AUSTIN — Black and Latino Chicagoans are snapping up two- to four-bedroom apartments, according to a new study — and experts said it’s a promising sign in efforts to increase ownership across racial lines and build generational wealth for people of color.
The bulk of mortgages in Chicago for two- to four-unit apartments between 2018 and 2021 went to black and Latino buyers: 60 percent, according to a report published last week by the Institute for Housing Studies at DePaul University. In comparison, these groups accounted for only 28 per cent of the loans for detached houses and apartments in this period.
Geoff Smith, executive director of the Institute for Housing Studies, said two-to-four apartment homes allow multigenerational families to get a home at a lower cost. Multi-unit homes allow an owner to live in one unit while a tenant or family member lives in another; that means the other tenants contribute to the overall housing cost, making them more affordable for the buyer, Smith said.
“I think it’s a positive indicator of investment,” Smith said. “This housing type creates an opportunity for moderate and middle-income families to enter home ownership.”
Two- to four-bedroom apartments have long been used by Chicago families to build generational wealth. Many of the city’s two-flats were built by immigrants or first-generation Americans trying to move up economically. They would live on one floor while renting out another or sharing it with family so they could cover the building’s costs.
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In recent years, there has been particularly great interest in such homes on the south and west sides.
For example, Austin has about 5.5 percent of Chicago’s two- to four-unit apartments — but 7.1 percent of the loans to buy those properties originated in the neighborhood between 2018 and 2021, according to the study.
South Shore, Auburn Gresham, Chicago Lawn, Greater Grand Crossing, Woodlawn, North Lawndale, Chatham, West Garfield Park and Portage Park have also seen high demand for loans for multi-unit buildings, according to the study.
“It can be a source of income that helps families build wealth,” said Anthony Simpkins, president of Neighborhood Housing Services, a nonprofit working to close the racial gap in Chicago’s homeownership. “The vast majority of those who live there live in affordable units. This is exactly what we hope to promote, and we hope that trend will grow.”
Simpkins’ group promotes homeownership among black and Hispanic Chicagoans through home ownership education courses and seminars on topics such as financial literacy and foreclosure prevention, lending services through the Neighborhood Lending Services loan program, and refinancing.
Simpkins said people buying these homes improve the long-term viability of the south and west sides in general. People buying two- to four-bedroom apartments can boost employment, wealth and investment to areas that have struggled with population decline — particularly for black and Latino residents — and disinvestment.
Families may also be interested in buying multi-unit homes recently because of the COVID-19 pandemic, which sharply increased housing costs overall, Smith said. Two- to four-unit units provide opportunities for the buyer to cover costs — such as by renting out another unit — in a way that cannot be done through single-family homes, he said.
Simpkins said the increase in home prices doesn’t worry him, and he remains encouraged by the increase in minority homeownership.
“That doesn’t mean homeownership is out of reach for anyone. It’s our job to help them with that process and get them to become homeowners,” Simpkins said.
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