New development is creating more demand for affordable housing. Economists and sociologists point out that the economy is widening, and the middle class is hollowing out. Thus, a larger share of new development will be oriented to higher-income consumers, who create demand for a lot of services, while services are provided by lower-income workers. This is especially significant in places like California where housing costs are high.
To bridge the need for affordable (rent- and income-restricted) housing, cities can pass inclusionary housing ordinances to require new residential development to include a portion of affordable housing or any new development to pay an in-lieu fee to support creating new affordable housing separately. Due to legal challenges, these ordinances require analytical support to demonstrate that the new development directly causes the need for affordable housing.
The demand for affordable housing can be measured through an economic impact analysis, most often conducted using IMPLAN, a world leader in economic impact data and modeling. RSG has helped cities throughout California to address their affordable housing needs using this tool while meeting the legal requirements.
Written by Dima Galkin, an Associate at RSG