Patterns of Lost 2 to 4 Unit Buildings in Chicago

The 2 to 4 unit housing stock plays a unique and critical role in Chicago’s overall housing supply by providing affordable rental housing, homeownership, and wealth-building opportunities. More than any other type of rental housing in Chicago, 2 to 4 unit properties are the most likely to offer lower-cost rents and family-sized units and these units make up a substantial portion of the housing supply in Chicago communities of color, particularly the city’s Latinx communities.

In response to concerns raised by local housing and community development stakeholders that these buildings are being lost citywide, a number of IHS research reports and technical assistance projects have highlighted the importance of and pressures facing the 2 to 4 unit housing stock in Chicago.

Building on this work, this analysis uses a unique data set to document the loss of the 2 to 4 stock in Chicago neighborhoods in an effort to understand the different ways that market forces put pressure on this key segment of Chicago's housing market. For more details on the importance of the 2 to 4 stock in Chicago neighborhoods, see The Characteristics of the 2 to 4 Stock in Chicago Neighborhoods report released in tandem with this research.

This analysis finds:

• Every type of neighborhood housing market is losing 2 to 4 unit buildings, but the loss is most acute in higher-cost neighborhoods on the city’s North and Northwest sides. In these neighborhoods, this loss is typically due to the replacement of 2 to 4 unit properties by single-family homes through conversion of the existing building or demolition and new construction. This phenomenon highlights how changing demand for housing, particularly demand for expensive single-family homes, is impacting the overall housing supply.
• In the city’s more affordable, moderate-cost neighborhoods, the 2 to 4 unit housing stock is generally more stable, but losses of 2 to 4 buildings are concentrated in a small number of census tracts with rising values or near ongoing or planned catalytic investment projects. These findings amplify calls by housing advocates regarding the need for proactive policies to preserve the existing lower-cost rental stock before it is lost to gentrification pressures.
• In lower-cost neighborhoods, the loss of 2 to 4 unit stock is most commonly seen through demolition and replacement by non-residential use, often vacant land. This phenomenon highlights the need for investment in both the broader community and the existing housing stock to reverse the tide of long-term population loss, historic disinvestment, and the ongoing legacy of the foreclosure crisis and Great Recession.
• Finally, the analysis shows that lost 2 to 4 unit buildings were far more likely to be associated with a foreclosure filing compared to the remaining, legacy 2 to 4 stock. This finding highlights the vulnerability of this stock, particularly at a time when the COVID-19 pandemic is having a disproportionate impact on lower-wage workers, renters, and small property owners, and raises the specter that the economic fallout of the COVID-19 pandemic could further deplete this unique housing resource.

These findings highlight the need for a comprehensive approach to preserving 2 to 4 unit buildings that 1) recognizes the stock’s critical importance to providing affordable rental housing, homeownership, and wealth-building opportunities in all Chicago neighborhoods and 2) addresses the spectrum of challenges facing these buildings, their owners, and tenants in different market contexts.