speaker-0: Welcome to Built Different Chicago, a podcast about how neighborhoods and communities get built, what makes them evolve, and what that means for all of us. I'm Stacy Young from Community Investment Corporation.

speaker-1: And I'm Megan Hart from Lisp.

speaker-0: Each episode will dig into one big question about community development.

speaker-1: Today we're asking, why can't we get affordable housing right? Stacy. Why'd you choose this topic?

speaker-0: Because everyone wants to talk about affordable housing now. I mean, you know as well as I do back in the day when we started in this industry, no one really cared that much about affordable housing and we were so excited when someone would talk about it. But wow, it's all the rage right now.

speaker-1: I agree. And everyone has a different definition of what affordable means in affordable housing. Exactly.

speaker-0: Exactly right. We can never assume that when someone wants to talk about it, that they're talking about the same affordable housing that you're talking about.

speaker-1: I know in the communities that we're serving, you know, on the south and west side or the low to moderate income communities, there's discussion around it. And then there's also in, you know, higher income communities, the discussion around my kid can't afford an apartment in Lincoln Park. And how does how do those definitions change across those populations?

speaker-0: I think it's even more confusing when I'm talking to my neighbors and I say that I'm doing ⁓ work in affordable housing, they want to ask about homelessness, right? The people are concerned about all these different levels. So you've got these folks who are higher income people who are s really struggling with affordable housing and housing costs. And then you certainly have the other end of the spectrum that has always been a challenge. So it's confusing. And if we don't have a common understanding, of course, it makes it even harder to solve the problem. Well, to learn more about why affordable housing is such a hard issue, I called up my friend Jeff Smith from DePaul University's Institute for Housing Studies and had a great conversation with him. So Jeff was talking about this number. And he and his fellow researchers at DePaul come up with this number, and it's really a shortage of the units that are affordable to people who earn under a certain income. But when it's reported in the press or when people talk about that number more casually, they typically talk about it as if it's a supply number. In other words, we're missing 120,000 units of affordable housing. And that's confusing. Hey Jeff, it's Stacey. Good, good. I'm so glad I caught you. I have a question on a number that you and I have discussed many, many times. I know that the Institute of Housing Studies reports on an affordability gap number for Cook County. So I was hoping that you could explain exactly what that number represents.

speaker-3: ⁓ yes, I will do my best. So I think, you know, when when people talk about housing and talk about affordable housing and and housing affordability broadly, you're talking about sort of two components. There is demand for housing and supply of housing. So demand is who are the households that need to find housing and supply is where they live. And so the big picture affordability challenge is this mismatch between the incomes of low-income renters trying to find housing that is affordable. ⁓ to them at say 30% of their monthly income. So when we develop this housing affordability gap calculation, we're trying to quantify in some way that mismatch of low-income households looking for affordable housing and and there is this this mismatch that that we need to solve for. So really the the goal here is to highlight the need for aff a affordability affordable housing affordability strategies to address 120,000 households, not necessarily the need to build hundred and twenty thousand new affordable units. Folks just think well we need to build a hundred and twenty thousand or whatever units to fill this affordability gap. In the reality it's just a bit more nuanced than that.

speaker-0: Thanks a lot, Jeff. That was really helpful. Appreciate you taking my call.

speaker-2: I p

speaker-3: Happy to chat.

speaker-1: Well first, thanks for calling Jeff Without Me. Totally jealous. Love Jeff, but from from what you're saying, it's his discussion about the hundred and twenty thousand units is about people, not housing, right? So is that is that the nutshell?

speaker-0: Yeah, no, that's a great that's a great distinction that he makes. The fact is there are a lot of lower income people who are not able to afford their rent or their mortgage.

speaker-1: even when others might consider that rent affordable for themselves, right? So is that a geographic thing or and an income challenge?

speaker-0: Yeah, I mean, I think you nailed it. I think that, you know, depending on where you live, the costs are different. So there's so many dynamics that come into play, which is why it's so great that we have the guests that we have. So with those insights as background, we wanted to bring in someone who's been in this work for a very long time. And today we're excited to have Becca Goldstein join us. Becca's the founder.

speaker-1: Thank you for inviting me to that conversation 'cause I love Becca too.

speaker-0: For Megan. This time you're included. Becca's the founder and managing principal of BG Consulting, which works with many clients in the housing community development, impact investing, and social justice space. Of course, I met her when she worked for the mayor's office back in the early 2000s. I think maybe, Megan, you met her then too. Exactly. But she also cut her teeth at the Chicago Housing Authority and Neighborhood Housing Services of Chicago.

speaker-1: Yeah.

speaker-0: So she knows a little something about housing. So Megan, aren't you impressed that we got back up?

speaker-1: I am so impressed. What a what a great guest to have on the show, especially in this discussion. And I just gotta say, Becca is in and around this issue all over the city with so many partners. And not only that, she's just a great taskmaster to keep us on target and what we're trying to do and really bringing that expertise to the table too.

speaker-0: She brings a discipline to everything she does. When you say Taskmaster, that is no joke. ⁓ so we're lucky to have worked with her and we're so glad that she's here. So thanks for being here, Becca.

speaker-2: Thank you for inviting me here. It's good to be here. ⁓ I enjoy working with both of you and so really appreciate being able to join to

speaker-0: To start things off, you know, talk a little bit about what we consider to be affordable housing. And of course, when I say we, there's so many different stakeholders in these different discussions. What do you think?

speaker-2: Well, first of all, I do think the definition is confusing. I think, you know, the housing industry, we we like to be a little wonky. So I would I would guess I would start with saying, ⁓ the standard definition of affordable housing, quote unquote, is any housing in which somebody is paying no more than thirty percent of their income on housing costs. So whether that's rent and your energy costs, whether that's mortgage and your property taxes and all of that. ⁓ that's kind of the the standard statistic. Housing can take a lot of different forms. It that can be affordable housing that's subsidized by the government. It could be affordable housing that is simply ⁓ affordable to people who are at that kind of 30% ⁓ of their income marks. So it might be located in the low-cost market or be an older building, but it's still something that is attainable to them. ⁓ it's a huge continuum of housing types. So For some people, it's a shelter. For some people, it's a supportive housing development with services. For some people, it's rental. For some people, it's a starter home to be able to buy and become a homeowner. So I, you know, it is it is a confusing space, but the truth is that the whole continuum is important.

speaker-0: I feel like one of the reasons affordable housing has become such a popular topic is because higher income people are being affected. They're spending a bigger chunk of their income on housing than in the old days. Do you think that might be true?

speaker-2: I think that's a hundred percent true. I think housing has become more expensive not only to build, but to operate, and incomes haven't really kept up. ⁓ and so that gap is just getting wider and wider. And yes, it used to be that it was really something, Stacy, as you talked about earlier, we were excited when people wanted to talk about housing, because there were only a few people that you know, a a small segment of an industry that was really working on it. ⁓ and it was very focused on very low-income populations. But increasingly, as the cost of living has increased for everyone, not only housing, food, health care, transportation, childcare, all of those costs are rising, ⁓ but incomes are not. And popul you know, people at different income tiers are feeling that housing crunch.

speaker-0: would you say because I think that's right on. I'm gonna ask you a question that I think has many answers, but I'm gonna ask it anyway. So how did it get to be like this? I mean you said the, you know, the cost of living has gone up, construction are there other dynamics at play here?

speaker-2: There's a lot of there's a lot of dynamics at play here for sure. And I think it goes back quite quite a ways back. You know, I think there there's always been households that have needed assistance. But a lot of people trace today's challenges back to the financial crisis. And, you know, the foreclosure crisis, the the resulting vacancies ⁓ really impacted neighborhoods, but it also really impacted the housing industry. And the home buyer industry home builder industry. So a lot of ⁓ home builders really left the industry after the 2008 crisis. ⁓ and so over time there's less homes being built, and it started kind of a a series of underproduction. And then we came to the pandemic. ⁓ we had, you know, increased costs, supply chain issues, an increased cost environment, and High costs again to operate. So it was just kind of started to to to snowball a little bit. So again, you have higher costs, higher regulatory requirements, smaller number of builders, smaller number of homes, more people that need housing, increased prices.

speaker-1: I don't think I really understood the amount of builders that got out of the industry. So can you just talk a little bit more about that? So they lost their shirts in 2008 and they went out of business or they changed and like what is I I even like give us a sense of the scale of what that is.

speaker-2: Numbers on the scale, but I do think ⁓ that the entire financial crisis really impacted that industry. And to your point, yeah, people lost their shirts and they left the market. And it was harder and harder to kind of build a business in that time. And I think when it comes to affordable housing, what you see today is even though, you know, there are home builders, to be a home builder and to build homes at an affordable price, ⁓ there's a gap. between what they can sell the price of the home in and what they had to pay to build it. Yeah. And what the the household can afford. And that gap is just there. And until somebody, you know, unless there's a way to fill it, that's not an attractive economic, you know.

speaker-1: Yeah. Numbers don't the numbers don't lie.

speaker-2: Mark. So they go somewhere else, whether it's a different industry or to a luxury home building market or, you know, to a different place that makes a little bit more sense and pencils out for them.

speaker-0: I was thinking of another important ⁓ dynamic that has r probably raised the stature of affordable housing as an important issue, which is the number of parents who have kids living in their basements. I can only imagine, you know, again, if you I'm sure there there's numbers about this, but that's a that's a tough thing when when your kid can't afford to move out. I was a little jealous, Megan was saying earlier about how.

speaker-2: Is

speaker-0: She doesn't have any gaming ⁓ headphones in her place anymore because her son moved out. Like, wow. Well, good for you. It was kinda like bragging, I felt like, but yeah.

speaker-1: It's only fifty percent. My other roommate is my daughter and her cat. So so she has failed to launch at this point. And to that point, it's not affordable, right? Even if she has she's in s like when I was in school and had a job, I could figure out how to pay rent. And that just doesn't exist, right?

speaker-2: I think that's right. And I think, you know, to the earlier point of more people are talking about this, it's because more and more people are not being able to afford something in the market. More people are affected and and seeing that having having their kids in the basement, wanting wanting their kids to be able to rent something on their own or buy something on their own, but it's just not attainable. You're also seeing people with high levels of student debt and high other kinds of living expenses. So It's you know, I think people are thinking about this in a broader budget sense. Yeah. Right. So I think there's a variety of different variables that really contribute to that.

speaker-0: And the challenges with affordable housing and again, maybe folks either staying with their parents a little longer or maybe they're shying away from buying a house. You know, they of course it's very difficult to afford, but also maybe the everyone's a little scarred from the crash and seeing what happened to all these homeowners being underwater. How does that affect our neighborhoods? What are your thoughts on that? ⁓

speaker-2: I think, well, I think one of the things that's important just to add to the conversation about the number of people that are affected by a lack of attainable housing is that when they do go into the market, they will add some additional pressures onto that continuum that we talked about at the beginning. So if there's a certain number of affordable rental units and and the people that needed them before still need them. But the people who used to be on a in a higher priced unit or have access to be able to build ⁓ to to go out on their own and build a home, they might be looking at something that's more affordable to them, ⁓ which is putting pressure on the system. If you think about it as a line, everybody's kind of pushing in in different different directions. So that's another thing that is impacting kind of the whole continuum, and that shows up In the neighborhoods too, just depending on what stock is available, where people are moving to, where people want to stay and are being priced out of their own neighborhoods.

speaker-1: So and it seems to me like those are s the neighborhoods that sort of ring closer to downtown, right? So West Town, East Garfield Park, Pilsn start feeling that pressure and then sort of it's pushing out some of the current population because others from higher cost markets are moving in. Is that sort of how you see it happening? Yeah.

speaker-0: And the values in those neighborhoods then, Megan and Becca, increase. And once those values increase, whether you're a renter or an owner, your property taxes increase. Now we've read a lot about property taxes. I don't want to dig too deep into that, except that if I own a rental property and my property taxes increase, I have to raise the rent, right? You know, the costs go up and I need to raise the rent. And I feel like that's a misconception about rental housing in particular and how and why rents go up. Can you talk about that for a minute?

speaker-2: I think that's a hundred percent right. And not only property taxes, but I think we've all seen insurance rates skyrocketing. Much of that has been driven by weather events, but that's something that hits both rental and homeowner properties. That's another housing cost. It's not only the cost of building affordable housing or preserving affordable housing, but the cost of operating affordable housing continues to go up. And you know, that's the building owner or the landlord, they're struggling too in many cases.

speaker-1: How do we get housing that's more affordable into places where we could relieve some of that pressure?

speaker-2: It's a really complex issue ⁓ with a complex set of variables and requires a whole bunch of different solutions. So yeah, I think do we need to build more? Absolutely. Do we need to preserve and take care of the housing that we already have? Yes, there is housing available in Chicago also, and some of it needs to be fixed up, right? And made sure that ⁓ people can live there. In some cases, it's about relaxing some regulatory requirements so that there's more natural building. In some cases, it's also assistance to the people that are living there, whether that is down payment assistance or different kinds of gap financing for people buying a home, housing vouchers and and rental subsidies continue to be critically important. The very low-income residents that we talked about since The days when nobody was talking about affordable housing, they still need help. And they, you know, those those subsidies are really critical to keep in the mix. And in many cases, being able to subsidize, deeply subsidize some of those units early on will make them more sustainable for a longer period of time. So it's a lot of different things. It's energy costs, it's property taxes. Again, it's a mix of solutions that will really need to be working together.

speaker-1: to your point that you made a while ago, which is incomes haven't kept up. Like this de the statistic of someone that made forty thousand dollars in the sixties with the cost of living should be making ninety thousand dollars today and they're making fifty thousand. And so if costs on building and rents are going up and the income isn't going up, there's always gonna be a mismatch. I do, I do wonder if Subsidies and rental assistance and down payment assistance are just covering sort of the sins of of wages not keeping up. Until we fix that, we're always trying to band aid other things to a lot to help people stay in their housing.

speaker-0: I love what you just said, Megan, and and Becca, you really nailed it, I think, when you talked about all the different types of categories of how to get from here to there. If incomes can't keep up, you know, the cost of housing doesn't change. The cost of housing continues to go up. Is Chicago keeping up when you think about other cities or metro areas that are trying to address this challenge?

speaker-2: Chicago does have some great, you know, positives as we compare ourselves to the coasts. I know it affordability here is still a big challenge, but we are still a more affordable city than many other places. We have a significant amount of vacant land. We're not a landlocked city. And I think we have a phenomenal tapestry of local community partners. and other organizations who are really advancing a lot of initiatives here. So I think we have to take the challenges, but also recognize those bright spots as things to to really leverage and build on. Speaking of that

speaker-1: I just got back from New York with my two ⁓ almost launching adults. ⁓ and it was really interesting because we were walking around Brooklyn and we were walking around other parts of New York and my son, who will be twenty one, we we started looking on Zillow rentals, right? And he was like, Wait, what? And I'm like, Yes, for what you're paying in Chicago, you would be three to a bed in Brooklyn. So I hope you like your roommate well enough to sleep in the same bed. It was it was just really shocking to them to see that and then understand that Chicago is way more affordable in addition to everything they else the else they love about Chicago, that they could, you know, relatively be able to afford living in Chicago. But what how do we stack up in other places besides the coast?

speaker-2: I would start with saying all cities across the country right now are struggling with this. Really? Urban, rural, big, small. It's really an increasing issue. So and red, blue, I it's really something that is front of mind. ⁓ there's a reason that people are talking about it. It's because it's a real challenge. All of those, a lot of those drivers, loss of home builders.

speaker-1: ⁓ really?

speaker-2: Increased construction costs, increased insurance costs, all of these things, they're happening all over the place. And we I think we need to remember that too. There are certainly some great things happening across the country. One city that I know a lot of people here have been thinking about and and looking at is the city of Atlanta, because they've had some opportunities to bring a lot of partners together, both on the policy side. the capital side and really the process side.

speaker-0: And and Becca, when you say when you say capital, you mean just money, different kinds of money from lenders, from philanthropy, from government. Is that right?

speaker-2: That's right. That's right. So to really have a shared vision for what's needed, both at the city level and at the state level, to be able to pool resources, to be able to have a shared table where a developer can go and be able to access, not run around town sending out 17 different proposals, but have a number of funders at a table to be able to say, you know, this is my project. This is the kind of pri financing I'm looking for. So some coordination. There's other collaboratives that are doing things similarly ⁓ across the country and and it's exciting. So there's ⁓ some work underway here as well to try to coordinate partners and align initiatives. So

speaker-1: ⁓ I got one question. It might be the last question, Stacey. Can I have the last question? Okay. So just thinking about overtime. You've been in this space for a long time. I'm not gonna say how long, but I was not coloring my grays when I met you, but I am now. But how have we progressed? Has the ecosystem progressed? I'm sure the the situation hasn't just because over time affordability has gotten

speaker-0: Yeah.

speaker-1: more challenging. What are the bright spots that you're seeing that have changed over time?

speaker-2: I do think we've moved forward as an ecosystem. I think the market has changed, but I I do think there are more partners that are interested in being involved. Not just people talking about it as an issue, but people talking about it as something that they wanna help address. I think the capacity of organizations has grown. Yeah. I've gotten into this space.

speaker-1: Yeah, loaded.

speaker-2: Does that mean that everything is easy for them? Not at all. Is there room for growth? Yes. But there are more of them with more capacity, knowledge, skills, ability to kind of roll up their sleeves and go. And I think just a lot of exciting community-driven initiatives that are underway in this space. So I do think that there are bright spots.

speaker-0: I think that's a great way to end. I appreciate that you have a ⁓ you know, you've you've brought up many positive things for us to think about. In Chicago, we are relatively more affordable. You know, I'm sure that while Megan's son likes his roommate, perhaps sharing what looks like a hotel room with one guy is less attractive than what's probably a nicer apartment here in Chicago. So Thank you so much. A great discussion. But before we let you go, we have a quick lightning round of questions for you. These are Chicago based questions. Put on your Chicago hat. Are you ready?

speaker-2: I think so. Okay.

speaker-0: What's a Chicago stereotype that's actually true?

speaker-2: People are nice. ⁓

speaker-1: ⁓ that's a good one. What is What's what's a local organization everyone should know about? You can't say LISC or CIC. You have to say somebody else.

speaker-0: I mean she could though, Megan.

speaker-1: I mean yeah, you could. I'm not gonna we just know that. We know that. Yeah, so it's true.

speaker-2: ⁓ the reclaiming Chicago's campaign.

speaker-0: Nice. That's a single family new construction effort that is great and taking place in many neighborhoods by

speaker-1: Working with grassroots community organizations, yeah, got all the parts.

speaker-0: All right, this is a really important one. Tavern or deep dish. Interesting. Interesting.

speaker-2: Tavern.

speaker-1: Very, ⁓ very Chicago neighborhood that is not your own. Amen, sister. Love that.

speaker-2: Love cold.

speaker-0: Mangets and neighborhood. Yeah. And finally, this is now you p you have to really put on your thinking cap for this based on all your thoughtful questions. Why can't we get affordable housing right?

speaker-2: It's really complicated and I think we can get it right, but it's it's not an easy silver bullet. There's a lot of different people with a lot of different income tiers and a lot of different needs and w it's very nuanced. Well but

speaker-1: One, you're brilliant. I just need to tell you that and let the whole world hear it. Agreed. But thank you so much for joining us. This has been great. Appreciate you as always.

speaker-2: Thanks for having me.

speaker-0: Well, that was a great discussion, Megan. I'm so glad we had Becca to really give us the landscape of how complicated it is, but also she was so positive and upbeat at the end. You know, I think that's we forget sometimes in Chicago that we have a lot going for us.

speaker-1: I mean, if you've done this work for a long time, like you could focus on the wins or you could focus on the losses and so she definitely focuses on the wins. It that was great. And I learned, like I didn't really appreciate the fact that there's not a lot of builders, and not as many as there used to be. So that was something I'm I'm taking away as good to know.

speaker-0: Guess where they will gravitate to is luxury, right? Yeah. It totally makes sense. And I thought she brought up many points like that. It's easy to forget. It's easy to kind of blame the industry for not getting it right when there's a lot of complexities in history that has gone into how we have gotten to this moment, right?

speaker-1: The other piece that was interesting to me is there there are a lot of players and the coordination of that to reach impact in any one place or all over the place is super important. I thought that came through pretty strong.

speaker-0: Absolutely. And in Chicago we do have it feels like a small town sometime, as you as you know, Megan, we all see each other all the time. And we think to ourselves, there's so many players, it's so hard to coordinate. And it is, but then, you know, when Becca says this is a challenge across the country and we're actually doing okay, it really is. It was it was nice that she really had so many positive, bright spots to end on at the end.

speaker-1: Yeah, and I just leaning into that, like the ⁓ Midwestern values of focus on blocking and tackling and make progress that way instead of big picture all the time focus big picture. There's so much to unpack in what she talked about. I feel like we have like ten more episodes to go into. So

speaker-0: Lucky Us.

speaker-1: To everybody listening, thanks for listening to Built Different Chicago, where we try to make sense of what's working, what's not, and why it matters. Bye.

speaker-0: We'll see you next time. Bye.