Housing crash cost Chicago area 227K new houses, report finds

The glacial pace of construction that followed the 2008 housing crisis cost the Chicago area an estimated 227,300 homes that would have been built in a healthier market.

That puts Chicago sixth among metro areas that lost out on potential new construction, ahead of New York and Los Angeles but behind No. 1 Atlanta, which would have built 407,000 more single-family homes if not for the crash, according to a report from Zillow cited in Crain’s.

The report compares the pace of single-family home construction over the past decade with the pace registered between 1985 and 2000, when the market was considered relatively healthy. If the whole country kept building houses at that pace from 2008 until now, it would mean an additional 6.3 million units, researchers found.

The Chicago area saw about 3.1 building permits per 1,000 residents each year during the last 15 years of the 20th century, compared to 3.9 permits per 1,000 nationwide. Since 2008, the national average slid to 1.9 permits per 1,000, and the Chicago area dropped to just 0.7.

Of all the metro areas studied in the report, Houston is the only market where construction actually sped up after the crash. The nation’s fourth-largest city, known for its relatively lax zoning, has issued 4.9 building permits per 1,000 residents every year for the past decade, compared to 3.6 between 1985 and 2000.

A report this spring posted the inventory of single-family homes on the market in Chicago at its lowest level since at least 2007. [Crain’s] — Alex Nitkin