Categories Navigation

Asset Publisher

September 19, 2014

Tenure and Vacancy Trends in Metropolitan Chicago’s Housing Stock

Homeownership and vacancy rates in northeastern Illinois have begun to decrease over the past few years, mirroring national trends.  Data from the 2013 American Community Survey (ACS) indicates that the Chicago region contained 3 million occupied housing units, of which 63.6 percent were owner-occupied and 36.4 percent were renter-occupied.  Since 2010, the region has experienced little change in the total number of housing units, but ACS data estimates that vacant housing units and vacancy rates have begun to decline. These developments have many implications for the region's communities as they seek to manage a changing housing stock.

In addition to decennial U.S. Census data, this Policy Update uses one-year and five-year ACS data on housing unit tenure and vacancy to describe current housing trends in the region. The one-year dataset provides the most current demographic data for areas with larger populations. The five-year dataset provides more accurate information as well as data for smaller geographies like townships, but estimates are a weighted, rolling average.

Homeownership trends

The homeownership rate measures the proportion of an area's occupied housing units that are owner-occupied. Because the homeownership rate is calculated using only occupied units, it can shift due to changes in the composition of the housing stock and housing vacancy rates. A decline in the homeownership rate may mean that a community has added more renter-occupied units or that vacancy rates in owner-occupied housing have increased faster than vacancy rates in rental housing. During the housing crisis, a large-number of previously for-sale housing units transitioned to vacancy and then to the rental market. This represented a turn in the 2000-10 regional trend toward comparatively small increases in rental housing stock in many areas.

While homeownership rates in the region have historically been slightly higher than the national average, recent changes have mirrored the national trend of declining homeownership.  The region's homeownership rate has declined at a faster pace, leading to a convergence of the national and regional rates. Data from the 2013 ACS indicates that 63.5 percent of the nation's 132 million occupied housing units were owner-occupied. Homeownership in the region increased throughout the first half of the last decade, peaking at nearly 69 percent in 2007.  Since then, the regional homeownership rate steadily declined to 63.6 percent in 2013.

Similarly, homeownership rates declined in all CMAP counties between 2005-13.  DuPage County experienced the largest decrease at -5 percentage points.  Overall, homeownership is just below 2000 rates for most areas of the region.

Click for larger image.

There are many drivers of decreasing homeownership rates.  Prior to, during, and after the 2007-09 recession, large numbers of homes went into foreclosure or through a short sale.  In a short-sale process, homes are sold for less than the outstanding loan value. At the same time, high national and regional unemployment levels have reduced individuals' ability to and interest in purchasing a home.  Delay of major life events like marriage and childrearing, limited access to credit, and uncertainty about the recovering housing market have also deterred prospective homeowners from entering the market. Due to this weak market for owner-occupied housing, many formerly for-sale homes were converted to rental housing by investors or rented out by owners unable to sell their home. 

To provide a closer look at the distribution of homeownership rates in the region, the following map illustrates homeownership rates at the township level according to 2008-12 ACS data.  Homeownership rates are highest in townships at the edge of the region.  In contrast, Chicago and adjacent townships have lower homeownership rates, as do the townships overlapping older communities like Joliet, Aurora, Waukegan, and Zion.  These established communities have a greater mix of single-family and multifamily homes, as well as rental and for-sale housing options.

Click for larger image.

Regional vacancy trends

Vacancy rates can have a strong interaction with homeownership rates.  The vacancy rate for owner-occupied units is typically much lower than that for rental units, but the foreclosure crisis led to substantial increases in vacancy rates in both rental properties and traditionally single-family, for-sale properties.  Steep increases in vacant homes can strain communities as they invest limited resources into monitoring and/or maintaining these properties.

Annual ACS data indicates that housing vacancy rates in the region peaked at 10.3 percent in 2011 and declined to 8.8 percent in 2013.  The counties experienced a similar trend, with the exception of Lake and DuPage Counties, which experienced peak vacancy rates in 2010.  In 2013, the region had approximately 300,000 vacant units, a decrease of 13 percent from 2011.  Just over 50 percent of this decrease in vacant units occurred within the City of Chicago, but the City still contained a disproportionate share of the region's vacancies (51.2 percent) compared to total units (35.2 percent) as of 2013.  All other counties' shares of vacant units are less than their shares of total units. This matches historical trends. In addition, the Chicago region's housing vacancy rate of 8.8 percent remains below the national vacancy rate of 12.4 percent.  

Click for larger image.

To show the distribution of housing vacancy in the region, the following map provides vacancy rates by township using five-year ACS data for 2008-12.  The majority of townships in the region have vacancy rates at or below the regional average of 9.5 percent.  Townships with above-average vacancy rates tend to be located in the center, southeast, and outermost portions of the region. This encompasses a mix of older, established townships and fast-growing areas at the edge of the region. 

Click for larger image.

Looking forward

Following the recent recession, many municipalities are planning for a changed housing stock.  GO TO 2040 recommends that communities plan for housing options to support livable communities over the long term. Through the Homes for a Changing Region program, CMAP assists municipal leaders in charting future demand and supply trends for and developing long-term housing policy plans. Recognizing that housing markets cross political boundaries and that many communities share planning challenges and opportunities, the program develops housing policy plans for clusters of communities. These plans aim to create a balanced mix of housing, serve current and future populations, and enhance livability. There are currently Homes plans in development in DuPage, Kane, and Lake Counties.