Government Regulation and Changes in the Affordable Housing Stock

[...]In this paper, we look at the relationship between these twoissues to examine how government regulation affects thedynamics of the low-income housing stock. We find that,consistent with theoretical models of housing, restrictions onthe supply of new units lower the supply of affordable units.This occurs because increases in the demand for higher qualityunits raise the returns to maintenance, repairs, and renovationsof lower quality units, as landlords have a stronger incentive toupgrade them to a higher quality, higher return housingsubmarket. This result is disturbing because it highlights howpolicies targeted toward new, higher income owner-occupiedsuburban housing can have unintended negative consequencesfor lower income renters.[...]