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Inclusionary Zoning Policies May Discourage New Housing Supply

Meant to encourage more affordable housing, these policies may have the opposite effect.

By Kristen Smithberg | March 10, 2025 at 04:28 AM

Inclusionary zoning (IZ) policies, which require or incentivize developers to provide some income-restricted housing units in otherwise market-rate projects – may be a double-edged sword, according to a new study by Pioneer Institute. The study found that while IZ policies help address urgent, short-term housing needs for a few families, they also can discourage new supply and increase higher market-rate prices, jeopardizing long-term, broad-based affordability.

Massachusetts has one of the highest concentrations of IZ policies in the country with 141 communities implementing some form of IZ. Seventy-one of these communities mandate a set percentage of below-market units per development and 43 require a certain percentage of affordable units in select districts or project types. IZ is voluntary in the remaining 27 communities, although most offer density bonuses to allow for extra units beyond what is allowed in non-inclusionary projects.

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