Gary Galles explains at The Los Angeles Times:
This month the U.S. Supreme Court will decide whether to hear a legal challenge to San Jose's controversial inclusionary housing ordinance. Enacted in 2010 and upheld by California's top court in June, this zoning law requires housing developers of 20 or more units to sell 15% of them at prices far below their market value or pay a six-figure fee instead.
More than 170 California communities impose similar mandates and set-asides, but the net effect isn't more affordable housing for all. Rather it is a reduction in the construction of new homes, which pushes prices upward.
This is hardly a solution to a housing affordability crisis. It's also an unconstitutional government taking of private property without just compensation, and a violation of several precedents specifically, which is why the San Jose case deserves consideration by the Supreme Court.
If you think affordable housing mandates can't do much harm in regions where home prices are already among the highest in the nation, think again. In a Reason Public Policy Institute study that investigated the impact of housing set-asides in the San Francisco Bay Area from 2003 to 2007, economists Benjamin Powell and Edward Stringham found that the volume of new home construction dropped on average 30% in the first year after such a law passed, and prices rose 8%
Perhaps the reason that inclusionary zoning mandates aren't more widely opposed is that they transfer so much wealth from real estate developers and homebuyers to people who already own property. The mandates are portrayed as compassionate, but they survive because they have the opposite of the supposed intention, resulting in higher home prices, not lower.