Housing affordability, and what to do about it

A recent Brookings Institution study suggests that, if Evanston were its own metro area, it would be among the 25 percent of most costly areas for home ownership in the nation.

The study compared median owner-occupied housing prices to median household incomes in census tracts in nearly 400 metro areas across the country and found that the typical house costs from just 1.68 times the median income in Danville, Illinois, to 8.56 times the median income in Santa Cruz, California.

Looking at city-level data for selected communities, as Evanston Now did in the chart at the top of this story, yields an even wider range -- from 1.2 in Flint, Michigan, to 9.8 in San Francisco.

The Brookings study says that the cost of the median-priced home in the Chicago metro region, at 3.76 times median household income, is within what it describes as the normal range -- in the middle half of the distribution -- although it's toward the higher end of that segment.

For Evanston, the median home price is 5 times the median household income. That wouldn't rank Evanston in Brookings top 10 percent "very high" category, but puts it well within the "high" range.

The Brookings study notes that while extremely high cost ratios make it hard to buy a home, extremely low ones make it very hard for homeowners to build housing weath.

It also suggests that nationwide the average ratio of housing value to income has ranged historically from 2.6 to 4.

The authors of the study argue that high housing prices result from excessive land use regulation and other policy choices of local governments.

Making housing more affordalbe to middle-income families, they suggest, will require local governments "to revise their zoning and allow more housing to be built, especially near jobs and transportation."

Evanston officials are now considering a variety of possible zoning code changes that are aimed at achieving those goals, but it's not yet clear how many changes will win approval or how effective they will turn out to be.

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Comments

Brookings Institution statistics.

If more affluent people bought housing in Evanston but housing prices stayed relatively unchanged, would not the median value of housing be reduced when comparing median cost of housing to median income?

Affluence ...

Hi Dan,

The ratio between housing cost and income would be reduced, yes. 

The Brookings study measures the "fit" between the cost of owner-occupied housing in a locality and the incomes of the people who live there.

That's far from the only way of looking at housing issues, but it's one useful lens.

-- Bill

Flawed conclusion

I can appreciate the methodology so some extent to highlight the lack of housing that is affordable to residents of a particular metro area. But anything that shows Evanston is LESS affordable than Wilmette is frankly misleading. Evanston has MUCH MUCH more cheap housing than Wilmette, but is "less affordable" according to this analysis because there are way more low income people in Evanston. So, a city like Evanston that attracts more low income residents (because is IS more affordable), become LESS affordable based on the calculation since the denominator of the calculation is smaller. That doesn't make sense.

One could accurately state that Evanston residents on average spend more of their income on housing than Wilmette, but that is because Evanston residents on average make less, not because Evanston is less "affordable." Being a very expensive place that attracts only super wealthy people is NOT an "affordable" place to most people, but according to this analysis, one would conclude that is is affordable because only rich people live there. Incidentally, the Chicago metro area is currently one of the most affordable places in the nation right now of major cities. Chicago prices have NOT increased much and have had the lowest appreciation of the largest 20 metro areas since the Great Recession. We are lucky to have plenty of affordable housing options for the residents of this great city.

Not so ...

Hi Bradley,

It's not misleading at all. The data indicates that Wilmette is more affordable -- to the average person who lives there -- than Evanston is to the average person who lives here.

There are all sorts of good questions about what sort of income distribution a community ought to have and how much housing it ought to provide at different price levels. But those aren't the questions the Brookings study was trying to answer.

-- Bill

Evanston residents don’t live in a vacuum

While I agree your statement and can appreciate the Brookings Institute’s Methodology, my point is simply that Evanston residents don’t like in a vacuum and can easily move in / out to places like Winnetka (a “more affordable” place, hahaha) with minimal impact on their lives (no need to find a new job) because they’re near each other. So, I see the value of this ratio comparing metro areas against one another (although certainly people can move to a different metro area but the barriers are higher), but not for use for cities/villages within the same metro area. Median home price is simple and fair enough to look at.

Saying “Winnetka is more affordable than Evanston” is misleading to the average raeder even when you follow it up with “for the average person who lives there.” Saying “Evanston residents spend a higher percentage of their income on housing” leaves less room for misinterpretation. (So, yes, I’m probably making a point about people not reading “beyond the headline” in today’s society although hopefully EvanstonNow readers are mostly smarter than that!) I do thank you Bill for your original analysis of data though Bill. It’s always interesting and spurs additional thought.

Unaffordable Evanston

Yes, this is what Evanston is: unaffordable.  But why?  Because more and more every year the councilpeople who we elect to show restrain and judicious criterion representing our money and interests spend more and more of it.  These days it is building more affordable habitations... That should solve the problem of un-affordability, right?

What they don't seem to be able to realize is that un-affordability is created by them!  Not by some weird unaffordable peculiarity of homes in Evanston.

Evanston becomes unaffordable because of encumbrances on its citizens.  Because of so over-expensive services, such as costly parking meters, garages, car taxes, parking by your home taxes, food taxes, shopping taxes, beach tokes, ENORMOUS PROPERTY TAXES….And so many regulations and codes!!!  Not too many people can afford Evanston.

Evanston is unaffordable because councilpeople spend without control; because they are spendthrift and wasteful.  Because it is so easy and wonderful to spend other peoples moneys on kindhearted and “caring” projects. Projects that once created cannot be eliminated because of all that personnel that has been hired…!  And the new bureaucracies that have been created!

Ever since I came to this town 56 years ago, services to me by the city have become fewer and fewer, and the ones left more and more expensive.  When I came to Evanston the city cleaned the sidewalks and I paid fewer taxes.  When I came to Evanston we had collection of wastes twice a week and paid fewer taxes. When I came and the right to park "freely" by your house was started I only had to ask for the sticker.  It was free. When I came to this city there were practically no parking meters.

When I came to Evanston there were lots of quaint small shops that didn’t have to close due to huge taxes.

In those days Evanston still preserved some of its original quaintness.  Which is all now long gone to give room to special projects that hopefully will provide the uncontrollable spending more tax money.  Such as ugly Chicago style high buildings.

And now the destruction of the last of the treasures, the Harley Clarke building.

I wonder: do councilpeoples themselves spend THEIR OWN money that way?  Do they tell their own kids, “yes honey, go and buy all the snacks and candies you want….”  “Yes, dear, you can have this new bicycle any time….” "yes, you can have more and more computer games...."

If people in the council cannot create a reasonable budget that makes Evanston more affordable.  If they cannot stay on that budget and refrain from overspending money that is not theirs, they should not be in the council.

Evanston Is Not An Island

Great analysis and loved reading that study.  In my view, it confirmed what I've felt (as someone who lived in California and New York before coming back) -- that Evanston/Chicago does not have a housing affordability problem.  Which is why I'm fascinated and flummoxed by the City Council's obsession with "Affordable Housing."  One can buy a condo for <$100K and a house for <$300K (and even cheaper in other parts of Chicago)...how much more "affordable" can housing in a North Shore community be?

Here are some quotes from the article that stuck out to me:

1.) House prices are affordable to middle-income households in most US neighborhoods.  2.) Affordability is mostly a problem in large Northeastern and Western cities.  3.) The poorest 20% of US households have difficulty paying their rent...regardless of where they live.  4.) The US does not have a national affordability problem.  5.) Almost all Midwestern households live in affordable neighborhoods.  6.) Housing affordability is a regional rather than a national problem.  7.) Nearly all communities have some neighborhoods that will be out of reach for middle-income families -- the "nicest" neighborhoods in town.  But in most communities, middle-income households can still afford to buy a home in a reasonably wide range of neighborhoods.

This study considers Evanston to be part of the Chicago metro area -- a neighborhood.  Which makes sense.  If one accepts that...then why can't Evanston be one of the "nicest" neighborhoods in town?  Why does Evanston have to be "affordable" to everyone?  Is there really a housing crisis (like there is in San Francisco)...or is housing being used to fight other battles?

The Progressive/Liberal position seems to be that economic and racial segregation are what ails society.  And these ills can only cured by Diversity/Inclusion/Equity/Integration/Multi-Culturalism.  "Affordable Housing"/Evanston's Inclusionary Housing Ordinance is just a tool used for that purpose.  It's why there is so much focus on having affordable units in new buildings and having affordable housing in all wards.

Economic and racial integration is the goal...not making housing more affordable.