http://www.chicagomag.com/city-life/May-2016/Well-Off-Millennials-Are-Flooding-Chicagos-Rental-Market/

My commute to work takes me down Milwaukee Avenue through Logan Square and Wicker Park. If you haven’t been there recently, that stretch is practically one long construction zone, in part due to new apartment-building construction. There’s L, for instance, a mixed-use development with a 200-space bike room, a bike-maintenance station, and 120 units that start at $1,575 for a junior one-bedroom and go up to $3,900 for a three-bed. (When the transit-oriented development at 1611 West Division went up in 2013, its 99 apartments went for $1,495 to $3,295.) The Aldi at Milwaukee and Leavitt, next door to the 606, just came down for a 95-unit building due later this year. Logan Square’s “twin towers” will add 213 units.

It’s a lot of new apartments, and if neighborhood trends hold, they won’t be cheap. So, who’s renting these?

Lots of people, it turns out. DePaul’s Institute of Housing Studies has a new report on Cook County’s rental market, and there’s been a dramatic change in recent years among its renters. Here are the top five groups, broken down by age and average median income (AMI), in terms of the raw number of renters. (For reference, Cook County’s average median income in 2010-2014 is $54,828.)

Renters between the ages of 25-34, making between 120 and 200 percent of the area median income—$74,000 to $123,000 in 2014—are now the biggest demographic in the county rental market.

In 2007, that demographic didn’t even make the top five; it consisted of 26,532 renters. That number more than doubled, adding an additional 27,902 middle/upper-middle class renters. Over the same period, renters making 200 percent or more of the area median income nearly doubled, rising from 10,809 in 2007 to 20,056.

And as the new developments suggest, many of those new renters are moving into relatively large apartment complexes.

The supply of units in buildings of five units or more increased by over 82,000 from 2007 to 2014. The increase in single-unit rentals also increased by more than 40,000. What stagnated? The classic Chicago two- and four-flats. Daniel Kay Hertz has written a great deal about this—how medium-density two- and four-flat rentals are being deconverted into luxury multi-unit buildings housing fewer people, or into expensive single-family homes:

But because Chicago’s zoning code fits so snugly over its neighborhoods outside of downtown – so snugly, in fact, that maximum allowed densities are frequently much lower than what already exists – builders have not been able to add much new housing. Instead, they maximize their profits by turning two-flats into luxury two-flats, or into mini-mansions for a single family. As a result, as places like Lincoln Park get more desirable than they’ve ever been, fewer people are able to live there, and its population remains about 40 percent below its peak, depriving the rest of the city of whole heaps of tax money that we might be able to spend on schools, roads, transit, and so on.

I watched this happen on my own block, when I lived on the border of Humboldt Park and Ukrainian Village; at one point, we had simultaneous deconversions from multi-unit buildings to single-family homes going on next door and two doors down. A third was happening kitty-corner to us on the next block. As Chris Hagan reported for WBEZ in March, West Town, Lake View, North Center, Lincoln Park, and Logan Square were vast outliers in terms of combined demolitions and new construction; it’s enough that planners and politicians are concerned about how decreasing density could affect commercial activity in thriving, wealthy neighborhoods.

And Hagan echoed what Hertz wrote:

In addition to demand for access to good elementary schools, there are legal reasons behind the transformation from multi-unit buildings to single-family homes: There’s little to stop a developer or homeowner who wants to deconvert.

The Chicago zoning code allows developers to build single-family homes in any residential area, but adding units requires city approval. That increases costs and complexities for any developer wanting to add density.

It’s not just zoning, though. There are more basic financial reasons why developers are inclined to build larger buildings and skip the two- and four-flats that have historically made up so much of the city’s rental infrastructure.

“From the financial side, particularly for a rental two-to-four, it’s not an easy financial thing to do … in terms of getting financing together, in terms of how you acquire the capital," says Geoff Smith, director of the Institute of Housing Studies. "The way it all shakes out is that it’s far more efficient and far more profitable to do big deals or smaller deals. The two-to-four-unit buildings that are new development are mostly condos.”

Like so much with housing, it goes back to the financial crisis, he explains.

“The default rates on two-to-four [flats] were much higher, because a vacancy on one of those units can be 25 percent, and if you’re relying on that income to pay your mortgage, it makes it a much riskier proposition. During the financial crisis, and even still, the underwriting got much tighter on those types of properties,” Smith says.

More difficult, expensive underwriting favors larger projects, but there are other financial incentives as well.

“When you get to the five-plus unit side of things, you’re in the multi-family, more of a commercial-lending universe,” Smith says. “And from a commercial-lending perspective, if you’re making a loan under like three million dollars, it just becomes really expensive to underwrite, because it’s the same price to underwrite a one-million-dollar loan as it is to underwrite a five-million-dollar loan, effectively, so lenders are just going to underwrite that five-million-dollar loan, because they get more fees from that. The servicing is more lucrative. So when you look at the lending trends, the financing is really going to these larger deals.”

The financial crisis also reduced the number of lenders who were more inclined to finance lower-density rental projects....

i love how the mortgage on my house is less than what i would pay for a "junior one-bedroom"

Why not NYC where people are less xenophobic and tribal

Just before Oregon I lived w 2 other guys on Cortland and Campbell for $900/month 3 bed. Now that same apartment would be closer to the $900 a piece than the old $300 share.

I just cannot understand where this demand comes from. Chicago is a nice city and I love it, but that's because its home. There's a lot of really aggravating bullshit about living here that's convinced me to move once already, and if it wasn't for my personal connection to the people here I wouldn't have come back.

People from Iowa, Michigan, Ohio etc. that are flooding into these neighborhoods (judging by the license plates) dont have that. So why come here? Why not NYC where people are less xenophobic and tribal, or LA for better weather... paying $1000/month for these neighborhoods is fucking insane.

i love how the mortgage on my house is less than what i would pay for a "junior one-bedroom"

It's insane. And you know these people aren't just staying home firing up Netflix.

Crossfit, Brunch, Parson's etc. Shit adds up.

Living it up is awesome. I want to know how they swing it. Factoring all taxes/benefits and 401K I'm taking 56% of gross pay.

High earners are fortunate Social Security hits a ceiling just over $100K but the math still doesn't make sense.

People from Iowa, Michigan, Ohio etc. that are flooding into these neighborhoods (judging by the license plates) dont have that. So why come here? Why not NYC where people are less xenophobic and tribal, or LA for better weather... paying $1000/month for these neighborhoods is fucking insane.

Our city center is far less dense than those across the world. There is plenty of room for more.

Because it is twice or three times more expensive there and you can drive home rather than fly home for the holidays.

It's mildly interesting that Chicago doesn't draw in a lot of Minnesotans. They seem much happier to stay put around the Cities than their Wisconsin/Michigan peers.

Don't these fucking people have student loans?

Pretty interesting to see growing number of multi-family buildings knocked down to construct their suburban oasis within a city neighborhood.

"The dirty secret of operating a new business where an old business used to be is, if you're going to change the culture, it offends everyone who used to be there," Christopher admits. "Step one is change what you carry and raise your prices, because a lot of times a failed bar or restaurant caters to a clientele that doesn't necessarily drive a profitable enterprise." A new crowd of regulars, which is made up of many former customers, frequents the bar that feels like it's been there for decades.

So what is the appeal in drinking in a bar that feels like a spit-shined rusty nickel? Christopher believes, "It's a craving to authenticity, which is a hallmark of this generation, because the things that are new in our time are, for the most part, pretty inhuman. Technological and scientific advancements are where it's at, but holding an iPhone is not the same as holding an Old Fashioned."

http://chicago.eater.com/2016/6/1/11797882/chicago-dive-bar-rescue-feature

Oh brother

I have no idea what the guy is trying to say.

An iPhone is a telephone and an Old Fashioned is a cocktail.

They are indeed not the same. So, I guess I agree?

Dive bars aren’t dives at all. They really should be called “local bars.” What happens is dive bars get categorized as dirty bars, old bars, uncared-for bars. That’s not what a dive bar is. A dive bar is an old historic bar.

Dive bars aren’t dives at all. They really should be called “local bars.” What happens is dive bars get categorized as dirty bars, old bars, uncared-for bars. That’s not what a dive bar is. A dive bar is an old historic bar.

Hey Taffer,
The Lake Marie Lodge tried to call you for some follow-up, but THEY'RE OUT OF BUSINESS.
Rule #1:
If you're going to name a bar after it's attached body of water, try getting the lake name correct. It was on CHANNEL LAKE you dumb fuck. Embrace THAT solution.

Hey Taffer,
The Lake Marie Lodge tried to call you for some follow-up, but THEY'RE OUT OF BUSINESS.
Rule #1:
If you're going to name a bar after it's attached body of water, try getting the lake name correct. It was on CHANNEL LAKE you dumb fuck. Embrace THAT solution.