Tag Archives: affordable housing

When affordable housing is not affordable to those with few resources

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Who can access affordable housing in American communities?

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The poorest people in the U.S. face the most acute shortages of affordable homes. But the majority of low-income housing financed in recent years is for those earning 50% of an area’s median income or above, according to a survey of state housing agencies.

Some cities are now seeing an uptick in vacancies as rents for these units approach market rates. The result: Apartments designated as affordable sit empty because the poorest of the poor cannot afford them…

There are only about 4 million affordable rental units available for the country’s 11 million extremely low-income renter households, according to the National Low Income Housing Coalition’s most recent annual report…

Yet homes set aside for these renters were only about 12% of the affordable housing units financed in 2024 by the Low-Income Housing Tax Credit — a federal program providing tax credits to developers in exchange for keeping rents low for at least 30 years, according to figures from the National Council of State Housing Agencies.

This fits with what I have seen with affordable housing in suburbs. When communities are willing to approve and go ahead with affordable housing, they limit the number of units available and the units are priced closer to the market rates than nothing.

So (1) where would such housing be located and (2) who would build it? Communities would need to approve housing for the poorest people living in the US. Few might be willing to do this. And even with incentives (such as the LIHTC noted above), what builders or developers would be interested in constructing these units?

The American public may have soured on public housing but it did provide a housing option for those who needed it. If there are not enough units available in the private market, where are they supposed to come from? And there needs to be some public and political will to address this concern or housing will continue to be for thseo with more resources.

More manufactured homes approved for suburbia

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One response to rising housing costs in the United States is moving to approve manufactured housing for suburban communities:

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For decades, manufactured housing has mostly been limited to trailer parks and rural properties. Now, a few developers are pitching factory-built homes as the way of the future, trying to sell higher-quality homes in a new context: the typical American suburban subdivision…

Stigmatized as low-quality, less-safe housing for the poor, factory-built housing was banned for decades by many towns and cities. But as soaring home prices prompt a search for affordable options, some policymakers have been willing to give manufactured homes a new look.

Villa’s new neighborhood is one of a few dozen similar experiments across the country. The major manufacturer Clayton said it has sold more than 2,000 of its “cross-mod” homes, which are partially factory-built and partially site-built, to 23 subdivisions in 10 states…

“They had a really bad reputation, and a lot of localities put in exclusionary zoning to prevent them from being used in neighborhoods,” said Rachel Siegel, a housing analyst at the Pew Charitable Trusts who believes that modern manufactured homes are of a much higher quality than those of past decades and should be allowed in more places. “We see empty lots that just don’t get filled. We see really old, unrepairable homes not get taken down and replaced because the cost to do a site-built home is just too high. … There’s almost no other way right now to build smaller homes that people can truly afford, that are new, outside of manufactured housing.”

The article suggests this is possibly a new trend or still in experimental mode. The need for affordable housing may push more communities toward changing their zoning and regulations. Many current residents and potential future residents want cheaper quality options. It would be interesting to see more residents and possible residents advocate for this kind of housing.

At the same time, I suspect wealthier and higher-status communities would be slower to approve manufactured housing. Reputations and stigmas can be hard to overcome, particularly if current residents have resources to afford more expensive housing options. This is another way certain communities can distinguish themselves from other suburbs; they are compromising in order to have affordable housing but we do not need to do that.

Win a cheaper single-family home via lottery in a Chicago suburb

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Many Americans would benefit from affordable single-family homes. The Chicago suburb of Elk Grove Village set up a lottery for ten local residents to get one such unit:

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Inside a room at the Belvedere banquet hall in Elk Grove Village, 10 families got the chance to pick their new single-family home — priced below market rates and for village residents only — in a perhaps first-of-its-kind municipal housing initiative aimed at helping ease the housing affordability crisis…

The village bought the 2.5-acre site — the former Elk Grove Presbyterian Church property — for $965,000 in 2023, and recently sold it to the Mount Prospect-based Nicholas Family of Companies for $1 million. That recoups the village’s costs to purchase the site and tear down the church, officials say.

The deal also allows the homes to be “moderately priced,” officials said, at between $466,000 and $508,000…

Fourteen showed up to the lottery, and 10 of them picked homes on Saturday.

Names were drawn one by one. Each potential buyer had five minutes to pick from the available lots.

Then they signed purchase agreements and related forms and gave the developer a $2,500 cashier’s check. A year from now, they will be the first residents in the Tonne Grove development, where 20 single-family homes will be built on the northwest corner of Tonne Road and Elk Grove Boulevard.

Several quick thoughts in response:

  1. The property became available because of the closing of a church. According to the still-existing Facebook page, the church held its last service in June 2023 and the building was demolished in April 2024. This is one potential fate for closed churches: the land is redeveloped for other purposes.
  2. The lottery method reminds me of a framing of the documentary Waiting For Superman where families are in a lottery to get into desirable schools. In both, the use of a lottery could invite questions: is this a public good that should only be available by lottery?
  3. It is interesting that only 14 people showed up to the lottery. Granted, there were numerous conditions potential homebuyers had to meet. I imagine similar lotteries throughout suburbia could invite many more participants.
  4. Was this a success? Will other suburbs copy this?

“Attainable housing” price points in a wealthy suburb

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A developer has proposed a new set of nearly 300 luxury apartments in Naperville:

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Their target demographics are people ages 25 to 35 and 50 to 64. The former group makes up about 16% of Naperville’s population whereas 21% are ages 55 to 64.

“The residential use will provide an additional housing opportunity to an underserved segment of Naperville’s population sometimes referred to as ‘renters by choice’ and folks looking for quality housing along the I-88 employment corridor,” the petition said.

Proposed rents run from $1,900 to $2,000 for a studio, $2,050 to $2,400 for a one-bedroom, and $3,000 to $4,400 for a two-bedroom. According to the petition, the majority of the units would be considered attainable housing for the city’s population.

Naperville’s average median income is about $150,360, the petition said. For the person whose average median income is $120,288, about 90% of the apartments at CityGate II would be considered attainable. For the person who makes $90,126, more than 60% of the apartments would meet that threshold.

Naperville is a wealthy suburban community. According to the American Community Survey, owner-occupied units have a median value of $540,000 and the median rent is $1,885.

The developer is not claiming this is affordable housing. The price points would need to be much lower, particularly given Naperville’s median household income. This is “attainable housing,” a different category with a different audience in mind. This is for young professionals and downsizers (looking at the age categories). This is for people who work white-collar jobs in the I-88 corridor, a set of properties crucial to Naperville’s development from the announcement of Bell Labs building a facility in the 1960s.

Another category of people communities like Naperville like to discuss as possible residents are civil servants. Could school teachers, police officers, and firefighters live in this new development? City employees?

Luxury apartments are for certain kinds of possible residents or existing residents. Is there a kind of semi-luxury apartments that could be approved?

At least four Illinois municipal leaders in favor of giving up some local zoning control in order to build more housing

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The leaders of Sesser, Des Plaines, Lexington, and Oak Park, Illinois recently described why they support the BUILD plan proposed by Governor Pritzker:

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You are probably wondering why local officials are challenging the instinct of protecting local control. But here’s the reality: The housing market does not stop where our towns end. The housing market, and subsequent shortage, crosses municipal boundaries and affects communities across Illinois, from large cities to small towns. Yet the system for addressing it remains fragmented and reflects the larger problems that we are all facing — the fewer houses available, the more expensive those few become. That’s why we support a statewide solution to give us the framework to do the things that make sense for our individual towns. BUILD does not replace local control with a one-size-fits-all system. It does not override community character or dictate identical development across Illinois. It creates a tool kit for us to implement a housing vision for our individual communities that addresses our unique needs on an improved and more efficient, affordable and attainable timeline.

BUILD would mean more townhomes, two-flats, duplexes, cottages, bungalows — just regular types of houses that have historically formed the backbone of neighborhoods, made housing affordable and showcased the uniqueness of Illinois’ architecture. They are the homes that allowed working families, young people and seniors to live in communities they could afford. Somewhere along the way, these types of houses stopped being built. Regular, affordable houses have since become so rare that people think the only options are unattainable mega-mansions or luxury high-rise developments. It does not have to be this way.

BUILD would restore balance and establish a clear, statewide baseline that makes it possible to build regular types of housing in the first place. BUILD would establish minimum expectations and set a baseline to meet every locality’s housing needs, while preserving and enhancing the character of what makes each of our towns so unique. From there, we would retain control over how that housing fits in our communities through design standards, form and local context. We would still shape where housing goes, how buildings look and how development fits in our communities.

Several quick thoughts in response:

  1. This is an interesting mix of communities: two small towns, one in central Illinois, one in southern Illinois, and two Chicago suburbs. How many communities near them would agree with these arguments? Will there be a clear set of communities for and against this plan or will more quietly work behind the scenes?
  2. Each of the op-ed writers are leaders in their communities: three mayors, one village president. How many of their fellow local officials, elected or not, would agree with them? Pushing a little further, does this become an important local campaign issue for those running for municipal office?
  3. If there are some communities more open to the BUILD plan than others, would they end up with significantly more new housing units if the BUILD plan goes forward? Do they see the BUILD plan as the way to population growth and all that comes with that (status, construction jobs, etc.)?

And I would still be interested to know what kind of incentives would be needed for developers to take a big interest in cheaper or affordable housing in the four communities highlighted here…

How big do the financial incentives have to be to actually have affordable housing built in Illinois?

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A proposed Illinois bill suggests offering incentives for middle housing or affordable housing is a better way to go:

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While Pritzker’s plan would require municipalities statewide to allow denser housing, the municipal league’s bill, introduced by Homewood Democrat Rep. Will Davis, makes participation voluntary by dangling state money as an incentive rather than wielding state authority as a hammer. Local leaders have spent months objecting to Pritzker’s plan as an unprecedented state intrusion into their authority to shape their own communities….

Cole characterized his organization’s proposal not as a counter but as “an alternative proposal” built around a voluntary incentive program of state funds to support local participation in expanding housing supply, including locally chosen overlay districts where middle housing would be allowed by right. He pressed his case at a House subject-matter hearing on Wednesday with pointed rhetoric…

In addition, the new bill would allow municipalities to prioritize blighted properties for redevelopment, potentially with state assistance; exempt certain housing building materials from some taxes; and prevent private homeowners’ associations from restrictions that “unreasonably prohibit” ADUs. It would also cap upfront rental costs at one month’s rent. Whether to allow single-stairway buildings — a provision of the governor’s proposal for many buildings up to six stories — would remain up to individual municipalities…

Cole argued Monday that many of his members would embrace denser housing if the financial incentives were right and pushed back on the idea local leaders are inherently opposed to growth.

This is a familiar debate in a number of American states: people generally like the idea of constructing cheaper housing but do not necessarily want it near them as they fear for their property values and who might be their neighbors.

Here is what I want to know on the incentives side: what incentives are needed to get developers, builders, and communities to move? How much money would be available? How much money do those on the developing and constructing side want in order to change their focus from higher-end housing to cheaper housing? Will these incentives push communities to actually approve cheaper housing (say for any new residents more than 10-20% below the existing household median income for the community)? Incentives are often pitched as the answer but rarely are the numbers discussed publicly.

At the moment, the debate is pitched as state control or local control, mandates or incentives. Do we actually know what incentives will work or are Illinois communities committed to not giving up any local control (and this is a bedrock of suburban local government, if not all local governments)?

How many housing units should be added each year in Chicago?

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Chicago is the third largest city in the United States. How many housing units should be built in the city each year?

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In Chicago, fewer than 5,000 new units were completed over the past year — about 0.8% of existing inventory — nowhere near enough to meet demand. To close the gap, production will have to accelerate dramatically in the years ahead. In other words, the city of big shoulders needs to get to work. Chicago doesn’t just need more housing — it needs far more housing, an increase of a scale we haven’t seen in years. That won’t happen if lawmakers don’t get more obstacles out of the way.

The Chicago area ranks among the three worst metros in the nation for housing underproduction, behind New York and Los Angeles, according to a 2022 report from nonpartisan group Up for Growth, and the gap has not improved meaningfully since then.

The argument in this editorial is that this figure is far too low. The city needs more units built, if only to help counter rising prices for purchasing and renting.

But what exactly is the number of units a “healthy” city would add each year? 2% of inventory? 5% of inventory? How do these numbers intersect with growth or decline in population with Chicago experiencing a little of each in recent decades. How should these residential units be spread across price points so a city is not just adding really expensive units? The kind of housing residents need might not line up with what developers and builders want to construct.

There is a lot to be figured out here. Having a clear number might help prompt action. It may not. I have seen plenty of numbers over the years from groups suggesting that many units are needed to address affordable housing and little seems to be done in the biggest cities (LA and NYC are also noted above for low construction rates).

“Informal housing” and affordable housing in the postwar suburbs

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Historian Michael Glass describes how informal housing units came to be in the postwar suburbs:

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Yes, this was a major surprise during my research. While scanning through microfilm reels of local newspapers, I kept coming across exposés of “illegal apartments,” that is, single-family homes illegally converted for multifamily occupancy. This took many forms: owners might rent out the basement, convert the garage into a dwelling, or wall off the attic as a separate apartment. Urban planners conducted comprehensive studies, and they estimated that by the 1970s between 10 and 20 percent of the single-family homes had been subdivided. A truly astounding statistic! 

In addition to being exclusionary and costly, the postwar suburban development model was completely unsustainable. Today the housing stock in Nassau County consists almost entirely of single-family dwellings. But people in the suburbs also needed cheap rentals, especially low-income families, young singles, divorced couples, retirees, and undocumented immigrants. Because zoning prohibited multifamily housing in most places, homeowners and landlords met these needs by converting single-family homes into apartments. 

The apartments were hidden, but certainly not a secret. Local officials absolutely knew the subdivisions were happening, and they let it continue because the informal apartments were meeting important housing needs. What I take from scholars of informal housing in the Global South – folks like Ananya Roy and Raquel Rolnick – is that turning a blind eye is itself a policy choice. It’s a way for government officials to manage housing needs in a context of scarcity. 

My basic argument is that informal apartments became the tacit solution to the affordable housing crisis. It helped resolve contradictions: local officials could simultaneously declare their opposition to new apartment construction while continuing to quietly tolerate informal units. 

People needed housing in the growing suburbs, homeowners adapted their properties, and local officials responded by not doing much. I wonder how much the lack of local reaction discovered was due to:

  1. The actual need for housing. How many units were needed in the postwar decades, particularly in comparison to today? Even as suburbs were growing rapidly, how much would local officials admit that even more housing was needed?
  2. The reference in the quote above to apartments is interesting as many suburban communities did consistently resist apartments because this might lead to different kinds of residents and affect the character and property values of nearby single-family homes. Informal housing is preferable to apartments until when?
  3. What happened when local residents complained about informal units? Say a resident suggests their neighbor has created an informal housing unit in violation of local regulations. How did local officials respond given #1 and #2 above? The quote above refers to media exposes so there must have been some local responses.

This might fit into a bigger story of suburban residents who since World War Two have used their homes and properties in ways that go against local regulations or what was expected. The idea of property rights is pretty important in many suburbs but so is the impulse to not have one’s property and housing values threatened by nearby land uses.

What private equity expects from suburban residential developments and “a revenue gap”

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A new proposed residential development in suburban St. Charles sparked discussion about the possibility of including affordable housing:

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A 29-acre site in St. Charles — one of the last remaining open properties in town for residential development — is becoming a flashpoint for housing affordability in the city.

With a new proposal on the table, some city officials are requesting affordable units while the project’s developers argue it would hurt their private equity-backed bottom line…

The developers said they are trying to support retail along the Randall Road corridor by “attracting residents with disposable income.” City officials responded by saying there are people who work for the city who can’t afford to live there.

During the March 16 meeting, the developers said offering affordable units, such as a $1,070-per-month studio, would “provide a revenue gap.”

The basics of the story are not unusual for suburban residential development projects. A developer sees an opportunity. Upscale residential units can bring a good profit and upscale suburban communities tend to like residential properties that enhance their status and character. The city responds to the proposal with a few requests, including requesting some affordable housing units for several groups in the community the suburb would like to retain or attract. A period of negotiation or dialogue commences.

What is different here is that the developer has clearly stated that substituting affordable housing units will lead to a revenue problem. Why? Because there are expectations from the private equity supporting the development. The article does not discuss the details (and they may not be publicly available) but it sounds like it can be put another way: not enough money will be made on this development if affordable housing is included.

Profit-making is not unexpected. The clash between private equity money and affordable housing is less often in the public view. What amount or percentage does private equity expect to make on residential development? Can it make room for any affordable housing or is it completely about profit maximization?

Who is driving newfound Midwestern population growth?

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I wrote in January about the modestly increasing population in the Midwest and this piece from yesterday suggests housing affordability is behind the change. Let’s say this is true and it is more than a one or two year pattern: more people are moving to the Midwest and they are doing so because they can still get good housing for less than $350,000. Who exactly are these movers? Some speculation from yesterday’s piece:

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Take Rockford, the most popular housing market from the Zillow report. Although it’s within easy driving distance of Chicago, the average home value is about $170,000, to Chicago’s $300,000. A hybrid worker could conceivably work from Chicago a day or two a week while paying much less for a house than if they lived in the city. The same goes for Milwaukee, which is also an hour and a half from Chicago…

In addition to proximity to a large city, what distinguishes bright spots such as Columbus and Indianapolis from less desirable midwestern cities is the availability of good-paying jobs. After all, few people can buy a house, even for $300,000, if they can’t find work nearby. According to OSU’s Partridge, the midwestern cities that were less reliant on manufacturing in the 1950s are the ones doing well now. These places were never dependent on factory jobs, so they were better able to weather the steep decline in U.S. manufacturing that began decades ago. “Because they had a more service-oriented composition of businesses, they did much better,” Partridge said. Today, these cities offer plentiful finance, tech, and health-care jobs. JPMorganChase employs 18,000 people in Columbus, for example; the pharmaceutical company Lilly is headquartered in Indianapolis.

Two kinds of people are referenced: people who work remotely at least part-time and those who can access good-paying white collar jobs. This may require certain levels of education and/or job experience.

For years, I have read discussions about how Americans who need cheaper housing could move to places with cheaper housing. Particularly in comparison to the most expensive housing markets, often on the coasts, there is decent housing to be had in other places. This is easier than it looks. People have ties to particular social and family networks as well as places. Additionally, if a lot of people moved to these cheaper places, this drives the prices up.

What might a more accurate version of this story be (and someone must have some data to support or counter this)? Something like: those with some resources and education can move to the Midwest for particular jobs and take advantage of comparatively cheaper housing compared to high-priced housing markets. This means this potential opportunity is not necessarily available to everyone.