Chicago City Wire

Chicago is facing a persistent shortage of affordable housing, and current approaches often rely on public sector intervention. Critics argue that such strategies have not delivered lasting solutions. Some urban policy advocates suggest that relaxing regulations and allowing the private sector more freedom could increase the housing supply to better meet demand.

Historically, Chicago has enforced restrictive zoning laws designed to maintain single-family residential areas. These rules have included requirements for large minimum lot sizes, bans on boardinghouses, and mandates for off-street parking. Such measures have limited the types of housing available and suppressed development in neighborhoods with high demand. Reformers are now calling for a reduction in these restrictions to enable more flexible housing options.

Accessory Dwelling Units (ADUs), such as backyard coach houses or basement apartments, are one method for increasing affordable housing. Currently, Chicago’s pilot program for ADUs is limited to five zones and includes requirements like owner-occupancy and caps on the number of units. Advocates suggest that expanding ADU allowances citywide would give homeowners more opportunities to create rental units, especially in RS-1 to RS-3 residential zones. These zones vary in their restrictiveness, with RS-1 allowing only single-family homes on large lots, while RS-3 permits two-flats on smaller lots.

Boardinghouses were once a common feature in Chicago, providing affordable rooms with shared facilities. Changes in federal standards and local codes after the 1930s made these options less viable. The loss of single-room occupancy (SRO) units was significant; over 80 percent disappeared between 1960 and 1980 as buildings were demolished or converted for other uses. Stricter building and health codes increased costs for operators, causing many older properties to close.

Some policy experts recommend revisiting these rules by lifting occupancy caps, updating codes to safely allow shared kitchens and bathrooms, and creating new zoning categories for co-living arrangements. Examples from cities like Tokyo and Berlin show that micro-units and co-living can be successful. In Chicago, each parking space required by code can add $25,000 to $50,000 in development costs. In 2025, the city repealed parking minimums near transit stations, making it easier for developers to build without these added expenses. Expanding this policy citywide could further encourage small-scale infill projects.

The permitting process in Chicago often requires aldermanic approval even when proposals comply with zoning rules. This can cause delays and discourage smaller developers from pursuing projects. Streamlining approvals for code-compliant proposals could reduce costs and speed up construction.

Current zoning also mandates minimum dwelling unit sizes and requires private kitchens and bathrooms. Reformers argue that reducing these size requirements and allowing shared facilities would make it possible to build smaller, more affordable units suitable for students, service workers, or seniors. However, there is strong opposition from homeowners in certain neighborhoods who are concerned about property values.

Supporters of reform say that giving homeowners more flexibility—such as building coach houses or adding rental units—could help families stay together across generations. They believe that while change may be difficult for some communities, the benefits of increased housing options outweigh the drawbacks.

The article notes that public sector involvement remains necessary in maintaining law and order so that new housing can be developed safely throughout the city.