Tag Archives: affordable housing

Who will lead the way to address the need for hundreds of thousands of housing units in Illinois?

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A new study suggests Illinois needs a lot of new housing:

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Illinois has a shortage of about 142,000 housing units and must build 227,000 in the next five years to keep pace with demand, a number that would require recent annual production rates to double, according to a new economic study.

The joint study published Tuesday by the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois Urbana-Champaign found that although the rental and for-sale housing markets in Chicago and Illinois as a whole remain more affordable than many coastal cities, such as New York and Los Angeles, and some other states, Illinois still faces a severe housing shortage that is escalating affordability challenges.

National housing shortage estimates are wide-ranging, with Freddie Mac citing 3.7 million and the National Association of Realtors reporting 5.5 million.

And the recommendations for how to do this?

The authors suggest a variety of solutions, some of which Chicago officials and other state leaders are already working on, including easing zoning restrictions, quickening permitting processes, offering tax incentives to convert commercial buildings to residential units and increasing surtaxes on short-term rentals such as Airbnb. Aldermen recently took a step toward giving themselves the power to ban Airbnb and other short-term rentals from opening in their wards, a move that could potentially lead to an increase in housing supply.

This is not a new issue. And even drastic changes right now would not lead to 227,000 new units in five years. This is a long-term project that needs to be addressed.

One thought: this is an opportunity for Illinois to do something that could help lead the way in the United States. Here is why. It is a blue state and Chicago and its region dominates politics and perceptions. (This is not to ignore those living outside the Chicago area; there are just fewer of them.) It has more affordable costs compared to numerous other important cities. Chicago is still an important, world-class city. If Illinois could make a serious dent in providing affordable housing across the state, it could become a model for numerous other places. What works in Illinois might not work at all in New York City or Seattle or San Francisco or other super-heated housing markets. But it might work in Cleveland, Nashville, Denver, and other American metropolitan regions. Figure it out and Illinois and lots of areas could benefit.

For numerous reasons, it seems like politicians and business leaders in American cities and regions are hesitant to truly tackle affordable housing. But those who get out ahead of it can (1) help people living there and (2) provide models and tools for others to learn from and use.

And Area Median Income limits in California

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The Chicago region has particular Area Median Income limits. How might they compare to the AMI limits in California?

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In Orange, Santa Barbara and San Diego counties, the threshold for a low-income single-person household will soon surpass $100,000 if current trends continue, according to data published by the California Department of Housing and Community Development in April.

They would join three Bay Area counties that already hit that bureaucratic threshold.

California defines income levels by how they compare with the area’s median income. But in areas with unusually low or high housing costs, those definitions are often tweaked to reflect the reality on the ground for residents. Therefore, someone earning $100,000 could be above the area’s median income line but be considered low-income because of the high cost of housing. A number of government programs use these income designations to determine who qualifies for benefits such as housing assistance…

Between 2020 and 2025, the threshold to be considered low-income rose 40% across Southern California’s ten counties, reflecting the rising cost of living across the region.

At the same time, median incomes — representing the middle, not the average — across the region rose 35%.

Similar concept applied to a very different housing situation yields very different AMI limits. California housing prices are higher to the degree that the median income needed is much higher than in the Chicago region. Someone from the Chicago region might see this story about California regions and think that the housing situations are barely comparable.

At the same time, both regions struggle to provide affordable housing. The income levels may differ as might the physical landscape but both share limited appetites from municipal officials, developers, and residents for affordable housing.

Thinking beyond these two regions, are there regions that are doing better at constructing more units of affordable housing? Where incentives and local guidelines and people encourage affordable housing? Where there is good housing available at more or all of the points of the AMI limits?

Area Median Income limits for the Chicago region

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I recently read about a proposed affordable housing development in the Chicago suburbs that invoked the Area Median Income for the region:

According to a memo, The Residences at River Point would set aside one-quarter of the apartments for households making 30% or less of the area median income. Roughly half would be earmarked for households making 60% or less of the AMI, and the rest would be for those making 80% or less of the AMI.

According to the federal Housing and Urban Development Department, the AMI for the Chicago metropolitan area, which includes Kane County, is $50,976 for a four-person household.

The AMI is set by HUD who has a chart of the various cutoff points for the AMI for the entire region. From the City of Chicago:

For those who have not run into these figures before, several things from this chart might stand out:

  1. The AMI depends on household size. Discussions of housing and affordability can often focus on median household incomes but HUD adjusts for the total number of people in the household. This fits with housing with more space and bedrooms generally being more expensive.
  2. The AMI figures are for an entire region. The Chicago region includes more than 9 million residents and hundreds of municipalities. While the AMI limits for Chicago might differ quite a bit from other regions, there can be quite a bit of variation within the region as well regarding incomes and housing prices.
  3. These income guidelines apply to a number of programs but are not the only metrics that might be used regarding housing affordability.

Chicago rents up at three times the rate of median household income in 2+ decades

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The cost of renting in Chicago has increased in recent years:

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After adjusting for inflation, Chicago’s median household income grew by just 9% from 2000 to 2023. Meanwhile, the city’s median cost for rent and utilities grew by 28%, roughly three times faster, according to a WBEZ analysis of census data.

This particularly affects lower-income residents:

Like Robinson, about 129,000 renter households in Chicago — roughly one-fifth of the citywide total — make between $2,000 and $4,000 a month, according to a WBEZ analysis. About 30% of those households are spending a majority of their income on rent and utilities…

Twenty-five years ago, a majority of the apartments in a dozen neighborhoods would have been affordable for someone making about half the city’s median income, like Robinson. They would have included North Lawndale, South Lawndale, the Lower West Side, the Near South Side, Douglas, Grand Boulevard, Washington Park and Woodlawn. Now, a majority of the rents in those eight neighborhoods are completely out of her reach. For example, after adjusting for inflation, the median rent in the Near South Side community has nearly quadrupled since 2000.

And the causes?

New apartment construction fell off dramatically in the late 2000s, in the early years of the subprime mortgage lending crisis and the Great Recession. “A number of single-family home builders [and] a number of multifamily developers left the sector all together,” Hermann said. “Less housing was built for more than a decade than we’ve seen pretty much ever.”…

The city is also losing housing — in particular, older two- to four-unit apartments that have historically offered more affordable rents for families.

Can leaders – political, business, real estate, etc. – address this issue? Building more units overall could help. Offering more incentives for affordable housing could help. Promoting and incentivizing development throughout the city – and not just areas where developers see the potential for a lot of profit – could help. Can housing be a leading issue to tackle?

Big cities face numerous issues but housing is a foundational concern. Residents need quality housing at prices they can afford. Not having such housing can affect all areas of life, including people’s hope for what their future can be. It can lead to people leaving (hinted at by the end of the article) and limit who can move in. And if the affordable housing shortage continues, the number of units needed only increases.

Even as there appeared there might be some energy in mid-2024 to address housing concerns at a national level, communities need to keep at this and make sure there is affordable housing on the way.

Living in a deserted English church as a “guardian”

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Here is one way those needing lower rents and those wanting to protect empty buildings, such as churches, can find common ground:

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Three people have lived in the deserted cathedral in the past two years, with each occupant — an electrician, a sound engineer and a journalist — paying a monthly fee to live in the priest’s quarters.

The cathedral is managed by Live-in Guardians, a company finding occupants for disused properties, including schools, libraries and pubs, across Britain. The residents — so-called property guardians — pay a fixed monthly “license fee,” which is usually much lower than the typical rent in the same area…

The practice of populating disused properties with guardians is unregulated in Britain and comes with fewer legal protections for the residents than renting. Guardians have also complained of inconveniences and outright hazards, such as no access to drinkable tap water and rickety ceilings…

The practice started in the Netherlands in the 1980s and has long attracted artists, musicians and other creatives in search of enough square footage to do their work, as well as those prepared to live more precariously. For example, in Britain, guardians can be asked to vacate the property with 28 days’ notice, compared with the two months afforded to most private renters…

The UK housing ministry states in its guidance on guardianships that it “does not endorse or encourage” the practice because people “can be asked to live in conditions that do not meet the standards of residential properties.”

This seems like a short-term solution to two big issues facing a number of cities. Where is the affordable housing? How might older but unused buildings be preserved or used again? Each issue is complex. Each would take a long time to address.

In the meantime, what truly happens to these buildings? It seems like they have some use but given the stories shared here, it sounds like they are slowly deteriorating.

And what are the experiences of residents? Based on what is shared here, it sounds like it might be a less than positive experience overall as people are able to get by and not much else.

Are there any cities in the United States that have similar programs and, if so, what are the outcomes?

Who the nice new apartments in Chicago’s northwest suburbs are for

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Multiple suburbs northwest of Chicago have constructed apartments in their downtowns and/or along transportation options. Who lives in these new residences? A VP for a real estate development firm answers:

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Suburbs such as Niles, Des Plaines, Buffalo Grove, Palatine, Wheeling, Elk Grove Village and Rolling Meadows no longer are flying under the radar. And based on strong supply-demand fundamentals as well as greater municipality support, the future looks even brighter for new rental options in the Northwest suburbs…

While those starting their careers continue to make up the bulk of renters, Gen Xers and baby boomers also are drawn to the maintenance-free and resort-like lifestyle renting offers them at a time when they are looking to downsize and enjoy retirement.

And with high interest rates and low for-sale housing inventory, even 30- and 40-year-olds who are in the thick of raising children and typically gravitate to single-family homes have turned toward renting in recent years — both out of necessity and choice.

The city of Chicago’s uncertain political environment and higher taxes also have increased the suburbs’ draw for some people, with rental communities near Metra stops or major expressways providing an appealing alternative for professionals who prefer the slower pace of the suburbs while still enjoying an easy commute.

And while there are suburbs hesitant to embrace rental housing, a growing number of municipalities understand the many economic benefits of new, high-quality rental options — such as increased foot traffic in their downtowns and activating underutilized sites.

If there is demand for housing, developers will want to build but suburbs often want housing that fits their particular goals and character. How will apartments fit into communities often full of single-family homes? What might apartments do to daily life in downtowns and around transportation corridors? Who will live in these apartments?

In my research on suburban development, I have seen discussion and debate involving all three of these questions. Focusing on the last one, the description above highlights the ideal apartment dwellers in suburbs. The first group is young professionals. These residents might be coming off finishing their education and are looking to establish themselves. They may have smaller households. They may not have the financial resources yet to purchase a home or they like the idea of living in a more vibrant location. Then there are those looking to downsize. They want an easier life. They may have owned homes in the past but do not need all that space or the trouble of maintaining a home and property. And “even” those who families may want to rent.

And these are not necessarily cheap or affordable rentals. These are places that are “high-quality” and “resort-like.” Their location near walkable amenities and transportation likely drives up demand and cost.

If the goals were to provide more units at prices accessible to more residents and prospective resident, the apartments might meet with more concern from local residents and leaders who could view them as threats to a particular quality of life and to their property values.

Suburban pattern #1 to watch in 2025: affordable housing

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What will 2025 bring in the American suburbs? One thing I will be watching for are discussions of and actions regarding affordable housing.

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Why this particular concern? We could start with a broad statement: there is a need for cheaper housing in many American metropolitan areas. The rise in housing prices in recent years has priced out many residents from quality housing or living near where they work or residing in places they want to. This is not just true in the most expensive urban areas like Manhattan or San Francisco; there is a need for housing in numerous suburban areas.

At the same time, affordable housing can mean different things in different communities and among different actors. Is affordable housing about providing broad housing opportunities to most people who could live in a region? Or is it for lower-income residents? Or is it for seniors? When suburbs discuss affordable housing, I think they have different populations in mind depending on the local history and context.

The last few decades demonstrated that affordable housing is not a concept many suburban communities welcome. It has particular connotations. It may be perceived as a threat to existing property values. It is for particular residents. Few American suburbanites seem to want to live adjacent to affordable housing, even if they are for the concept in general.

So what might happen in 2025? There surely will be discussions at the federal, state, and local levels about affordable housing. Different levels of government and different actors may want to use different levers to encourage affordable housing. What kind of carrots or sticks might be offered? The 2024 presidential campaigns had different thoughts. Could there be significant shifts either way in the next year? If Americans continue to be concerned about their own economic standing, the issue of housing prices will not go away. But who will act and what might they do?

Adding hundreds of luxury apartments to a shopping mall – and not affordable housing

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Why add affordable housing to the suburban shopping mall when a developer and community can add hundreds of luxury apartments to the mall? Such a plan is under discussion in Skokie, Illinois:

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The Skokie Village Board gave tentative  approval at its Oct. 8 meeting for developers to build hundreds of luxury apartments across three buildings at the upscale Westfield Old Orchard Shopping Center.

The first phase of construction would create 425 apartments between two mixed-use buildings, one five stories tall and one seven stories tall. The second construction phase would be for an additional seven-story building that could be used for more apartments or a hotel, said Stephen Fluhr, Unibail-Rodamco-Westfield’s senior vice president of development…

The additions to the mall were met with criticism by an affordable housing group, which blasted the Village Board for approving plans they saw as having too few affordable apartments.

The first phase would put two buildings in the area of the former Bloomingdale’s retail space in the northwest part of the mall, south of Old Orchard Road and east of Lavergne Avenue.  The developers’ intention is to create a new neighborhood complete with parks, restaurants and spaces for concerts and farmers markets, according to Fluhr. The development is a partnership with the mall’s owner URW and Focus, a development group that is also in the process of building apartments near malls in Vernon Hills and Aurora.

Many malls would like to add housing to their property (examples from the Chicago suburbs to southern California): it makes use of vacant shopping space and provides local residents who might visit stores, restaurants, and entertainment options at the mall.

I would also guess many mall and community would like to add luxury apartments. These apartments will attract certain kinds of residents, those with resources to spend more in the community and contribute to a certain status. Luxury apartments at malls would go along with the idea that only the wealthiest malls will survive.

But, as communities consider affordable housing, why not include affordable housing as part of redeveloped housing at the mall? Many suburbs have limited greenfield development options so redevelopment provides an opportunity for affordable housing. Or affordable housing could provide housing for people working at the mall or working near the mall as shopping malls tend to be close to all sorts of businesses and jobs.

The bigger issue at hand is likely this: how many suburbs are truly willing to add affordable housing? And if they say they want to add such housing or have local regulations that require it, where will they allow it be located?

Combining a new Costco and affordable housing in LA

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Costco plus affordable housing is set to arrive in Los Angeles in a few years:

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An approved upcoming Costco location in South Los Angeles (the Baldwin Village/Crenshaw area specifically) is slated to open in the coming years, and it combines the company’s more-is-more brand with a novel new approach to residential construction. The project, to be built by developer Thrive Living and architects AO, was first announced early last year in a press release that revealed renderings of a mixed-use model with multiple floors, open courtyard spaces and other amenities. All told, the build would encompass not only the Costco store (and necessary parking) but a whopping 800 residential units, including 184 set aside specifically for low-income tenants…

According to real estate analysts CoStar, this entirely new mixed-use model isn’t just something novel for Los Angeles, it “may have national retail implications for Costco.” That could mean smaller footprints, more transit-oriented openings, or Costco itself getting even further into the housing market…

So yes, 800 small apartments can fit on top of a Costco in the middle of Los Angeles, with 23% of those units reserved for low-income residents and all units eligible for Section 8 vouchers. And if done right and embraced by locals, developers, big box retailers and public officials, the project could be a novel model for future build-outs statewide.

It sounds like Costco and the housing units will coexist. Are there ways that they might be more intertwined? I could imagine some deeper partnerships:

  1. Special deals for those living in the development.
  2. Jobs for those living in the development.
  3. Costco block parties for neighbors.

While this development will help provide affordable housing units, it is also interesting how it weaves a big box store into a denser environment. Developers and planners have tried a variety of ways to incorporate big box stores into cities. Is putting the big box store in with housing a new formula for success for both?

Turning down a big proposed warehouse, thinking about affordable housing for certain members of the community

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The spread of warehouses in suburban areas can meet opposition:

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For the second time in less than a year, the Geneva Planning and Zoning Commission is recommending the denial of a request to allow a 719,200-square-foot warehouse on the northeast corner of Kirk Road and Fabyan Parkway.

The commission voted 4-1 Thursday against Venture One Acquisitions LLC of Rosemont’s requests to amend the city’s comprehensive plan for the 55.62-acre site, changing it from rural single-family residential to light industrial, and approving a site plan.

If not warehouses at a site of suburban open space, what else could go there?

Walendziak said the east-side residents do not want more diesel pollution and truck noise.

“What the residents do want is residential,” Walendziak said. “We need affordable housing in Geneva. This is one of the last big sites left. … Housing for starting families, for seniors that they can afford to stay living here in Geneva.”

Commissioner Mim Evans also suggested that housing is the best use for the site.

“We need housing in this town, even if it isn’t technically affordable housing,” Evans said. “Housing is needed everywhere at every price point, at every level of density.”

If warehouses are the enemy – traffic, noise, out of character for a community due to their scale and industrial aspects – then housing may be more desirable. And housing for certain people groups, including families or young professionals starting out and older residents of the community who want to downsize and stay.

It may be helpful to look at the longer trends. Suburban residents and leaders have had heated debates about land use since at least the beginning of the postwar era. Big proposals could generate conversations about what the community could become. Community needs shift over time as social and economic conditions change.

At the same time, I wonder if there is extra urgency these days due to two factors. First, many suburbs have few large parcels left. This means that decisions like those above feel extra consequential. Second, housing prices are high enough in many places that people want to protect their housing values and extend housing opportunities to certain people.

Figuring what happens with this particular property might take years from additional discussions to planning to actual construction.