Pittsburgh, Pennsylvania: Inclusionary Zoning & Construction Slowdown
Paper finds "affordable housing" requirements led to 32% drop in new construction and affordable housing
A new paper (The Effects of Inclusionary Zoning on New Housing Construction in Pittsburgh) from Jack Billings (University of East Anglia) and David Vatz (Pro-Housing Pittsburgh) finds that Pittsburgh's inclusionary zoning (IZ) policy aimed at creating affordable housing has reduced new housing construction in areas where it was implemented.
Why it matters: As Pittsburgh faces rising housing costs and considers expanding the policy citywide, the data suggests the current approach may worsen the housing crisis by constraining supply and driving up rents.
Data and insights:
Housing Production Changes:
Lawrenceville pre-IZ: 97 units/year
Lawrenceville post-IZ: 66 units/year (-32%)
Strip District: Increased from 112 to 152 units/year (+36%)
South Side Flats: Increased from 85 to 100 units/year (+18%)
Total completed units (2012-2024):
Lawrenceville: 1,070 units
Strip District: 1,684 units
South Side Flats: 1,154 units
Policy Details:
Requires 10% affordable units in 20+ unit buildings
For rentals: Must be affordable at 50% AMI
For sales: Must be affordable at 70% AMI
Tax abatement offered up to $250K/year for 10 years
Initially implemented in Lawrenceville (2019), then expanded to Polish Hill/Bloomfield (2021) and Oakland (2022)
Economic Effects:
5-7% revenue reduction for affected developments
Estimated 8.75-16.75% reduction in new housing supply
~90% of new Pittsburgh housing is in 20+ unit buildings
Every new large building typically reduces nearby rents by 6%
For every 100 market-rate units built, 17-40 affordable units become available within 3 years through filtering
Evidence of Avoidance:
Industrial Commons (Lawrenceville): Combined two units to stay under 20-unit threshold
3339 Ward St (Oakland): Revised plans from 20 to 19 units after IZ implementation
Between the lines
The data shows a stark tale of two cities after Pittsburgh implemented its affordable housing requirements. In Lawrenceville, where the policy took effect, housing construction plummeted by nearly a third. Meanwhile, similar neighborhoods without these requirements saw their housing growth accelerate - the Strip District's production jumped by more than a third, and the South Side Flats increased by almost 20%.
The policy's mechanics help explain why. When developers are required to make 10% of units in larger buildings affordable at below-market rates, their revenue is cut by 5-7%. That might not sound like much, but in Pittsburgh's tight construction market, stopping many projects before they start is enough. The researchers estimate this translates to a 17% reduction in new housing supply - a big hit considering that 90% of Pittsburgh's new housing comes from these larger buildings.
However, perhaps the most striking thing is how this policy may backfire on its core mission of creating affordable housing. Research shows that each new market-rate building naturally reduces nearby rents by 6%, and every 100 new units create up to 40 affordable units within three years as people move into newer housing and free up older units. The policy appears to be disrupting this natural affordability cycle by hampering new construction.
Developers are already finding ways to address the requirements. In Lawrenceville, the Industrial Commons project combined two units to stay under the 20-unit threshold where the policy kicks in. In Oakland, plans for 3339 Ward Street were revised down from 20 to 19 units specifically to avoid the requirements - showing how the policy can reduce the total housing supply it was meant to expand.
The bottom line
The study used building permit data to compare construction rates before and after IZ implementation in 2019, focusing on buildings with 20+ units. While the sample size was limited due to Pittsburgh's overall low construction rates, the findings aligned with economic theory and similar studies in other cities like Seattle, Portland, New York, and Los Angeles. While well-intentioned, Pittsburgh's current IZ policy appears to be reducing housing construction in ways that could worsen affordability challenges. The researchers recommend either repealing the policy or modifying it with:
Making it voluntary
Pairing it with significant upzoning
Providing more subsidies to offset costs
Streamlining approvals for compliant projects