Chicago affordable housing: Longtime residents fear hot market could drive them out

Nathan Law

Maritza Bandera did everything she was supposed to do. She graduated high school, went to college, earned a master’s degree, found a career that pays well, got married and had kids. But there’s one thing she and her husband have yet to do: buy a home. And post-pandemic, that’s becoming […]

Maritza Bandera did everything she was supposed to do. She graduated high school, went to college, earned a master’s degree, found a career that pays well, got married and had kids.

But there’s one thing she and her husband have yet to do: buy a home. And post-pandemic, that’s becoming increasingly more difficult — at least in the neighborhood she’s called home for over 25 years.

“It’s heartbreaking to an extent that even someone like myself is being priced out of the area as it relates to homeownership,” Bandera said. “We probably earn double the average salary for our household in the area and we would love to stay here, but it is becoming harder and harder to find a home within our price range.”

Bandera grew up on Chicago’s Northwest Side in Belmont Cragin, a neighborhood where, as in much of Chicago, the housing market is hot. Owning a home in the neighborhood she loves is, she fears, becoming a distant dream.

In June, the median list price of homes in Belmont Cragin was $360,000 — up 19% from June 2020, according to Realtor.com. But the median sale price in the neighborhood was even higher: $375,000, indicating people were willing to overpay to get the home they want.

To stay within their family’s budget, Bandera said she hopes to spend about $250,000 on a home. They could manage $300,000 — but it would be tight.

“I’m always keeping an eye out for homes as I am driving by and I saw these beautifully rehabbed bungalows — don’t get me wrong, they’re gorgeous — but they were up on the market for almost half-a-million dollars,” Bandera said. “I don’t understand who they are building these houses for and how can they even afford that kind of price tag in this neighborhood.”

A house in the 4800 block of West Montana Street is for sale in the Belmont Cragin neighborhood.

A house for sale in the 4800 block of West Montana Street, in Belmont Cragin.
Pat Nabong/Sun-Times

Belmont Cragin, where Latinos make up more than 80% of the population, has a median annual household income of about $51,689 — less than the citywide median of $58,247, according to census data.

Bandera worries the neighborhood she’s called home for decades is at risk of becoming gentrified, like nearby Logan Square. She points to Cook County Health’s new $12 million development at 5501 W. Fullerton Ave. and the Chicago Fire’s proposed $90 million training facility at Hanson Park.

“I am happy these developments are coming here. I mean, Lord knows we need it. But I just wonder how this is going to affect people like me,” Bandera said. “Can we stay here? I hope so, but I’m not sure anymore.”

Bandera’s not even sure her family can stay in Chicago.

Geoff Smith, executive director of the Institute for Housing Studies at DePaul University, said neighborhoods like Belmont Cragin aren’t alone in seeing housing prices rise since the start of the pandemic.

People have been diving into the housing market to take advantage of record-low interest rates, he said, but demand outstripped supply. Fewer homes were being put up for sale and even fewer new homes were being built.

In Chicago, new builds have steadily declined since 2016, and that drop became even steeper during the pandemic.

In 2020, the city approved nearly 30% fewer permits for new construction than in 2019, according to city data. The drop in new permits in 2020 is about 37% compared to 2018.

What hasn’t changed is that new construction continues to be concentrated mostly in North and Northwest Side neighborhoods.

“More times than not, these constructions are happening in densely populated and in more wealthy communities — and it’s not like new homes are being built on empty land,” Smith said. “New constructions in Chicago are usually de-conversion jobs, where they turn a traditional two-flat into a single-family home.”

Smith said converting two-flats into single-family homes also eliminates rental units, driving up the cost of apartments in the area. That can make a neighborhood unaffordable to some longtime residents, pushing them out.

A similar trend could happen with the rising costs of single-family homes in neighborhoods that haven’t been touched by gentrification, Smith said. Families who have worked their way up the economic ladder and are in the position to own a home may not be able to buy one in their own community.

As inventory thins in the Chicago area, Smith said, he expects people could start to look beyond their first-choice neighborhood. More affluent people trying to buy in Logan Square, for example, could get discouraged by repeated bidding wars and may look at nearby Hermosa, Avondale or even Belmont Cragin, where Bandera lives.

Those buyers could offer more than the asking price, leaving a neighborhood’s typical buyer out of luck.

The Institute for Housing Studies also monitors housing affordability. Its Cook County House Price Index measures the quarterly prices of single-family homes.

The report groups neighboring communities and suburbs into 33 submarket categories to see how prices are fluctuating. The latest report, issued in April, compared the fourth quarter of 2020 with the same period in 2019. It found the biggest annual price increases occurred on the South and West sides.

Despite having the bulk of the city’s new construction permits, the North Side’s annual single-family prices either remained flat or even decreased.

According to that index, the areas with the largest increase in single-family sale prices in that time frame were in the submarkets of Englewood/Greater Grand Crossing (23.7%), Humboldt Park/Garfield Park (20.1%) and Auburn Gresham/Chatham (17.3%).

The only markets to see year-over-year price declines were in higher-value, more stable markets. These include Lake View/Lincoln Park (-5.2%), Lincoln Square/North Center (-1.7%) and West Town/Near West Side (-0.8%).

“It’s interesting that the areas that saw a slight dip in sale prices over the year also tend to be areas that have the most new constructions,” Smith said.

A way to combat that is to develop affordable homes and rental units in communities that need it. And indeed, some Chicago neighborhoods are essentially untouched by development, with vast stretches of vacant land. Affordable homes there could help people in those neighborhoods accrue wealth.

But it’s a balancing act, Smith said.

“The problem you run into with a rush of development is gentrification,” Smith said. “There has to be a concerted effort in making sure the development happening is what the community wants and that affordability for everyone remains at the center of it.”

Maritza Bandera and her partner Roberto Parra pose for a picture with their kids (left to right) Arielle, Eliel and Gabriel in front of their home in the Belmont Cragin neighborhood.

Maritza Bandera and Roberto Parra with their children, (left to right) Arielle, Eliel and Gabriel in front of their home in the Belmont Cragin neighborhood. They are renting now and want to buy, but prices in the area are rising.
Pat Nabong/Sun-Times

The Institute for Housing Studies hasn’t yet published its report on the first quarter of 2021, but the National Association of Realtors has, and it shows sale prices continuing to rise.

The median sale price of single-family homes rose at an annual pace of 16.2% — a record high since 1989. The nation’s median sale price was $319,000 in the first quarter of 2021 compared to nearly $275,000 in the first quarter of 2020, according to the National Association of Realtors.

That rate of growth was mirrored in metro Chicago, where the median single-family home prices rose from nearly $262,000 at the end of the first quarter of 2020 to nearly $304,000 at the same time this year.

Samuel Hernandez, a real estate broker in Chicago and surrounding suburbs, said the market in Belmont Cragin has thrived in the past few years but, like many neighborhoods, is especially competitive now.

“The lower scale market is the one that is just unusually tough,” Hernandez said. “It is usually pretty easy to close on a house over the $450,000 mark but anything under $225,000 is just tough.”

Pre-pandemic, Hernandez said, buyers would be able to look at several homes and take their time before buying, weighing the pros and cons of each property. Now, they look at one or two homes, then have to make an offer while still walking through.

“There is definite fatigue for the lower-end buyers because not everyone has it in them to offer $10,000 or even $20,000 over asking price,” Hernandez said. “This isn’t a market for everyone, but I’m just telling people to be patient and we can find them a home that makes sense for them.”

Hernandez said buyers also are realizing it’s no longer possible to find a Northwest Side home priced under $250,000 that’s also “move-in ready.” Maybe on the South Side, he said — and even then, it may need some work.

But the Northwest Side is all Bandera knows, and those rising prices beg the question: How were her parents able to do it decades ago, when they first bought a home in Belmont Cragin?

Both she and her husband make sizable salaries compared to her parents, but the idea of owning a home in the same neighborhood is slipping away.

“Our goal is to stay here because this is all we know and this is where all our family is at,” Bandera said. “But I won’t lie, it may no longer be possible. We are starting to look at some nearby suburbs since owning a home here seems to be such an obstacle.”

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