What are some of the key obstacles we confront today with regard to providing affordable housing?

According to James Frank of the National Center for Policy Analysis (NCPA), two key obstacles to providing affordable housing are inclusionary zoning laws and impact fees (National Center for Policy Analysis (NCPA), "Barriers to Affordable Housing").

Inclusionary zoning laws were developed in many areas to try and increase the availability of affordable housing to low- and middle-income residents. Ironically, in reality, they only serve to raise housing prices, making affordable housing even less available. Inclusionary zoning laws mandate housing developers to either build a portion of units for low- to middle-income residents, sell a portion of units well below the market value, or pay a six figure fine. However, the result of the mandate is that developers can afford to build far fewer homes, and since supply diminishes, prices rise. As reported by op-ed writer Gary M. Galles of the Los Angeles Times, economists Benjamin Powell and Edward Stringham conducted a Reason Public Policy Institute study on the consequences of inclusionary zoning laws in the San Francisco Bay Area ("How Affordable Housing Mandates Make Housing More Expensive"). Their study found that, from 2003 to 2007, housing construction decreased by 30% and housing prices rose by 8% after the enactment of San Francisco's inclusionary zoning laws (Galles). Stringham and Powell conducted a second study on the effects of inclusionary zoning laws in Southern California and found that, whereas over 28,000 new homes were typically built over a seven-year period, seven years after the enactment of the inclusionary zoning laws, only 11,000 new homes had been built, and, while 770 of those homes were affordable to low- and middle-income residents, the absence of the 17,000 other homes that would have normally been built led to housing shortage and increased prices (Galles). One solution would be freeing the housing market by eliminating inclusionary zoning laws and making affordable housing more available through alternate means. Alternate means of affordable housing development include increasing the numbers of manufactured housing units; constructing homes out of alternate means, such as using 48-foot cargo containers; and making legal once again single resident occupancy dwellings (NCPA).

The second obstacle to more affordable housing is impact fees. Local governments levy impact fees to pay for the infrastructure costs needed for new housing developments, such as new connecting roads and new sewer lines. Ideally, impact fees are levied on housing developers; however, in reality, developers easily shift the burden of payment to either the new buyers or new renters by either increasing the cost of the house or raising the rent. Impact fees pose a significant problem for low- and middle-income residents because impact fees are determined either per unit or per number of bedrooms. Actual cost of the housing unit is never a factor in determining impact fees; the result is that impact fees raise the prices of housing, reducing the availability of affordable housing to low- and middle-income residents. One solution would be reducing or completely eliminating the levy of impact fees on housing units for low- and middle-income residents (Gene Bunnell, "Pros and Cons of Paying for Growth with Impact Fees," University of Wisconsin-Madison Department of Agricultural Economics).

Hence, as we can see, two of the means we have developed to try and increase availability of affordable housing--inclusionary zoning laws and impact fees--have actually created obstacles to providing affordable housing.