Chicago’s existing naturally occurring affordable housing stock decreased over 10% in the past decade, highlighting the need for continued tax credit-based development to provide housing to Chicago’s most vulnerable tenant populations. The Preservation Lab, an urban planning research effort by DePaul University and Preservation Compact, researched the changing housing landscape. They found that from 2012 to 2019, the total stock of existing affordable rental housing in Chicago dropped 10% while in the same period, overall rental housing supply increased 4%. This shows a prioritization of market rate developments focused on larger multifamily projects in high cost of living neighborhoods in the city, targeting higher income tenants while oftentimes eliminating lower-cost housing stock on the site.
This is not the only way that non-tax credit affordable housing stock has been lost. In many scenarios, the appreciation of property in a neighborhood as it gentrifies and subsequent rent increases prices the unit out of consideration for lower-income tenants. In fact, the share of units with gross rent of $900 or less decreased from 40.4% in 2010 to 18.1% in 2019. In addition, higher rates of ownership changes for the properties create a scenario in which more units become owned by newer investment groups, which seek immediate returns on their property and the higher valuation that they had to pay. All of these factors create a current housing landscape in which market forces are driving developers away from existing, cheaper stock for lower-income tenants. This highlights the need for the development of affordable housing through the use of the Federal LIHTC and state affordable housing tax credit programs, which create permanent supplies of housing for the most vulnerable populations in Chicago.
Clocktower is ready to help all Chicagoland clients looking to build needed units while using tax credits for preservation work or for new construction. If there are any questions or similar projects seeking a tax credit equity source or a path for tax credit eligibility, please reach out to David Curtis at (978) 440-0742, or email him at DCurtis@ClocktowerTC.com.