0
0
0

The politics of housing in Chicagoland

by Chicago Agent

Applying pressure to the already pressed

In August of last year, Hoist Liftruck, a local material handling equipment manufacturer, moved 500 Illinois manufacturing jobs to Indiana. When the Illinois Policy Institute asked the company’s president and CEO, Marty Flaska, why the jobs were leaving, he said: “If I didn’t have the worker’s compensation issue and the (property-tax) issue, I probably never would have even considered moving.”

Illinois is one of the least business-friendly states in the country, according to the CNBC Global CFO Council. And last year, The Tax Foundation said that our property tax climate is among the nation’s five worst.
Fiscal uncertainty and bundled tax increases have put Chicago’s business community on edge, Bernardoni says. In the parts of the city that need development the most, businesses have little incentive to set up shop.

“Economic development policies need to start finding their way into the neighborhoods west of Western Avenue and south of Roosevelt Road, where home prices are flat in a lot of cases,” he says. “Economic development is not a sexy issue, but it’s a huge one in those areas nonetheless. The fact of the matter is, people do not want to move into communities where there are no stores.”

Granted, some suburban communities, like Lake Zurich, have enjoyed modest upticks in development. According to The Chicago Tribune, the retail vacancy rate in Lake Zurich has dropped sharply from Q4 2013’s 11.64 percent to 5.6 percent in Q2 2016, a number that is also much lower than the overall Chicago area’s 10 percent. Among other factors, the village’s location and efficient application process have been credited with aiding development.

And for its part, the city is not incapable of uplifting blighted neighborhoods. Last year, the 606, a 2.7-mile walking, running and biking trail, opened in Chicago’s Northwest Side and helped boost single-family median home prices in Humboldt Park by 62 percent to $138,500. Chicago magazine called the block of Humboldt bordering the 606 the neighborhood’s “hottest.”

Home prices in the area still trail Cook County’s median home price of $213,000, but the improvements and increased foot traffic are helping push forward other developments. Forgivable loan programs have been implemented to prevent locals from getting priced out of their longtime homes.

But the narrative playing out in Humboldt Park is not a familiar one in many the city’s underserved parts.

For instance, between 2012 and 2014, only 13 mortgages were issued in Riverdale, one of Chicago’s low-income neighborhoods, according to a Chicago Urban League analysis. From 2005 to 2014, mortgage activity in East Garfield Park declined 84 percent. Those shortfalls threaten commercial interest.

“Flat home sales and prices, low transfer tax revenues – those are all things retailers look at when determining where to set up shop,” Bernardoni says. “As we approach the 2020 Census, we need to focus on those areas to strengthen commercial appeal.”

But there’s a problem: homebuyers are not just avoiding those neighborhoods. Residents are also leaving them.

Demographer William Frey told the Chicago Tribune: “It’s a lot of younger blacks feeling, ‘I don’t want to grow up in this city neighborhood that my parents and grandparents lived in. I have the opportunity to move to the suburbs.’” Why are they leaving? It’s not because of a lack of grocery stores or walking trails. Those luxuries have always been absent. They’re leaving because they’re scared.

“My fear is too strong,” said South Side native Tenisha Bell in an interview with the Chicago Tribune. “I wouldn’t be comfortable letting (my son) play basketball. I wouldn’t want him to go to the basketball court. I wouldn’t want him to walk to the corner store. There’s so many things that I’d just be afraid to let him do.”

It’s a fear that has spread beyond the borders of the neighborhoods from which it emanates.

“We’ve hit 500 murders and tripling that in terms of total shootings. It’s the headline story on every newscast,” Branch says. “It’s not just one or two neighborhoods; it’s across the city. Everyday I have a client ask me, ‘is this neighborhood safe?’”

It’s another source of economic instability in the city, he adds. It keeps homebuyers from investing in neighborhoods that have a “reputation,” whether earned or not. And from that lack of residential investment comes an even wider deficit in commercial investment.

The way NAREB President Cooper explains it, it’s almost paradoxical – unsafe neighborhoods beget more unsafe conditions, he says.

“We need to learn from our history. Neighborhoods don’t transition unless the people living in them have a vest interest, which comes from ownership,” Cooper says. “I’m not saying crime and murders are caused solely by a lack of homeownership, but they’re a symptom of economic conditions. We see it in every major city.”

Read More Related to This Post

Comments

  • Dave Hanna says:

    Outstanding article. Perhaps in the future you can include some comment on Chicago’s conforming loan limit being the same as Topeka, Kansas while our cost of living is more like San Francisco’s. Our conforming loan limit is 43% lower, and has a profound impact on access to mortgage funding above $410,000.
    You have done a great job outlining the complicated landscape and the many challenges to getting to a truly healthy real estate market both in the city and the suburbs.

Join the conversation

New Subscribe