Tuesday, April 5, 2011

How Is Mixed Income Housing Doing in Chicago?

Last week the last of the Cabrini Green highrises started to come down.  It's strange to drive by that intersection and not see the white towers, but it is a good thing.  I hear Target may be putting a store in that spot, which would be pretty great.  (What I would really love there, though, is an Ikea!)

Under Chicago's 2000 Plan for Transformation, nearly all of the projects around the city came down, and in their place (or around their place or in new areas) came mixed income housing.  These are developments -- some mid-rises, some duplexes, some townhouses -- where a percentage are Section 8 or otherwise government subsidized, a percentage are "affordable," and a percentage are "market rate."  The "affordable" units allow people like teachers, cops, etc. who are working but may not make a lot of income to be able to live in the developments.  Around the Cabrini Green area is a development called Parkside of Old Town. 

You find very little in the news about how the mixed income developments are actually faring.  Are the "market rate" units being sold?  What about the "affordable" units?  The subsidized units there appear to be full.  How many vacancies are there?  Are they having problems selling the "market rate" units?  How is everyone getting along?  Any issues?  Here and there are some articles, where the prevailing theme seems to want to be "oh, it's all wonderful," but underlying there appears to be more to it than that.  One of my friends for a short time rented a "market rate" unit in another nearby mixed income development called North Town Village.  He couldn't wait to leave.  His car got broken into repeatedly, his bike got stolen, he had to deal with trash strewn all over the place, and neighbors who camped out on his shared porch all hours of the day and night partying.  Not a good experience.  You don't hear about experiences like his in the news.  This was happening just last year.

I've been wondering about the vacancy rates at Parkside of Old Town.  It is in a great location -- a few blocks from the Red Line el, a couple of blocks from the main Old Town drag of bars and shops which is one of the best in the city, close to the grocery store, and brand new.  One would think people would be dying to buy in such a place.  That would be wrong, from the little I've been able to find in the news.

Let's start with a little over a year ago, in January 2010:
Parkside was supposed to receive its final $3.4 million in promised TIF dollars after selling 85 percent of its 194 market-rate homes. It’s nowhere near that mark, so the city lowered the threshold to 43 percent and cut the number of Parkside’s market-rate homes down to 177. The project’s 85 sales represent — you guessed it — 43 percent of those 177 units, so Parkside’s getting its cash.

So, as of January 2010, only 85 market rate units had been sold, out of what was supposed to be 194.  Even with the lowering the number of market rate units (wonder if they were lowered to affordable units or subsidized units?), that is only 43% market rate sold.  I've been able to find no information on whether the affordable units are sold out.

This article, dated in May 2010, indicates that from 4Q 2009 until end of 1Q 2010, ten additional units were sold.  It doesn't specify whether they were market rate or affordable.  Assuming they are market rate, that takes us to 95 market rate units sold out of 177.

In June of 2010, prices were slashed:
One-bedroom condominiums are now being offered from $175,000, two-bedroom condominiums start in the $240,000s, and three-bedroom condominiums are priced from the $320,000s. Two and three-bedroom townhomes are priced from the $330,000s. All condominiums include garage parking, and townhomes come with either a one- or two-car attached garage. A variety of condominium and townhome floor plans are available for immediate delivery.

These are amazing prices.

And in March 2011, the prices are still coming down, along with some free grant money.  The Parkside web site urges people to "get off the couch" and buy.  It appears from the web site that a lot of units are still available.  I haven't found a single news story reporting on how many are still available.  Even looking at the real estate listings only turns up one or two units, but that seems to be inconsistent with the Parkside web site.  Obviously a lot of the housing industry is having problems, so that may be somewhat to blame for the slow sales.  (A lot of high rise condo developments are having problems.)  However, condos are still selling around the city, many in locations much worse than this, and with finishes much worse than this.  Could it be -- and could people be afraid to admit -- that market rate buyers simply don't want to live right next door to government subsidized renters?  I imagine at some point there is going to be a comprehensive study about mixed income developments, much like there have been extensive studies about the projects.  It will be extremely interesting to see the long term effects of such developments, and what happens to the market rate units.  At some point, the developers are going to have to do something with them. 

4 comments:

  1. Yeah, I would like to see a long-term study about this too because Richmond has been talking about doing this in some shady parts of town for a long time and I think it's crap.

    Hell no I don't want to live next to a Section 8 renter with 6 kids. I'm not trying to sound stuck up either. Anyone can take a drive through the crap parts of town and see how they treat the renovated Sec 8 housing.

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  2. I agree with you! It's not worth the hassle.

    Out of curiousity after I posted this I dug around to see how sales were going in the SoNo high rise, which was built in 2007-2008, is all market rate, and is fairly close to Parkside. (I can't find when the Parkside units were completed, but I feel like it was at least by 2008.) Some would probably argue that it's not exactly the same neighborhood, but in my opinion it is fairly close. SoNo is one el stop up, a high rise rather than a midrise mix with townhouses and duplexes, but still, new and (I think) considered the same neighborhood. (I believe both are considered Old Town; North Avenue is the border for Lincoln Park, and SoNo is just south of North. Get it? SoNo. So cheesy.) Arguably Parkside is in a slightly better location.

    What I found is that in this 199 unit SoNo building, only 11 units remain unsold from the developer. These units are generally smaller and cost more than the Parkside units, and it looks like parking is paid for separately.

    I think it's pretty telling.

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  3. It is very telling.

    The way I see it - the city wants to create a way to finally make some tax dollars off the real estate the projects are sitting on. So, they tear them down and the Sec 8 people throw a fit. To be politically correct, they make this fluffy sounding deal with a developer to have mixed income housing. The developer has to know the trends. I am convinced that the tax payer is the one getting screwed on this. No developer is going to go into something like this without a guarantee or a major tax credit.
    Also the property values aren't going to be very high, and there will be constant maintenance on the Sec 8 units because they have no respect or gratitude for what's given to them.

    Oh man this pisses me off.

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