The collapse of rental housing on Chicago’s North Side

I’ve written several times about the problem of shrinking population, and shrinking housing supply, in Chicago neighborhoods that ought to be booming. A quick recap: Over the last generation or so, the number of people wanting to live in Chicago’s close-in neighborhoods, particularly on the North and Northwest sides, has skyrocketed. Many of these people are also much wealthier than the people who had been living in these neighborhoods before. Downtown, builders have responded to this situation as they had historically throughout the city: by building more densely and allowing more people to live in a given area.

Note that outside of the central area, high rates of housing construction exist mainly along the river - along the western border of Lincoln Park and North Center. Many of those areas were formerly non-residential. Small amounts of new construction translated to high percentage growth.
Note that outside of the central area, high rates of housing construction exist mainly along the river – along the western border of Lincoln Park and North Center. Many of those areas were formerly non-residential. Small amounts of new construction translated to high percentage growth.

But because Chicago’s zoning code fits so snugly over its neighborhoods outside of downtown – so snugly, in fact, that maximum allowed densities are frequently much lower than what already exists – builders have not been able to add much new housing. Instead, they maximize their profits by turning two-flats into luxury two-flats, or into mini-mansions for a single family. As a result, as places like Lincoln Park get more desirable than they’ve ever been, fewer people are able to live there, and its population remains about 40% below its peak, depriving the rest of the city of whole heaps of tax money that we might be able to spend on schools, roads, transit, and so on. And, meanwhile, the intensified bidding war over the housing that remains drives up prices, pushing some of the people who would have lived in Lincoln Park in 1990 to Wicker Park in 2000 or Logan Square in 2010 – in other words, it causes gentrification.

But the situation is actually even worse than that. Because the deconversion of multi-unit buildings into smaller multi-unit or single-unit buildings is just part of the removal of rental housing: there are also lots of buildings that retain the same number of units, but are converted from renter-occupied to owner-occupied. (This trend has slowed dramatically since the recovery of the rental market, and there are even a few places where condo buildings have been converted back to rental—but not nearly enough to reverse the trend of the last 20 years.)

As a result, the stock of rental homes in some of these North Side neighborhoods—which, at this point, is the market that anyone without an upper-middle-class income is in by default—has just completely collapsed.

Screen Shot 2015-08-28 at 6.25.30 PM

Why is this a problem? Well, for one, owner-occupied housing almost always excludes more people—people of more tenuous economic standing—than rental housing. This is true even when monthly payments aren’t terribly different, because owner-occupied housing requires greater savings, a more stable source of income, and generally better credit. Less rental housing in that sense translates directly into a more exclusionary neighborhood.

But also, to the extent that rental housing constitutes its own market, reducing the supply of homes through condo conversions will bid up rental prices in the same way that too-low supply of homes in general will. In the wake of the recession, huge numbers of people who might in another time have chosen to buy—even people with relatively high incomes—stayed in the rental market instead. They found it much smaller than it would have been a decade or two or three before, and that almost certainly contributed to the competition for apartments that has pushed prices so high over the last several years.

And, of course, this is all happening in the context of sometimes extreme political pressure on aldermen and developers to privilege new owner-occupied housing over rentals. That makes pushing back against those pressures, as aldermen like Walter Burnett and Ameya Pawar have done, all the more crucial.

Advertisements

4 thoughts on “The collapse of rental housing on Chicago’s North Side

  1. Solution: Academic studies have found that people pay premiums for housing within ~0.4 miles of public transportation. Take the following measures:
    1: Upzone every lot within 0.4 miles of an el station to a minimum of RM-4.5 (4 story townhouses are extremely common everywhere and not overly burdensome to anyone)
    2: For those same lots, versus the standard RM-4.5 zoning rules, front setbacks are never required to be more than 8′
    3: Side setbacks are no longer required (although fire codes must still be followed), and buildings may still be at least 60′ deep even where this would eclipse the allowed Floor Area Ratio. For example, RM-4.5 allows for FAR of 1.7 or .425 per floor assuming equal floor footprints. A “standard lot” is 25′ * 125′ = 3,125 sq. ft. so .425 = 1,328.125 sq. ft. per floor. With the typical required 20% worth of side setbacks, the building would be 1328.125/20 = 66.41′ deep. Without side setbacks, the building would be 25′ wide and 1328.125/25 = 53.125′ deep. However allow the building to be 60′ deep to take advantage of the deep lots without sacrificing apartment quality, so the each floor can have dimensions of 25′ * 60′ = 1,500 sq. ft.
    4: Also for all of these lots with 0.4 miles of el stops, make coach houses legal again so that people can build a floor of living space above their 2-car garages, or if they don’t need off-street parking, just let them build small 2-story houses off the alley on the footprint of the garage. Adjust Lot Area Per Unit zoning rules to allow for this to be a separate unit.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s