Key Findings of the Regional Rental Market Analysis
Introduction
Quality rental housing is a crucial part of a healthy housing market and is fundamental to the stability of fami-lies and neighborhoods throughout the region. Renters are a diverse group, from young adults starting out on their own to working families with children to households with special needs to senior citizens looking to sim-plify their lifestyles. A range of rental options is needed for the growing workforce in the region, whether hourly service employees or highly specialized professionals.
In November, 1999, the Metropolitan Planning Council published For Rent: Housing Options in the Chicago Region, prepared by the University of Illinois at Chicago, the Urban Institute, and Applied Real Estate Analysis, Inc., which summarizes seven technical reports and provides new information about the rental housing market in the six-county region, including demographic data, rent levels and vacancy rates, and qualitative informa-tion from focus groups and interviews. For Rent provides the baseline information necessary to craft innovative policies, programs, and investment strategies for the region’s rental housing market. This is one of a series of briefing papers presenting highlights from the Regional Rental Market Analysis focused on particular geo-graphic areas and subjects of interest.
Background
- Approximately 1,024,00 households, representing 38% of all households throughout the six-county region, rented their home in 1999.
- The region’s rental market is at a low 4.2% vacancy rate, well below the 6% measure of a tight market set by the U.S. Department of Housing and Urban Development (HUD).
- While the region’s population has grown by close to 8% (over 500,000 people) between 1990 and 1999, the number of rental units has declined by more than 50,000 units.
- The region’s renters are diverse in their economic status, with about 11% of all renter households earn-ing annual incomes in excess of $76,000 and approximately 50% earning less than $32,000 per year.
- Between 264,000 and 395,000 entry-level workers regionwide earning less than $30,000 per year cannot afford to pay more than $750 per month for rent (the recommended 30% threshold for income spent on rent). In many parts of the region, including the high job growth areas of DuPage County and north suburban Cook, the average cost of a two-bedroom apartment ranges from $859 to $883. Commuting from lower-cost areas can take up to 90 minutes each way.
- Regionwide, there is a deficit of 153,000 units affordable to families earning less than $20,000 per year.
- Community resistance to apartments was consistently mentioned as the primary barrier to the devel--- opment of rental housing.
- This resistance to rental housing is often reflected in local zoning ordinances that limit multi-family housing.
- Inflexible building codes, lengthy permit review periods, and high land costs are additional barriers preventing local developers from meeting the region’s strong demand for rental housing.
- Cook County’s property classification system taxes rental properties with more than six units at more than double the level of single-family homes. According to the Institute for Real Estate Management, real estate taxes on large multifamily buildings as a percentage of total expenses average 27.6% in Chicago versus 15.7% nationally.
- Condominium conversions have reduced the supply of rental housing in parts of the region.
- Limited public investment also makes it difficult to develop rental housing attainable for entry-level workers and other lower-income families.
- Conducting outreach and education to public officials and to citizens about the need for housing options.
- Creating project-based subsidies out of a portion of the region’s tenant-based housing vouchers.
- Expanding the various housing trust funds that underwrite project costs and tenant rents.
- Making public and private dollars available for mortgage payments to support home ownership, thus reducing demand for rental housing.
- Increasing federal funding for public housing.
- Tying new initiatives to existing affordable housing production programs. For example, 10% of apart ments created using public funding could be earmarked for tenants needing an additional rent sub-sidy provided by Housing Choice Vouchers (HCV) or housing trust funds.
- Lowering the assessment level of rental housing in Cook County.
- Expanding exception rents to allow HCV participants to live in higher cost job-rich communities.
For Rent: Housing Options in the Chicago Region and the seven technical reports are available from the Metropolitan Planning Council’s web page, www.metroplanning.org.