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Extending the real option framework to analyse the economic effects of inclusionary housing policies in different types of markets

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Listed:
  • Keener Hughen
  • Dustin Read

Abstract

Inclusionary housing policies enacted by municipal governments rely on a combination of legal mandates and economic incentives to encourage residential real estate developers to include affordable housing units in otherwise market rate projects. Although these regulations provide a means of stimulating the production of mixed-income housing in parts of a community where it would not otherwise exist, they may also slow development activity and put upward pressure on the price of market rate units if a financial burden is imposed on the private sector. The following paper extends the real option framework to explore the effects of inclusionary housing policies on housing prices and development timing. Overall, the results demonstrate that both market conditions and consumer perceptions about mixed-income housing can influence the economic outcomes of these affordable housing initiatives.

Suggested Citation

  • Keener Hughen & Dustin Read, 2012. "Extending the real option framework to analyse the economic effects of inclusionary housing policies in different types of markets," ERES eres2012_006, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2012_006
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    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2012-006
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    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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