How Foreclosures Have Impacted Chicago
Last month, I wrote a post about the number of vacant properties in Chicago and how long those properties had been vacant.
Now, to elaborate on that post, I have found an article in the Washington Post that discusses what that actually means for Chicago. The Institute for Housing Studies at DePaul University has analyzed the housing stock in Chicago. It has found that the ubiquitous three-flat is 26% of Chicago's overall housing stock and about 50% of the city's multi-family residential units. In some neighborhoods, these two to four unit builidings are 70% of the housing stock.
These buildings are also in foreclosure. Between 20-40% of three-flats are in foreclosure in some neighborhoods. Those neighborhoods tend to be on the west and south sides of the city. This should come as no surprise to anyone following the housing market in Chicago. While areas like Lakeview are seeing prices coming back to their pre-2007 levels, the predominantly minority-populated south and west sides are stagnating with urban blight and zombie properties.
Even more problematic is the fact that many of these three-flats are now in various states of disrepair and ruin due to the fact that nobody is maintaining them. The property owners are largely absent and the banks refuse to finish the foreclosure process, which leaves the properties stuck in limbo. To make matters worse, lenders aren't giving construction loans in these neighborhoods, so there's not much hope of rehabbing the structures.
The trend in building these days is to build higher-density apartment buildings because they are more cost-effective for the builders and investors. Unfortunately, they are also more expensive for the renter, which creates a problem for Chicago. As more three-flats leave the available housing pool, they are not being replaced with new three-flats. Without some way to stabilize this trend, it is very possible that affordable rental housing in Chicago will be much harder to come by in areas where affordable rentals are needed the most.
While the city has attempted to force banks to maintain these properties, it does not apppear that there is a clear strategy for how to handle the shrinking pool of two to four unit apartment buildings.