An analysis of 2007 foreclosure filings shows that 35 percent, or over 4,800 foreclosure filings, were on 2- to 6-units multifamily properties. Communities with the highest concentrations of foreclosures on 2- to 6-unit properties include West Garfield Park, East Garfield Park, Austin, Humboldt Park on the West Side and New City, Englewood, and West Englewood on the South Side

Geoff Smith

English

IssueLab

   Woodstock Institute                                                                                 May 2008     Introduction  The foreclosure crisis in the City of Chicago impacts not only the market for single family homes, but also the market for affordable rental housing.  In Cook County, declining access to affordable rental housing has a been a critical concern for a number of years.  In 2005, 42 percent of the rental housing stock in Cook County was considered to be affordable.  This was a sharp reduction from previous years.  Between 1990 and 2005, Cook County’s supply of affordable rental housing decreased by an average of 9,000 units each year.  This decline was due to factors such as condominium conversions, demolition, or previously affordable units increasing rents to market rate.  Although the demand for affordable rental housing in Cook County has also declined in recent years, this decline has not been as sharp as the decrease in supply.   In 2000 it was estimated that the demand for affordable rental housing in Cook County exceeded the supply by roughly 34,000 units.  By 2005, this imbalance had increased to 114,000 units.1  In addition to these trends, rising levels of foreclosures are adding stress to the already strained affordable rental housing market.    A report by Harvard’s Joint Center for Housing Studies showed that nationally the recent rise in mortgage foreclosures has altered the supply and demand dynamics in the rental market.  Foreclosures have forced many families to leave owner-occupied housing for rental housing to fill a temporary or a long term need for shelter.  This increased demand for affordable rental housing has not been met by an increase in supply, and, in fact, a significant portion of the rental housing stock is also threatened by foreclosure.  Data from the Mortgage Bankers Association shows that 20 percent of national foreclosure actions in 2007 were associated with small, multi-unit properties.  These properties make up a substantial share of the rental market in many urban areas.  Foreclosures on these types of properties impact the rental market not only by reducing the number of rental units, but also by forcing tenants of those buildings back into the market for rental housing.  In most markets, the foreclosure process is lengthy and can prevent these properties from returning to the rental housing inventory for years.2     The Small Multifamily Housing Stock in Chicago  The housing stock in the City of Chicago is made up of a diverse set of buildings.  In mortgage lending terms, a “single family” building is considered a site built structure with one-to-four housing units or a condominium.  For the Cook County Assessor, the category of residential, or “single family,” properties is made up of a number of different types of structures.  The majority of these structures are single unit buildings such as stand-alone, one- or two-story houses; town homes; and row houses.  However, the same property class also includes condominiums and 2- to 6-unit buildings.    Small multifamily buildings make up a large share of the overall rental housing stock in the City of Chicago and Cook County.  A recent study of rental housing in Cook County found that 34 percent of renters in the county resided in 2- to 4-unit buildings and 19 percent in 5- to 9-unit buildings.  By contrast, single family detached homes were 8 percent of the county’s rental stock, and buildings with 50 or more units provided 17                                                  1 The Real Estate Center at DePaul University. The State of Rental Housing in Cook County: Current Conditions and Forecasts. Chicago, IL: The Real Estate Center at DePaul University. In this report, affordable housing was defined as housing costing less than 30 percent of the monthly income for a family of four earning 150 percent of the poverty level of income.  In 2005, this translates to income of $29,957 and rent of $749 per month.  2 Joint Center for Housing Studies of Harvard University. 2008. America's Rental Housing - The Key to a Balanced National Policy. Cambridge, MA: Joint Center for Housing Studies.  Foreclosure Crisis Impacts Chicago’s Rental Housing Market percent of the stock of renter occupied units.3  As opposed to larger multi-unit buildings which can have hundreds of units and are often owned by investor groups and run by management companies, these smaller multi-unit buildings are often owner occupied or owned by individual investors who manage and maintain the properties themselves.     Foreclosures on Small Multifamily Buildings  In 2007, a substantial share of the residential properties with foreclosure filings in the City of Chicago were on small multifamily buildings.  Overall in 2007, there were 13,872 properties with foreclosure filings in Chicago.  Figure 1 breaks out the distribution of these foreclosures by property type.  It shows that over 35 percent, or 4,822 foreclosure filings, were on 2- to 6-unit multifamily properties.  Depending on the number of units in each property, these foreclosures could impact between 9,644 and 28,923 housing units.  Looking at other property types, nearly 53 percent of foreclosure filings were on one unit buildings and 12 percent were on condominiums.  Figure 1.  City of Chicago Residential Foreclosure Filings by Building Type, 2007  52.8%35.1%12.1%1-Unit Building 2- to 6-Unit Building Condominium                                                Source:  Woodstock Institute analysis of data from Foreclosure Report of Chicago  Foreclosures on small multifamily buildings were largely concentrated in certain communities.  Figure 2 maps the geographic distribution of 2007 residential foreclosure filings by property type in the City of Chicago.  It shows that the areas with the highest concentrations of foreclosures on 2- to 6-unit properties were located in neighborhoods on the West and South Sides of Chicago.  Community areas with the highest concentrations include West Garfield Park, East Garfield Park, Austin, Humboldt Park on the West Side and New City, Englewood, and West Englewood on the South Side.  Areas along the lake had the highest concentrations of foreclosure filings on condominiums.  These include areas such as Near North Side, Edgewater, Uptown, and Lincoln Park.    Figure 3 breaks out the foreclosure filings in each Chicago community area by type of property and ranks the community areas by the share of 2007 foreclosure filings that were on 2- to 6-unit buildings.  In West Garfield Park, over 86 percent of the 2007 foreclosure filings were on 2- to 6-unit buildings, and in North Lawndale nearly 80 percent of the 2007 foreclosure filings were on 2- to 6-unit buildings.  The Loop and Near North Side had the highest percent of foreclosures that were on condominiums.  In the Loop, over 98 percent of                                                  3 The Real Estate Center at DePaul University. The State of Rental Housing in Cook County: Current Conditions and Forecasts. Chicago, IL: The Real Estate Center at DePaul University. Page 23627612656 6242394131353233823252037713611127669465253544943757274454455124579101415 161718 19212224282930 3437 384047 48505157585960636465 6667 68707173Figure 2.  Chicago Residential Foreclosure Filings by Property Type, 20072- to 6-Unit Building1-Unit BuildingCondominiumForeclosure FilingsCommunity Areas1. Rogers Park2. West Ridge3. Uptown4. Lincoln Square5. North Center6. Lakeview7. Lincoln Park8. Near North Side9. Edison Park10. Norwood Park11. Jefferson Park12. Forest Glen13. North Park14. Albany Park15. Portage Park16. Irving Park17. Dunning18. Montclare19. Belmont Cragin20. Hermosa21. Avondale22. Logan Square23. Humboldt Park24. West Town25. Austin26. West Garfield Park27. East Garfield Park28. Near West Side29. North Lawndale30. South Lawndale31. Lower West Side32. Loop33. Near South Side34. Armour Square35. Douglas36. Oakland37. Fuller Park38. Grand Boulevard39. Kenwood40. Washington Park41. Hyde Park42. Woodlawn43. South Shore44. Chatham45. Avalon Park46. South Chicago47. Burnside48. Calumet Heights49. Roseland50. Pullman51. South Deering52. East Side53. West Pullman54. Riverdale55. Hegewisch56. Garfield Ridge57. Archer Heights58. Brighton Park59. McKinley Park60. Bridgeport61. New City62. West Elsdon63. Gage Park64. Clearing65. West Lawn66. Chicago Lawn67. West Englewood68. Englewood69. Greater Grand Crossing70. Ashburn71. Auburn Gresham72. Beverly73. Washington Heights74. Mount Greenwood75. Morgan Park76. O'Hare77. Edgewater	 2 MilesPage 33.7%3.9%4.2%4.8%5.1  %6.0%6.0%7.2%7.5%7.9%9.7%11.1%1 3.0%1 3.8%1  4.3%1 4.7%1 6.7%1 6.7%1 6.8%1 7.2%1 8.2%1 8.5%1 9.0%20.0%22.9%23.9%24.2%25.2%25.6%27.4%27.4%28.4%28.6%29.4%33.3%33.3%34.4%34.5%34.6%37.3%37.9%38.7%40.9%41.9%42.8%43.9%46.7%49.2%49.4%50.0%51.5%52.0%53.4%57.3%57.6%58.4%59.4%59.9%64.6%65.7%66.7%70.3%78.0%79.3%79.5%86.6%98.3%1 00.0%94.6%14.8%95.6%4.4%96.6%82.7%84.4%94.4%92.9%92.3%90.5%26.0%92.8%86.3%92.1 %89.3%83.3%26.0%86.2%3.6%6.4%24.4%82.7%83.2%8.6%77.3%81 .5%28.9%70.8%77.1  %75.8%26.3%1 8.0%1 1.0%72.6%66.3%67.9%39.7%46.8%66.7%66.7%65.4%48.6%62.7%38.1 %62.1 %56.6%50.0%39.5%1 9.7%34.1 %53.3%47.1 %48.9%1 4.3%25.0%1 8.0%46.0%43.1 %41.0%28.8%1 9.1 %40.6%38.2%35.4%22.5%33.3%29.7%1 3.1 %20.7%1 9.5%1 2.9%49.5%35.1%86.7%2.7%52.8%8.9%11.8%1.9%22.6%1 3.5%3.4%30.5%25.0%36.3%3.7%22.0%37.5%1 8.6%9.1 %4.7%24.6%12.1%2.7%1 6.9%23.8%31.7%3.7%6.3%63.4%56.8%49.5%9.2%52.1 %4.5%74.1 %59.0%78.9%82.1 %61 .0%5.6%68.0%6.3%3.6%2.6%2.4%1 1 .7%1 3.6%92.3%83.6%3.9%96.8%1 3.3%98.5%1.7%2.0%1.4%0.0%1 .0%0.6%0.0%0.2%0.2%1.7%2.0%1.7%1.0%0.5%0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%LoopEdison ParkM ount GreenwoodRiverdaleNear North SideAshburnNear South SideM organ ParkUptownHegewischNorwood ParkClearingGarfield RidgeBeverlyForest GlenWest LawnHyde ParkWashington HeightsDunningSouth DeeringAvalon ParkM ontclareKenwoodPullmanO'HareLakeviewDouglasCalumet HeightsRoselandEdgewaterWest ElsdonWest PullmanNear West SideJefferson ParkBurnsideAuburn GreshamWest RidgeRogers ParkLincoln ParkGage ParkPortage ParkChathamLincoln SquareSouth ShoreEast SideArcher HeightsChicago LawnIrving ParkBelmont CraginCity of ChicagoAlbany ParkWest EnglewoodHermosaOaklandNorth ParkGrand B oulevardNorth CenterM cKinley ParkGreater Grand CrossingSouth ChicagoWashingon ParkArmour SquareWest TownAustinBridgeportEnglewoodLogan SquareWoodlawnBrighton ParkHumboldt ParkSouth LawndaleAvondaleFuller ParkNew CityEast Garfield ParkLower West SideNorth LawndaleWest Garfield ParkFigure 3.  Chicago Community Area Foreclosure Filings by Property Type, 2007                           Condominum1-Unit2 to 6 UnitPage 4foreclosure filings were on condominiums, and in the Near North Side, nearly 97 percent of foreclosure filings were on condominiums. Community areas Riverdale, Mount Greenwood, and Hegewisch all had a high percent of foreclosures that were on one unit, single family structures.1    A number of the community areas that experienced the highest levels of foreclosures on small multifamily buildings are lower-income areas with high minority populations that recently experienced a decline in the number of  rental housing units.  Table 1 shows the top ten community areas by number of foreclosures on 2- to 6-unit buildings and the range of possible housing units impacted by these foreclosures.  All the community areas in the top ten are lower-income community areas with high minority populations, and most experienced declines in renter occupied housing units between 1990 and 2000.  Foreclosures on 2- to 6-unit buildings are likely to exacerbate these declines.  For example, between 1990 and 2000 North Lawndale experienced a 14.4 percent decline in the number of renter occupied housing units.  In 2007, North Lawndale had 240 foreclosures on 2- to 6-unit buildings representing nearly 80 percent of the foreclosures in that community area.  These foreclosures have the potential to impact between 480 and 1,440 housing units, depending on the size of the buildings in foreclosure.   Table 1.  Share and Number of 2007 Foreclosures on 2- to 6-Unit Buildings and Change in Renter Occupied Housing Units, 1990-2000  Number of Change in Foreclosures Renter Occupiedon 2- to 6-Unit Housing UnitsBuildings, 2007 If 2-Unit If 6-Unit 1990-2000Austin 421 842 2,526 3.2%New City 308 616 1,848 -0.2%Englewood 295 590 1,770 -16.7%West Englewood 253 506 1,518 -5.2%Humboldt Park 248 496 1,488 -2.5%North Lawndale 240 480 1,440 -14.4%West Garfield Park 188 376 1,128 -7.1%Greater Grand Crossin 185 370 1,110 -2.6%South Chicago 176 352 1,056 -0.6%Chicago Lawn 176 352 1,056 8.1%City of Chicago 4,822 9,644 28,932 0.5%Possible HousingUnits ImpactedRange of  Source:  Woodstock Institute analysis of data from Foreclosure Report of Chicago and Chicago Rehab Network  2003 Affordable Housing Fact Book   Conclusion  Going forward, it is critical that policy makers consider the impact of the foreclosure crisis on the rental housing market.  Foreclosures on 2- to 6-unit buildings made up over 35 percent of the foreclosures on residential properties in the City of Chicago in 2007.  These types of buildings make up a substantial share of the overall rental housing market in the city.  Additionally, many of the community areas with the highest concentrations of foreclosures on small multifamily buildings are also those that have seen the largest recent declines in rental housing units.  As the number of foreclosures on small multifamily properties grows,  mechanisms need to be in place to facilitate the process of municipal governments, non-profit agencies, and the private market acquiring these properties and keeping them active in the rental market.  Without such vehicles, large inventories of potentially usable buildings will remain vacant, and the affect of foreclosures will continue to threaten community stability.                                                     1 Appendix I includes data on foreclosures by property type for each Chicago community area.  Appendix II includes data and a map detailing foreclosures by property type in Cook County. Page 5Appendix I -City of Chicago Residential Foreclosure Filings by Property Type, 2007ShareNumber Community Area 1-Unit 2- to 6-Units Condominium NA Total Small Multifamily*1 Rogers Park 20 28 63 1 112 25.2%2 West Ridge 52 48 98 12 210 24.2%3 Uptown 4 3 84 4 95 3.2%4 Lincoln Square 25 18 20 2 65 27.7%5 North Center 14 18 9 3 44 40.9%6 Lakeview 7 16 86 1 110 14.5%7 Lincoln Park 9 21 52 0 82 25.6%8 Near North Side 6 1 212 9 228 0.4%9 Edison Park 13 0 2 0 15 0.0%10 Norwood Park 67 3 11 4 85 3.5%11 Jefferson Park 46 13 6 0 65 20.0%12 Forest Glen 36 2 1 1 40 5.0%13 North Park 17 18 8 0 43 41.9%14 Albany Park 45 44 29 1 119 37.0%15 Portage Park 138 57 13 2 210 27.1%16 Irving Park 72 51 25 1 149 34.2%17 Dunning 138 12 10 0 160 7.5%18 Montclare 45 6 3 0 54 11.1%19 Belmont Cragin 208 115 9 2 334 34.4%20 Hermosa 60 41 5 0 106 38.7%21 Avondale 23 67 12 0 102 65.7%22 Logan Square 49 98 23 4 174 56.3%23 Humboldt Park 158 248 8 2 416 59.6%24 West Town 36 103 61 6 206 50.0%25 Austin 373 421 16 0 810 52.0%26 West Garfield Park 28 188 1 1 218 86.2%27 East Garfield Park 25 149 17 6 197 75.6%28 Near West Side 41 27 74 10 152 17.8%29 North Lawndale 59 240 3 0 302 79.5%30 South Lawndale 64 117 0 0 181 64.6%31 Lower West Side 12 46 0 1 59 78.0%32 Loop 1 0 64 6 71 0.0%33 Near South Side 9 1 51 4 65 1.5%34 Armour Square 1 2 1 0 4 50.0%35 Douglas 19 13 46 1 79 16.5%36 Oakland 11 9 2 1 23 39.1%37 Fuller Park 14 28 0 0 42 66.7%38 Grand Boulevard 41 89 78 2 210 42.4%39 Kenwood 20 10 47 4 81 12.3%40 Washingon Park 13 45 33 2 93 48.4%41 Hyde Park 13 3 34 0 50 6.0%42 Woodlawn 49 150 58 4 261 57.5%43 South Shore 199 125 101 6 431 29.0%44 Chatham 184 77 10 1 272 28.3%45 Avalon Park 92 10 1 0 103 9.7%46 South Chicago 174 176 6 1 357 49.3%47 Burnside 37 11 0 0 48 22.9%48 Calumet Heights 129 26 1 0 156 16.7%49 Roseland 482 97 0 1 580 16.7%50 Pullman 56 9 0 0 65 13.8%51 South Deering 128 11 0 1 140 7.9%52 East Side 56 28 0 0 84 33.3%53 West Pullman 406 92 0 0 498 18.5%54 Riverdale 19 0 0 1 20 0.0%55 Hegewisch 28 1 0 0 29 3.4%56 Garfield Ridge 134 6 2 0 142 4.2%57 Archer Heights 22 11 0 0 33 33.3%58 Brighton Park 52 76 0 0 128 59.4%59 McKinley Park 16 14 0 0 30 46.7%60 Bridgeport 25 31 2 0 58 53.4%61 New City 130 308 0 0 438 70.3%62 West Elsdon 51 12 3 0 66 18.2%2007 Properties with FilingsPage 6Appendix I -City of Chicago Residential Foreclosure Filings by Property Type, 2007ShareNumber Community Area 1-Unit 2- to 6-Units Condominium NA Total Small Multifamily*2007 Properties with Filings63 Gage Park 114 43 0 0 157 27.4%64 Clearing 65 3 9 0 77 3.9%65 West Lawn 152 10 6 0 168 6.0%66 Chicago Lawn 335 176 1 1 513 34.3%67 West Englewood 415 253 0 1 669 37.8%68 Englewood 211 295 9 1 516 57.2%69 Greater Grand Crossing 177 185 14 2 378 48.9%70 Ashburn 318 5 13 0 336 1.5%71 Auburn Gresham 336 106 1 1 444 23.9%72 Beverly 78 4 2 0 84 4.8%73 Washington Heights 296 23 0 1 320 7.2%74 Mount Greenwood 59 0 1 0 60 0.0%75 Morgan Park 194 5 4 2 205 2.4%76 O'Hare 1 4 23 0 28 14.3%77 Edgewater 10 20 86 1 117 17.1%City of Chicago 7,262 4,822 1,670 118 13,872 34.8%Page 7Appendix II – Cook County Residential Foreclosure Filings by Property Type, 2007  Table 2 breaks out residential foreclosure filings by property type for the sub-regions of Cook County.  It shows that the City of Chicago had the largest share of foreclosure filings on small, multi-unit buildings with over 35 percent of all filings on this type of property.  In West Cook County, 15 percent of the foreclosures were on small multi-unit buildings.  In the other regions of Cook County a very small share or foreclosures were on 2- to 6-unit buildings.  The lowest was in Northwest Cook were only 0.5 percent of filings were on small multi-unit properties.  Figure 4 maps the distribution of 2007 residential foreclosure filings by property type in Cook County.    Table 2.  Residential Properties with Foreclosure Filings by Property Type for Cook County Regions, 2007  ShareCook County Region 1-Unit 2- to 6-Units Condominium NA Total 2- to 6- Unit*Chicago 7,262 4,822 1,670 118 13,872 35.1%North Cook 716 63 174 9 962 6.6%Northwest Cook 1,278 9 665 19 1,971 0.5%West Cook 1,936 382 214 13 2,545 15.1%Southwest Cook 1,322 51 238 4 1,615 3.2%South Cook 4,376 213 169 15 4,773 4.5%Cook County Total 16,890 5,540 3,130 178 25,738 21.7%2007 Properties with Filings *Calculation of the share foreclosures that are on 2- to 6-unit buildings does not include foreclosures on single family properties where the building type was not available.    Page 8Figure 4.  Cook County Residential Foreclosure Filings by Property Type, 20072- to 6-Unit Building1-Unit BuildingCondominiumForeclosure FilingsNorthwest Cookrt t rt t rt t North Cookrt  rt  rt  ChicagoiiiWest Cookt t t Southwest Cookt t t t t t South Cookt  t  t  	5 MilesPage 9

Foreclosure Crisis Impacts Chicago's Rental Housing Market

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Foreclosure Crisis Impacts Chicago's Rental Housing Market

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