According to Forbes, Chicago’s Affordable Requirements Ordinance has suppressed housing supply dramatically over 20 years, with the city granting permits for just 1.36 units per 1,000 residents compared to 4.71 in other cities. The mandatory inclusionary zoning scheme requires developers to include rent-controlled units or pay fees that get funneled to non-profit developers who build expensive units slowly. Joshua Bandoch, who authored a study on Chicago’s program, found that every time the mandate failed in 2003, 2007, and 2015, the city doubled down with tighter restrictions rather than removing them. In Seattle, similar programs have produced negative outcomes by adding costs across the housing economy that get passed to other renters.
The basic economics problem
Here’s the thing about mandatory inclusionary zoning: it sounds compassionate but ignores basic supply and demand. When you force developers to include below-market units or pay hefty fees, those costs don’t just disappear. They get baked into the prices of the remaining market-rate units. So you might get a few “affordable” apartments, but everyone else pays more. And if the math doesn’t work—if the added costs make projects unfeasible—developers simply don’t build at all. That’s exactly what happened in Chicago, where housing permits plummeted compared to other cities.
Why politicians love bad policy
So why do cities keep implementing these programs when the evidence shows they backfire? Bandoch hits the nail on the head: it’s enticing because it’s subtle and hidden. Politicians get to appear like they’re solving the housing crisis while actually making it worse. They hold ribbon-cutting ceremonies for the few subsidized units that get built, and voters never see all the projects that never happened because the economics didn’t work. It’s the perfect political solution—visible benefits, hidden costs. But who pays? Every renter facing higher prices because of artificial supply constraints.
The pattern repeats everywhere
Look at what happened in both Chicago and Seattle. When the programs failed, politicians didn’t question the underlying approach. They just tightened the screws. More requirements, higher fees, stricter mandates. It’s like watching someone try to fix a leaky pipe by turning the water pressure higher. The Illinois Policy Institute study shows this pattern clearly, and Seattle’s experience mirrors it. One tentative study there concluded the mandate was “one of several factors that have negatively impacted development feasibility since 2019.” Basically, when you make building harder and more expensive, you get less building. Shocking, right?
What actually works
The real solution to housing affordability isn’t complicated—it’s just politically difficult. We need more housing supply, period. That means streamlining approvals, reducing unnecessary regulations, and letting developers build what the market demands. When cities like Minneapolis eliminated single-family zoning and allowed more density, they saw rent growth slow dramatically. But that approach doesn’t give politicians the same photo opportunities as cutting ribbons on subsidized projects. Until we’re willing to embrace actual market solutions rather than feel-good mandates, the housing crisis will just keep getting worse.
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