The Expansion of the "Citadel of Affluence"

That's what happens when underinvested -- and undervalued -- urban neighborhoods are allowed to exist.

An aerial view of Chicago’s South Side Bronzeville neighborhood. Close to the Loop, but not nearly as valuable as similarly located neighborhoods. That’s changing, but not fast enough. Source: gettyimages.com

I’ll state this right from the outset. This is not a take-down. I’m expressing a point of view that differs from conventional urbanism wisdom. Please keep that in my mind as you read on.

Back in 2014, I wrote an article for my earlier blog entitled Two Chicagos, Defined. In the article, I described Chicago’s troubling expansion of inequality at many different levels – income, educational attainment, employment, housing costs, crime, transit access, job access, and so much more. I found that the gap was widening, at the metro level (where I focused my initial analysis) and at the city level as well. In the end, I found three distinct Chicagos that were worth noting: 1) a growing “Super Global” Chicago concentrated in the city’s downtown, north lakefront and near south lakefront neighborhoods that was affluent, highly educated and largely white; 2) an “Average Chicago” that was less affluent, less highly educated, containing more people of color and experiencing a sense of instability; and 3) a “Rust Belt Chicago” that was significantly lagging the other two segments on every level. I concluded that article with this statement:

“In reality I see the "Two Chicagos" meme as overplayed. Chicago may be better understood in thirds -- one-third San Francisco, two-thirds Detroit.”

At the time, that statement caused a huge reaction on Twitter, positively and negatively. There were many supportive reactions from people who seemed to understand that Chicago’s deep divides were widening and hardening, and got the general point that the city needed to be more beneficial to more of its residents. Some of the reactions were visceral; many Chicagoans could not fathom a comparison of Chicago with Detroit, a city understood by many to be well below Chicago’s stature. In fact, friend and fellow Substack writer Aaron Renn told me that the quote had reached former Chicago Mayor Rahm Emanuel and was discussed during an interview he had with him. He hated it.

But that underscores a misunderstanding about both Chicago and Detroit. Detroit is not the completely collapsed urban dystopia that many imagine it to be; there is a rapidly revitalizing downtown, and great neighborhoods that are getting stronger. However, there is poverty and crime, and neighborhoods that sit on an uncertain precipice. Similarly, Chicago is more than its beautiful skyline, fantastic lakefront neighborhoods and the strong post-industrial economy that supports that part of the city’s growth. Chicago is also the city well known for its legacy of government patronage and political corruption, and reviled for its own high violent crime.

What’s this got to do with anything, you say?

Well, on Wednesday, Yonah Freemark of the nonprofit thinktank Urban Institute commented on the Institute's Urban Wire blog that zoning restrictions and the nature of housing demand in Chicago has split the city in three – an affluent, high-demand central area and lakefront with lots of housing construction, an affluent and middle class, high-demand North and Northwest Side with little housing construction, and a low-income, low-demand West, Southwest and West sides that’s actually losing housing units and people.

Freemark notes that zoning restrictions are at the heart of this phenomenon. I hope he and the Urban Institute don’t mind this extensive quote from his article, which is the essence of his argument:

“Why was permitting concentrated downtown, which accounted for less than 8 percent of the city’s housing in 2000 and only 5 percent of its land? One explanation is the downtown area’s relatively permissive zoning. More than 16 percent of land in that area was zoned for high densities (defined as buildings with allowed floor areas more than 5 times that of their lot size), far higher than elsewhere in the city, where such ratios typically sit at 2 or below. Another is market demand—the center’s housing values were substantially higher than the city’s overall.

However, the rest of the city still experienced lower-than-expected permitting, given land area and preexisting housing units. The North and Northwest Sides accounted for 24 percent of the city’s permitted units, even though they had 40 percent of the city’s homes in 2000. This permitting underperformance happened despite the high demand to live in these pricey neighborhoods, which also have high white population shares.

Zoning may be blocking construction in those areas. On the Northwest Side, most land is zoned to allow only one- or two-family homes to be built. And on the North Side, just 2 percent of land allows construction of high-density multifamily buildings. These are high-opportunity neighborhoods, where schools boast higher test scores and where grocery stores are easier to come by. But the city’s zoning choices may prevent these communities from accommodating a greater diversity of residents.

Housing permitting also underperforms preexisting conditions on the South, Southwest, and West Sides. In these cases, limited market demand, indicated by low housing values, is likely the biggest obstacle to development. Current zoning, while limiting in some ways, nonetheless allows for more construction, given the high number of empty lots in the area.

Our research shows that thousands of additional housing units could be built in those neighborhoods, yet developers are reluctant to do so because they believe they are less likely to profit. There may also be a racial element at play. Fewer than 35 percent of units permitted citywide were in community areas where a minority of residents are white, which make up 75 percent of the city.

These neighborhoods suffer from historic underinvestment and high levels of vacancy, and the limited construction reinforces that pattern of inequity. Opposite sides of the city feature vastly different living conditions. One side has high levels of wealth, while the other has high levels of vacancy.”

There are three points I’d like to make in response.

First point: I know this topic. The article of mine I quoted at the start of this piece is one of dozens of articles on this very topic since I started writing in 2012. Chicago’s been a primary research subject for me as an urban planning practitioner for more than 30 years, and as a writer on the perils and promise of Rust Belt cities since starting the Corner Side Yard in 2012. Some samples:

· Tales of Two Cities (3/8/13)

· What Could The Legacy Economy Mean For The Rust Belt? (2/24/14)

· Two Chicagos, Defined (3/18/14)

· The Bifurcated City (4/23/14)

· Unresolved (11/30/14)

· Chicago, Detroit and the Rust Belt Bifurcated City (4/4/18)

· The Hardening of Chicago's Inequality (2/6/19)

· Chicago: America's Quintessential Bifurcated City (8/18/19)

· New Chicago, Old Chicago, Same Chicago (9/16/21)

· The "Tottering Chicago?" Series, Parts 1-5 (8/29/22 – 9/26/22)

· Chicago And The Disappearing Two-Flat (4/7/24)

Second point: I understand Freemark’s argument. The writings I produced on Chicago over the years corresponded with two dominant movements in the urbanism sphere – first, the 2010s rise of anti-gentrification sentiment in response to expanding revitalization in the nation’s biggest cities, and secondly the formation and growth of the YIMBY (Yes In My Back Yard) movement to promote zoning reforms that promote housing construction. Freemark may not remember me, but we did interact with each other during his days here in Chicago. From our interactions, I’d wager Freemark is connected to both recent movements.

In explaining Chicago’s conditions in the above articles and many more, I noted that its challenges are quite different from those of coastal cities that saw housing costs spiraling upward, and could not be solved simply by adding more housing. According to a report by the National Association of Realtors (NAR), the Chicago metro area ranked 83^rd in 3Q 2024 median single family home sales price, out of 226 metro areas tracked by the association. Chicago’s median sales price was $390,400, a 6.9% increase over 3Q 2023. Metro Chicago was behind the nation’s 3Q 2024 median sales price of $418,700, despite seeing sales prices rise at more than double the national rate since 3Q 2023 (3.1%).

In a national context, Chicago is hardly unaffordable. With Dallas, it’s the most affordable metro area with more than 5 million people. For those seeking housing in the city’s hottest neighborhoods or suburbs, however, it’s quite expensive. I don’t have time to seek out data now, but I’d wager that median sales prices for homes in the Loop, Near North, Near West and Near South sides, and up the north lakefront are on par with what you’d find in Miami, Denver, Boston, even New York City and Seattle. Outside of that area, though, prices will be much lower – in some areas, severely and troublingly low.

Chicago’s unique housing issue is that it’s expensive for some, but critically undervalued for others.

Third point: The outcome Freemark wants from his proposal is not the outcome that will happen. The reason for this Chicago bifurcated city phenomenon is segregation, not zoning or the nature of housing demand. In the extended quote from Freemark’s article, he noted somewhat obliquely that little housing development was happening in the city’s South, Southwest and West sides because “(t)here may be a racial element at play.” No question there’s a racial element at play. Chicago is one of many cities that perfected the art of northern exclusion – the potent mix of policies implemented since the Great Migration brought Southern Blacks to the urban North. You know the policies: restrictive covenants, explicitly and implicitly exclusionary zoning, redlining, public housing construction, urban renewal, and more. Value was sapped from the communities that were hit hardest by these policies, and never returned.

Here’s a case I’ve made before. For at least 50 years, gentrification of Chicago has taken place in formerly working-class white ethnic neighborhoods near the city’s core. As the inventory of such neighborhoods decreased, zoning would change to accommodate additional growth, but not as fast as the demand would warrant.

Freemark is making a case for upzoning in largely white middle class neighborhoods on the city’s North and Northwest sides to reduce housing prices and rents. On the surface it’s a laudable goal. Sadly, however, I view it as contributing to the spread of what I’ve called “citadels of affluence.” Here’s what I said in an interview with Business Insider in 2014:

“I'm concerned with how the rebirth is happening. There are so many new city movers who are either afraid of the conditions in sketchy areas, or afraid of being labeled as part of the problem of gentrification, that they're creating citadels of affluence in cities that have little or no connection to the rest of the city. My fear is that many would prefer to strengthen the citadel at the expense of the rest of the city. Where I live, in Chicago, might be the clearest example of this because of its long held segregation patterns, but it's happening in some fashion around the country.”

In my opinion, Freemark is calling for the expansion of the citadel of affluence, and not for the improvement of the well-being of more Chicagoans and more Chicago neighborhoods.

You know, 1,800+ words on this topic is enough for now. I’ll take a rest and pick this up later.