Democrats never seem to get it right on housing
When you look at the high cost of housing in Chicago, it’s easy to assume that Chicago officials are doing everything possible to make housing more expensive.
In his excellent essay published earlier this month, Contrarian’s Jordan Powell outlined the city’s housing debacle. This study builds on that insightful article.
But first we need to look back to July at a rare piece of sound journalism from Block Club Chicago, “Why Is It So Expensive To Build Affordable Housing In Chicago?”
Earlier this year, municipal officials, including Mayor Brandon Johnson, attended the ribbon cutting for a so-called affordable housing development, Encuentro Square, which is on the borders of Logan Square, Hermosa, and Humboldt Park in the 26th Ward. Also in attendance were some of the mayor's leftist allies, including that ward's alderman, Jessie Fuentes, as well as Representative Delia Ramirez (IL-3), and then-Cook County commissioner Anthony Quezada, who Johnson appointed to the vacant 35th Ward City Council seat two months later. In the group photo at the ribbon-cutting, most of them sported huge grins, like cats who just devoured a huge taxpayer-fed canary.
Commenting on the development months later, Block Club wrote:
“Encuentro Square cost $67.5 million to build — more than $750,000 per apartment — an exorbitant cost that hampers the ability to build more needed affordable housing, developers and experts said.
‘There’s this perception that when an affordable housing development is really expensive, somebody’s getting away with something,’ said Lincoln Stannard, co-executive director for LUCHA, the affordable development company behind Encuentro with Evergreen Real Estate Group. ‘The reality is, high costs for projects create challenges for anyone and keep us from doing what we want to do. When projects are high cost, they are more complex, take a lot longer and they limit our mission to create as much affordability as possible.’”
Encuentro Square is in the 60647 ZIP code, where according to Zillow, nearly every condominium for sale, none of which are advertised as “affordable housing,” can be purchased for less than $750,000, sometimes for far less. And these dwellings for sale, unlike Chicago's affordable housing developments, receive no taxpayer subsidies.
While COVID-era inflation has caused all construction costs to rise, Block Club Chicago explains costs to build high-rise luxury buildings have not increased as much as the outlays to build so-called affordable in housing in Chicago.
And that's not all.
Block Club added:
"Lesser-known development costs — legal fees, tax credit consultants, design and lawyer fees and environmental costs for high building standards — add to the unit price."
When considering the cost to healthcare, the words of the immortal P.J. O’Rourke come to mind regarding Chicago’s failed affordable housing efforts.
“If you think healthcare is expensive now, wait until you see what it costs when it’s free.”
Government forays into the private market have very expensive outcomes.
In that same article, Block Club cites a Crain’s Chicago Business study about a West Side affordable housing development with even a worse cost-per-unit, $850,000. Half of those costs were linked to regulatory requirements.
Developers seeking municipal funds, which are often initially provided by the federal government, need to complete a Chicago Economic Development and Affidavit Statement (EDS), which includes the requirement any participating company in a project disclose if it ever profited from slavery. EDS research regarding slavery is quite time-consuming and very expensive.
And it’s not just affordable housing that is unaffordable in Chicago. Axios Chicago recently reported, “You’re not imagining it. Rent in Chicago is through the roof and rising faster than in other major cities.”
The average rent cost in Chicago is $2,113 a month, over $100 more than last year.
Chicago is taking baby steps, through its Cut the Tape initiative, to decrease regulations, but it’s not nearly enough.
Detroit — yes, Detroit — has more aggressive plans than Chicago regarding housing. And not just rental properties. Don't laugh. The Motor City is that alcoholic uncle who, after totaling his third car, realizes that a reverse-course change is needed for survival. Detroit’s proposals include some of the reforms mentioned in Powell’s Contrarian analysis, such as allowing homes to be built on smaller setbacks, which means new homes can be constructed closer to property lines. Also, Accessory Dwelling Units (ADUs) would be permitted in most areas, and an expansion of locations where multi-unit homes can be built is also being proposed by the Motor City.
Will that mean more congestion? Of course. Deal with it, because successful cities are more crowded than failed ones.
A century ago, cheap housing was one of the reasons Detroit became the center of the automotive industry. The Roaring Twenties were a boom time for America, and Detroit boomed the most then.
Moderate and conservative candidates in Chicago can learn one lesson from the three-card monte campaign of socialist Zohran Mamdani, who will likely be New York City’s next mayor. Mamdani has made “affordability” a key word for his campaign.
Making housing more affordable can be a winning issue for the center-right. Remember, housing is an issue the Democrats have owned for nearly 100 years.
Employers are probably already struggling with recruiting top talent to Chicago. As Bret Baier pointed out to Governor J.B. Pritzker in a Fox News interview, Chicago has the highest murder rate of America’s 10 most populous cites. Housing costs will be, if they aren’t already, another reason for a recent college graduate to choose a job offer in Indianapolis for instance, instead of one in Chicago.
Expensive housing has many consequences. Here’s just one: Think of an empty-nester boomer couple in Chicago who can’t manage the stairs anymore in their three-bedroom home but are too proud to install a stairlift. After one quick look at the cost of a Chicago condominium unit, they decide to stay put. Meaning there is one less house for sale. Like any commodity, the price of housing is all about supply and demand.
That couple stays in their too-big home until the inevitable fall down the stairs happens.
Chicago, for many reasons, is headed for a serious fall too — unless numerous policy changes are made by Chicago’s next mayor and a radically overhauled Chicago City Council. A council hopefully free of Democratic Socialists like Jessie Fuentes and Anthony Quezada.
Chicago’s DSA aldermen were the brainchild of the City Council’s anti-development Northwest Side Preservation Ordinance, which will end up making housing on the Northwest Side even more expensive — and more run-down. That ordinance is Chicago’s first toe in the water of the doom-spiral rent control pool.
The liberal record on urban housing is shameful. Going back to the construction of high-rise housing projects such as Cabrini-Green and the Robert Taylor Homes, the left has repeatedly failed on housing. It’s time for Chicago’s moderates and conservatives to chart a better and more affordable path.
What needs to be next?
Eliminate the red tape, repeal the Northwest Side Preservation Ordinance, power scrub Chicago’s meddlesome Department of Housing, and build, build, build, and then build some more.
There is plenty of open land in Chicago. Parts of Englewood look like the most barren areas of Detroit.
