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Originally Posted by Mr Downtown
Virtually all of Chicago is zoned for a density much higher than actually exists, even on the North Side.
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Are you serious? Almost the whole northside pre-war housing stock in the "hot" neighborhoods is non-conforming under the new zoning code, in terms of off-street parking requirement, minimum average unit size, maximum units per lot area, etc. Under the new zoning R3 zones can generally have only a
single family house unless the lot is unusually large, and R4 can at best have a 3-flat. With the exception of a narrow sliver along the lake of R5 and R6 (the latter being the only true high-density zoning left), most of the northside is R3 and R4. In a very select few locations of R4 zoning, the areas could be fully redeveloped for a modest increase in unit density, but these are few and far between as R4 zones typically already have pretty high density.
Nothing resembling the current unit density of Wicker Park, Bucktown, Lincoln Park, Lakeview could be built under current zoning (I'll be nice and won't even bring up Pilsen with its 2-buildings-per-standard-lot). These neighborhoods are full of non-conforming uses, and if every lot were developed to their maximum allowable density, at least on the residential streets, the unit density would decrease. Before the new zoning went into effect in 2004, I would have mostly agreed with you, but definitely not now. And of course, Chicago housing/buildings/land out in the neighborhoods was much more affordable even as recently as 2002-2003...because now the price of building to market demand has to include the legal and political costs of an upzoning, or the opportunity cost of building fewer units than the market could otherwise absorb, and the problem is then further compounded now that any upzoning has to include an abusrdly high payment to the "affordable housing" slush fund.
The problem is also compounded by our incredible oversupply of business/commercial zoning, mandating first-floor retail spaces even where they aren't economically viable, so of course this further distorts the supply/demand equation for housing as the wasted retail space must be paid for through residential costs. Definitely there is room for increased residential density on our business/commercially zoned streets, but until the zoning eases up on use restrictions then the cost of developing these lots will be artificially inflated.
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Many thousands of lots in the city are entirely empty, and anyone proposing a three-flat there would be met by the alderman and the planning department with champagne glasses.
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That's right. These are the only lots for which the factors you cite, especially the inflated labor costs, affect buildability and affordability (there's year-round construction here, after all). For the developer's cost of construction plus contingency/margin, people simply don't want to live in these neighborhoods, so nothing gets built without a subsidy. But in regards to the hot neighborhoods, the vast majority of our price inflation is the difficulty with which supply can meet demand.