In 2007, The Real Estate Center used a $3.5 million grant from the John D. and Catherine T. MacArthur Foundation to form the Institute for Housing Studies (IHS), a research center responsible for two initiatives within the Preservation Compact*: the Rental Housing Data Clearinghouse, which gathers and analyzes data on rental property and neighborhoods—tax assessor data, multiple listing service data, crime data, foreclosure data, school data, health data—and the Interagency Council, which collaborates with federal, state, local, and county officials to identify at-risk properties, devise intervention strategies, and connect owners to resources.
“Is the amount and quality of affordable rental property in Cook Country secure and stable?” asks Marti Deuter, director of the Data Clearinghouse.
“Today, there’s a huge gap between demand and supply, between people looking for rental housing and the availability of well-maintained, priced-right units. Our work is helping make sure that gap isn’t getting wider.” Three years ago, this gap was caused by the gentrification of neighborhoods and the surge in condominium development. Now, its source is the weakened economy, the increase in foreclosures, and a general decline in property maintenance.
In its most recent study, “The Multifamily Housing Market and Value-at-Risk Implications for Multifamily Lending,” the IHS reports that last year prices had dropped 46 percent for small rental buildings from their peak in 2006 and 26 percent for large rental properties from their peak in 2007. As property values fell, new multifamily building foreclosures continued at a record pace, a trend forcing lenders to “pretend and extend” delaying foreclosures for about $1.5 billion of multifamily mortgage debt in Cook County. In fact, falling property values in the county have put more than $13 billion multifamily mortgages (or 30 percent) at risk of default.
“Multifamily foreclosures are not receiving as much attention as single-family foreclosures, but they should,” says the study’s author, James D. Shilling, the Michael J. Horne Chair of Real Estate Studies at DePaul. “More than 32,000 units in the Cook County rental market are impacted by foreclosures currently under way. And this is not just a Chicago issue. The same trends are happening in New York, Atlanta, San Francisco, Phoenix, Los Angeles and other cities.”
Susanne Cannon, Douglas and Cynthia Crocker Endowed Director of The Real Estate Center, agrees: “The research we’re doing is hugely important—it’s the first time anyone has tried to draw a comprehensive picture of the rental housing market in Cook County. What are the implications for a community if rental property disappears or is hard-to-find, run-down, or too expensive? Everyone needs to care about that.”
Armed with good data, the Interagency Council improves strategy coordination and information flow among governmental agencies dedicated to saving this housing. “Saving good properties is more efficient than building new ones,” says Stacie Young, director.
“We’re working at the property level to get a picture of what’s happening: Which buildings are at risk? What can be done to preserve them? Once we have the answers, we coordinate the use of resources. For example, we might steer owners to appropriate stimulus or other funds so they can keep their buildings in good repair.”
Two examples of recent activities suggest the Council’s outreach to owners: 1) an Owners Forum attended by more than 200 owners, where panels covered topics from new public resources and energy programs to multifamily finance and best management practices; and 2) two workshops for multifamily owners with presentations from the Cook County office that administers the Weatherization program (the federal government’s economic stimulus bill included $200 million in weatherization funds for Cook County), as well as representatives from the Cook County Energy Savers Program. Of the multifamily buildings now being considered for funds, representatives from the vast majority of those buildings attended the workshops.
“Our work is having a meaningful, real-world impact,” says Cannon.
* The Preservation Compact brings together the region's public, private, and nonprofit leaders to address the loss of affordable rental housing stock in Cook County. In addition to DePaul University, the partners of the Preservation Compact partners include Local Initiatives Support Corp./Chicago, Chicago Community Loan Fund, Community Investment Corp., Center for Neighborhood Technology, Chicago Department of Community Development, Illinois Housing Development Authority, U.S. Department of Housing and Urban Development, Chicago Rehab Network, Sargent Shriver National Center on Poverty Law, Metropolitan Planning Council, and the Cook County Assessor’s Office.