Transforming Chicago’s Housing Market: New Legislation and Opportunities for Property Owners

Land Use Reform in Chicago: Expanding Housing Opportunities



Recent legislative efforts in Illinois are reshaping the state’s approach to residential zoning, with significant implications for the housing market. A new bill, House Bill 1814, introduced last week, aims to eliminate single-family zoning in municipalities across Illinois. If passed, this bill will allow for the development of multi-unit buildings in areas currently zoned exclusively for single-family homes. This initiative, alongside a similar bill introduced last year, has the potential to address the state’s growing housing shortage and make housing more affordable for middle-class families.

The Impact of House Bill 1814

Sponsored by State Rep. Bob Rita, Rep. Jay Hoffman, and Rep. Kam Buckner, House Bill 1814 would require municipalities with populations of 10,000 or more to permit multi-unit buildings on most residential lots. In cities with populations of 25,000 or more, zoning laws would allow multi-unit buildings on lots of 5,000 square feet or more. This legislation is part of a broader movement to encourage the development of "middle-density" housing—such as duplexes, triplexes, and townhouses—that is affordable for middle-income families, which are often left out of both the luxury housing market and the subsidized affordable housing sector.

With the goal of addressing the lack of affordable housing options for the middle class, this bill provides a pathway to building more units on existing residential lots, which improves the overall housing supply. Governor JB Pritzker has endorsed these reforms, recognizing that increasing housing availability is crucial for the economic well-being of families across Illinois.

Opportunities for Converting and Expanding Properties in Chicago

For property owners in Chicago, this legislation opens up several opportunities for development. One practical option is converting existing three-unit buildings into four-unit properties. This type of conversion allows property owners to increase the rental income potential of their buildings while maintaining the existing structure. However, it's important for property owners to consult with zoning experts and understand local regulations to ensure compliance with zoning laws, especially in neighborhoods zoned for low-density residential use, such as RS-3.

The potential for converting properties into higher-density units aligns with the broader goal of increasing affordable housing options in the city. As zoning regulations evolve, property owners may find it easier to make such conversions in the future.

Building Coach Houses: A Growing Trend

Another avenue for increasing housing density in Chicago is the construction of coach houses. These are small, detached secondary units built behind or beside a primary residence. Chicago’s Additional  Dwelling Units (ADU) Ordinance, implemented in 2021, allows for the construction of coach houses in certain areas of the city. These units provide homeowners with an additional source of rental income and offer flexible housing options, such as accommodations for extended family members or long-term renters.

Coach houses are becoming an increasingly popular way to add housing without drastically changing the character of neighborhoods. However, property owners must ensure that their projects comply with zoning regulations related to unit size, height, and rental use.

Conclusion

The potential reform of residential zoning laws in Illinois, especially in Chicago, presents significant opportunities for property owners and developers. Whether through converting three-unit buildings into four-units or adding coach houses, these changes help address the growing demand for affordable housing in urban areas. As legislation progresses, it is crucial for property owners to stay informed about evolving zoning laws to take full advantage of these new opportunities.

Should you have additional questions regarding the subject matter hereinabove, please call us at 847-705-7555 or email Attorney Chance W. Badertscher at cbadertscher@lavellelaw.com to schedule your free and confidential one-hour consultation.