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Lion Share of New Construction in Chicago Affordable Only For Affluent Consumers

by Peter Thomas Ricci

The single-family home market for new construction has trended towards affluence, and so has the rental market.

furman-center-new-construction-income-inequality-affluence-rich-rental-housing

The last couple months, we’ve been reporting with regularity on how our nation’s issues with inequality have manifested themselves in new construction, especially new single-family home sales and development.

It turns out, though, that the new construction rental landscape lends itself equally (if not more capably) to that narrative, and our local market here in Chicago is a remarkable case study.

According to new research by the NYU Furman Center, just 6 percent of new construction rental units in Chicago are affordable to lower-income residents, compared with 40 percent for middle-income and 81 percent for upper-income residents. Those numbers are striking for two reasons: one, that’s a shockingly low rate of affordability for Chicago’s neediest households; and two, with 81 percent of units being accessible to upper-income residents, that means that 19 percent of new construction rentals are still out of reach for upper-tier individuals.

Take a look at our graph below for more perspective:

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Comments

  • wesley says:

    this is very simple to explain. when people have to build to the chicago building codes- or any other overbuilt statutes, there is a base cost to the shell and standard infrastructure that doesn’t change regardless of the finish of the unit. If developers put in better appliances or marble baths, that only changes the cost to build marginally, but increases the value of the units more then any other factor besides location. if you build ‘affordable’ units, they cost about the same, but no one really wants to finance a unit with carpet/linoleum and white basic appliances. this is a market distortion due to regulation and mortgage lending policy. politicians and bureaucrats are to blame.

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