Inclusionary zoning is justified on economic grounds as a form of value capture. But if value capture is not an accepted legal rationale in the US for requiring subsidized homes, then are there any grounds to justify IZ?

Single-family zoning causes gentrification.

One worry about densifying is that old cheap homes are torn down and replaced with expensive new homes. But adding new homes frees up old homes, via vacancy chains. A new 100-unit building could replace 60 old homes and still break even on the total stock of cheap homes. 1/

Important fact about inclusionary zoning: it's a *partial* value capture mechanism, because it applies only conditional on development. Landowners can avoid IZ value capture by doing nothing, and still watch their land value increase. Land value tax solves this. 1/

Discuss: is it better to under-capture land value, guaranteeing that market-rate housing is built while missing out on some subsidized homes; or over-capture and get the subsidized homes, but at the cost of higher market rents? Ie. costs of false positives vs false negatives.

Video idea: cyclists going through a stop sign at the same speed as a car doing a rolling stop. @ohtheurbanity.bsky.social

New post on inclusionary zoning, for my housing literature review. IZ requires developers to provide subsidized homes in their new apartment buildings. Without providing compensation to developers, this unfunded IZ is just a tax on new housing. 1/

New post on inclusionary zoning, for my housing literature review. IZ requires developers to provide subsidized homes in their new apartment buildings. Without providing compensation to developers, this unfunded IZ is just a tax on new housing. 1/

How to fund subsidized housing using upzoning, a thread. Land value capture works when zoning is (harmfully) a binding constraint on new development. Then, upzoning creates value. Land values rise, because the parcel has more uses. 1/

This paper gives a powerful generalization of event study models to allow an arbitrary number of events, each with a treatment dose of any sign or magnitude. #econsky 1/

Local control over zoning is a government failure, because restrictive zoning imposes a negative externality on non-residents who are priced out. Higher-level governments need to set zoning policy to internalize the externality.

🚨YIMBY research wanted🚨 Show quantitatively how a demand cascade works: when high-end demand increases, it spills over to the low-end market, so both high- and low-end prices increase. Use a Bartik demand shifter for college-educated workers. Measure quality using home age.

One misconception about IZ is that the market-rate homes in an IZ building cross-subsidize the non-market homes. But this isn't how tax incidence works. Developers cannot set above-market rents, because renters would simply find cheaper rents elsewhere. 1/

Moretti 2021 uses an IV for cluster size based on the number of inventors in the same firm in other cities. But this has a coding error, and correcting the error gives a null result. But the idea sounds like shift-share IV, so I tried that, and it works: 1/

LMW are testing whether we find the expected subgroup pattern, when using supply elasticity estimates from the literature to split the sample into Low- and High-elasticity subgroups, and estimating a new elasticity ψ: namely, ψ_L < ψ_H. 1/

LMW are making two contributions: 1) a substantive point about supply elasticities behaving as expected in subgroups. 2) a methodological contribution about identifying relative supply elasticities without a standard instrument. 1/

To people looking for a home today, writes @dannyoleksiuk.bsky.social, it matters a great deal whether that home is built next year, or in ten. Re-legalizing small apartment buildings throughout our cities would create more homes faster. www.sightline.org/2025/10/28/t...

Why not repeat this 1000 times?

Do young people face higher shelter costs than their older compatriots? @lausterna.bsky.social and I look into this question and the underlying mechanisms that can lead to age disparities in shelter costs.

C'mon.

Simpson's paradox, YIMBY edition: Increasing the supply of housing reduces the price of both new and old homes; but by shifting the composition of the housing stock towards (more-expensive) new homes, the average price increases.

Rollet 2025 Fig 3b shows that the average upzoning raises FAR by 1.0, but only increases built FAR by 0.10 over ten years. Upshot: theoretical zoned capacity needs to be at least 10x bigger than the target amount of housing.

Density bonus inclusionary zoning is win-win: we get lower market-rate prices and more subsidized housing. Upshot: we should tile the city with IZ apartments, to minimize prices and maximize the number of subsidized homes.

Has there ever been a proactive PHIMBY? Someone who calls for tiling the city with public housing. In practice, I've only ever seen reactive PHIMBYs, who use public housing as a reason to oppose new housing.

On the amyloid cascade hypothesis for Alzheimer's www.astralcodexten.com/p/your-revie...

Inclusionary zoning can be funded by tax exemptions, reduced parking requirements, permit fast-tracking, or density bonuses. Note: the first three are pure costs, but density is a benefit in itself, by lowering housing prices. 1/

How city planners are incentivized to perpetuate the housing crisis: Planners collect tax revenue from upzoning, via value capture. So to maximize their budget, they want to keep upzoned land scarce and hence valuable. But expensive land means expensive housing. 1/

>inclusionary zoning requires higher rents for the market-rate homes to cross-subsidize the below-market homes How does this work? Developers can't set rents higher than the market rate. Or do they upgrade to higher-quality homes with higher rents?

Mike Manville on the failure of value capture to actually capture value.

Minjee Kim argues that impact fees have different effects on multifamily developers vs small-scale home builders: while multifamily developers pay less to the landowner, home builders pass on the tax to buyers. How does this work? 1/

Vancouver has some odd views about value capture (through CACs: Community Amenity Contributions). Here, they say that CACs make developers pay for amenities. But developers are just a middleman; taxes are ultimately paid by new residents or landowners. 1/

Expanding the urban growth boundary makes residential land more abundant and hence cheaper; with ⬇️ land costs, housing supply ⬆️, and housing prices ⬇️. Upzoning makes apartment-zoned land more abundant and hence cheaper; with ⬇️ land costs, apartment supply ⬆️, and apartment prices ⬇️.

In honor of the innovation Nobel, help me do some innovation economics:

Who's writing the adversarial collaboration on Israel-Palestine? en.wikipedia.org/wiki/Adversa...

Let's talk Montreal's transformation: A city that somehow manages to impress me more with every visit. nextmetro.substack.com/p/montreal-a...

Montreal has incredible cycling infrastructure. Way more bike lanes than Vancouver, Bixi is everywhere, and you notice more bikes locked up on the sidewalk.

Moretti 2021 reports a positive effect of cluster size on patent quality. In my revised comment (currently under review at AER), I show this effect is actually negative. I interpret this as strategic patenting: firms in big cities create low-quality patents for IP lawsuits. #econsky 1/

Moretti 2021 reports a positive effect of cluster size on patent quality. In my revised comment (currently under review at AER), I show this effect is actually negative. I interpret this as strategic patenting: firms in big cities create low-quality patents for IP lawsuits. #econsky 1/

Paying for a working paper? Is this a joke? cepr.org/publications... #econsky

We need a Housing Protection Act. If you want to increase sewer fees or parking requirements or historical preservation, the burden of proof is on you to produce a Housing Impact Assessment showing there are no adverse impacts on housing supply.

What happened to land lift in Auckland before and after AUP? Does anyone even apply for upzonings?

I used to think the "stuff their mouths with gold" housing strategy was infeasible, because governments already extract 100% of the upzoning surplus (through inclusionary zoning, development charges, etc). 1/

Vancouver (Extra) Special 33' lots 4 and 6 storey single-stair buildings. 3Br accessible flats, adjacent to a park. (sketchup / ai render)

If you're a thinker or do-er in the housing space and you haven't subscribed to @michaelwiebe.bsky.social's substack, you're doing it wrong! It's a living urban econ lit review, inspired by @mattsclancy.bsky.social's New Things Under the Sun. Great stuff! Here's an example ⤵️.

New lit review post: filtering. 1/

The Tyee continues to push zombie Condonomics. See my debunking below.

Could we improve housing affordability by reducing the quality of homes? (the idea being that poor people can better afford lower-quality housing) Not necessarily. If you reduce quality without increasing supply, you just get rich people living in crappy homes. (hello SF)

Why don't developers refer to vacancy chain effects when defending their projects at city hall? New buildings free up cheaper old homes, as people move in and vacate their previous unit. www.buildingabundance.ca/p/vacancy-ch...

Does filtering have any policy relevance? What is added by knowing the filtering rate? (Beyond knowing that poor people live in old housing)

Trickle-down economics: policies that "disproportionately favor the upper tier of the economic spectrum". Does legalizing market-rate housing count as "trickle-down"? 1/