By Emily Gray Brosious
Originally published at Gapers Block
June 17, 2014
Cook County’s housing market has been making a slow comeback in recent years. Still, it’s been a fairly uneven recovery. Some neighborhood housing markets have stabilized. Others, not so much.
A new report and interactive map from The Institute for Housing Studies (IHS) at DePaul University looks at current housing market trends and conditions in Chicago and suburban Cook County and shows how the region’s diverse housing stock impacts housing recovery across different neighborhoods.
IHS says understanding neighborhood housing stock is critical for effective policy development.
According to the report, “In the City of Chicago and broader suburban Cook County, knowledge of a neighborhood’s housing stock takes on particular significance because of the diversity of housing types found in the area and the geographic concentrations of particular types of housing in different communities.”
The report identifies small multi-family rental buildings — with 49 or fewer units — as a critical source of housing in Cook County’s low and moderate-income neighborhoods. These buildings were disproportionately impacted by the housing foreclosure crisis, with lower income neighborhoods taking the biggest hits of all, it says.
Limited financing options for this type of building pose barriers to investors who might return these properties to productive use, according to the report. That’s made it harder for these communities to bounce back from the housing crisis.
“Traditionally, the secondary market has not supported financing of investor-owned properties under five units which has significantly restricted the number of lenders able to fund the purchase of two-to-four unit buildings,” IHS reports.
These smaller multifamily rental properties are often more expensive to finance than larger multifamily properties. Additionally, market loans to this type of building are primarily served by community banks that have tightened lending criteria and reduced volume in recent years, according to IHS.
It says investment barriers for small multifamily unit rental properties may be a threat to the supply of affordable rental housing in Cook County.
Communities need investment strategies that respond to the particular challenges associated with the types of buildings in those areas, IHS says.