Op-Ed: Chicago's Housing Providers Scream “Uncle!”
May 25, 2021

The struggles across our economy have been sadly documented these past 14 months. But rental housing providers have endured not only the economic challenges from the pandemic, but also an onslaught of ill-conceived legislation that is causing a crippling effect on the Chicago metropolitan area’s housing industry. Left on its current course, these policies will have disastrous consequences.

According to a recent survey of rental housing providers owning approximately 60,000 apartment units throughout the Chicago area conducted by the Neighborhood Building Owners Alliance and Essex Realty Group, Inc., 27% of respondents reported rent collections below the industry standard for breaking even; roughly half of housing providers have tenants more than 180 days in arrears; and approximately 9% of all rental payments for the past 12 months are past due; and 65% of those surveyed anticipate making fewer capital improvements. It is important to note that approximately three quarters of the survey respondents are small and mid-sized housing providers who own fewer than 100 rental units.

In addition, rental housing providers received a gut punch from the eviction moratorium, which forced housing providers to endow a social safety net that should have been addressed by public programs. Policy makers have not required grocery stores or pharmacies to provide critically needed services for free. Moreover, the bailout monies now earmarked for rental assistance reflect only a fraction of the amounts past due.

On the legislative side, the impacts are worse. The far-left factions of the City, County and State government are making operating housing an absolute mess. These laws are injuring communities and driving away investment capital. Just a few examples include limiting criminal background checks and sealing eviction histories which are important tools in the resident application process, and implementing draconian punishments for minor clerical errors in the handling of security deposits.

The coups de gras is that there is rising support in Springfield to lift the state ban on rent control. It’s not that state legislators believe that rent control is wise. Instead, they feel it is politically easier to let municipalities decide for themselves whether to implement rent control. If the state ban is lifted, Chicago’s socialist and progressive City Council caucuses will undoubtedly seek to impose a disastrous rent control policy. Placing government controls on rental rates may be politically popular, but these policies have been disastrous for the few cities where they have been implemented.

It is widely understood that many of the housing challenges facing the city are supply related. Rather than enact zoning policies that promote prudent development, the City Council just did the exact opposite, enacting legislation requiring new developments set aside 20% of the units for low-and-moderate income residents. While the intent to create more affordable housing is unquestionably a good thing, such legislation should use incentives rather than restrictions. This new legislation will lead to a material decline in new multifamily development which will only exacerbate the housing shortage in Chicago.

The image of the greedy landlord is as unsympathetic a figure as the unscrupulous auto mechanic or the Green Bay Packers fan. There are bad housing providers, and I have some great friends who are Packer’s fans, but they are the exceptions to the rule. The vast majority of housing providers are small and medium size businesses who take tremendous pride in their properties and are dedicated to customer service.

If this absurdity does not stop, it will not merely be housing providers who suffer. Residents will see a deteriorated housing stock, neighborhoods will be impacted, and there will continue to be less investment capital attracted to Chicago. If you’re a socialist policy maker, you might still view this outcome as successful because everyone will then have equally lousy housing. But if you’re someone who wants to see Chicago recover from the pandemic and thrive, it is time to stop crushing the industry that houses our citizens. Uncle!!!

Essex Realty Group, Inc. is a leading mid-market brokerage firm that specializes in the sale of investment real estate throughout the Chicago metropolitan area. Visit www.essexrealtygroup.com for access to our multi-family listings and more information.