Cambridge, Massachusetts, requires that 20% of the new space in larger housing developments include affordable homes. This, as we have talked about many times before on this blog, is known as inclusionary zoning (IZ). According to the Pioneer Institute, there are more than 141 communities in the state that have some sort of IZ policy.
But now, what is happening is that the numbers don't work on new housing projects. In the 30 years since the ordinance was enacted, it is reported that it helped create 1,603 affordable homes. However, since 2017 — the year the city increased the affordable requirement to 20% — only 200 new affordable homes have been created. That's approximately 20-22 new affordable homes per year — not much.
These numbers also don't speak to the number of new housing projects that could have been built, but weren't feasible precisely because of the IZ policy. This is the greater risk, because even new "luxury" projects help to relieve housing pressures within a market.
It is for this reason, along with others, I'm sure, that a developer is now suing the City of Cambridge, arguing that inclusionary zoning is unconstitutional on the grounds that it infringes upon people's property rights. To quote the developer, "I [would] have to build at a loss. Eventually, you just throw your hands up and say it doesn't work."
If successful, this case could help to change how cities tax new housing and how they aim to create new affordable housing, though I should mention that there have already been prior rulings on this issue.
Customarily, the way municipalities try to offset the burden of inclusionary zoning is to allow additional density and/or waive certain development levies. However, to accomplish this, you ideally need a planning framework where it's perfectly clear what maximum density would have been permitted without IZ.
For example, if 100,000 square feet is the maximum permitted density without IZ, and an additional 20% is permitted with IZ (+20,000 square feet) you can now calculate whether this additional density is enough to perfectly offset the IZ tax. If it is not, well then, you could maybe have a situation where it's deemed as an unconstitutional "taking" of private land (oh boy, please don't take this as any sort of planning legal advice).
I think most of us would agree that cities are better when they are diverse and attainable to more people. The problem with IZ policies is that they run the risk of selectively taxing only certain people in an effort to create this outcome.
Cover photo by Brett Wharton on Unsplash
As most of you know, the Toronto housing market has shifted its attention from condominiums to rentals. This is out of necessity. According to the Toronto Regional Real Estate Board, the GTA saw approximately 71,392 condominium apartments leased (counting only those leased through MLS) in 2025.
Quarter | Units Leased | Y-o-Y Change |
Q1 2025 | 14,797 | +16.7% |
Q2 2025 | 20,417 | +16.6% |
Q3 2025 | 22,491 | +20.2% |
Q4 2025 | 13,687 | +16.0% |
Total | 71,392 |
These increases are a result of having no other option. As demand has waned for new condominiums, a greater number of investors have decided to rent out their new condos. If you're a tenant looking for a new home to rent, this has been good news.
As a general rule, building a new building is easier than trying to do surgery on an existing one, because you never know exactly what you're going to find when you start the latter. But there are instances where surgery is necessary.
According to Bloomberg, developers in London are becoming increasingly interested in the airspace above existing buildings, and it supposedly started because of some policy changes:
In 2020, then housing minister Robert Jenrick introduced reforms that relaxed rules to add airspace builds above existing buildings. Owners can now construct additional residential stories to either expand their own dwelling or to create new units altogether without going through full planning permissions, which are often a long and costly process. This was part of a broader set of reforms to boost housing supply, and the current Labour government has not shelved these changes.
Here's an example site listed for £150,000:
The site currently comprises the roof and airspace above a 3-storey mixed-use residential-led block (Block B) within The Glassworks Development.
The existing development was constructed in 2017 and comprises 23 residential apartments plus ground floor commercial space, all of which are sold off on long leases.
I had an old boss who was very interested in this idea. For him, it was "free" land and a way to further extract value from an existing real estate portfolio. Of course, it's also a way to build new homes in already built-up cities.
Cambridge, Massachusetts, requires that 20% of the new space in larger housing developments include affordable homes. This, as we have talked about many times before on this blog, is known as inclusionary zoning (IZ). According to the Pioneer Institute, there are more than 141 communities in the state that have some sort of IZ policy.
But now, what is happening is that the numbers don't work on new housing projects. In the 30 years since the ordinance was enacted, it is reported that it helped create 1,603 affordable homes. However, since 2017 — the year the city increased the affordable requirement to 20% — only 200 new affordable homes have been created. That's approximately 20-22 new affordable homes per year — not much.
These numbers also don't speak to the number of new housing projects that could have been built, but weren't feasible precisely because of the IZ policy. This is the greater risk, because even new "luxury" projects help to relieve housing pressures within a market.
It is for this reason, along with others, I'm sure, that a developer is now suing the City of Cambridge, arguing that inclusionary zoning is unconstitutional on the grounds that it infringes upon people's property rights. To quote the developer, "I [would] have to build at a loss. Eventually, you just throw your hands up and say it doesn't work."
If successful, this case could help to change how cities tax new housing and how they aim to create new affordable housing, though I should mention that there have already been prior rulings on this issue.
Customarily, the way municipalities try to offset the burden of inclusionary zoning is to allow additional density and/or waive certain development levies. However, to accomplish this, you ideally need a planning framework where it's perfectly clear what maximum density would have been permitted without IZ.
For example, if 100,000 square feet is the maximum permitted density without IZ, and an additional 20% is permitted with IZ (+20,000 square feet) you can now calculate whether this additional density is enough to perfectly offset the IZ tax. If it is not, well then, you could maybe have a situation where it's deemed as an unconstitutional "taking" of private land (oh boy, please don't take this as any sort of planning legal advice).
I think most of us would agree that cities are better when they are diverse and attainable to more people. The problem with IZ policies is that they run the risk of selectively taxing only certain people in an effort to create this outcome.
Cover photo by Brett Wharton on Unsplash
As most of you know, the Toronto housing market has shifted its attention from condominiums to rentals. This is out of necessity. According to the Toronto Regional Real Estate Board, the GTA saw approximately 71,392 condominium apartments leased (counting only those leased through MLS) in 2025.
Quarter | Units Leased | Y-o-Y Change |
Q1 2025 | 14,797 | +16.7% |
Q2 2025 | 20,417 | +16.6% |
Q3 2025 | 22,491 | +20.2% |
Q4 2025 | 13,687 | +16.0% |
Total | 71,392 |
These increases are a result of having no other option. As demand has waned for new condominiums, a greater number of investors have decided to rent out their new condos. If you're a tenant looking for a new home to rent, this has been good news.
As a general rule, building a new building is easier than trying to do surgery on an existing one, because you never know exactly what you're going to find when you start the latter. But there are instances where surgery is necessary.
According to Bloomberg, developers in London are becoming increasingly interested in the airspace above existing buildings, and it supposedly started because of some policy changes:
In 2020, then housing minister Robert Jenrick introduced reforms that relaxed rules to add airspace builds above existing buildings. Owners can now construct additional residential stories to either expand their own dwelling or to create new units altogether without going through full planning permissions, which are often a long and costly process. This was part of a broader set of reforms to boost housing supply, and the current Labour government has not shelved these changes.
Here's an example site listed for £150,000:
The site currently comprises the roof and airspace above a 3-storey mixed-use residential-led block (Block B) within The Glassworks Development.
The existing development was constructed in 2017 and comprises 23 residential apartments plus ground floor commercial space, all of which are sold off on long leases.
I had an old boss who was very interested in this idea. For him, it was "free" land and a way to further extract value from an existing real estate portfolio. Of course, it's also a way to build new homes in already built-up cities.
At the same time, Urbanation just reported that a total of 9,821 purpose-built rental apartments started construction in 2025, representing a 42% increase from the year prior. This is the highest annual total since the 1970s.
At year-end, this resulted in a total of 27,815 purpose-built rental apartments under construction in the Greater Toronto & Hamilton Area. And like individual condominium buyers, developers are doing this because there is, in most cases, no other option.
But while these may seem like large numbers, it's important to keep in mind that new condominium completions are currently on a downtrend toward zero completions in the coming years (for all intents and purposes).
Even with rental starts approaching 10,000 units per year, it's not enough to replace the condominium supply that is starting to evaporate. Based on current sales and starts, 2029 looks to be the year where we'll hit our housing supply bottom.
But these are not simple builds. Can the existing structure and foundations support additional levels? How do you modify the existing elevator(s) while the building below remains occupied? How do you do the mechanical tie-ins without impacting the suite(s) below?
All of this makes me wonder how feasible it will be for London to build 180,000 new homes in this way. If it can, that would be a great accomplishment, and one that other cities should aim to emulate. But regardless, I'd love to get under the hood of one of these projects.
Cover photo by Travis Fish on Unsplash
At the same time, Urbanation just reported that a total of 9,821 purpose-built rental apartments started construction in 2025, representing a 42% increase from the year prior. This is the highest annual total since the 1970s.
At year-end, this resulted in a total of 27,815 purpose-built rental apartments under construction in the Greater Toronto & Hamilton Area. And like individual condominium buyers, developers are doing this because there is, in most cases, no other option.
But while these may seem like large numbers, it's important to keep in mind that new condominium completions are currently on a downtrend toward zero completions in the coming years (for all intents and purposes).
Even with rental starts approaching 10,000 units per year, it's not enough to replace the condominium supply that is starting to evaporate. Based on current sales and starts, 2029 looks to be the year where we'll hit our housing supply bottom.
But these are not simple builds. Can the existing structure and foundations support additional levels? How do you modify the existing elevator(s) while the building below remains occupied? How do you do the mechanical tie-ins without impacting the suite(s) below?
All of this makes me wonder how feasible it will be for London to build 180,000 new homes in this way. If it can, that would be a great accomplishment, and one that other cities should aim to emulate. But regardless, I'd love to get under the hood of one of these projects.
Cover photo by Travis Fish on Unsplash
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