Chicago’s high housing and mortgage rates, low inventory, stagnant wages and dwindling job prospects leave Gen Z workers with an unfortunate reality: Forget buying. Many struggle to simply move out of their parents’ homes.
In his proposed 2026 budget, Mayor Brandon Johnson aims to make Chicago the most affordable big city in the U.S. It’s a noble goal, especially if Chicago wants to attract young workers and stop losing talent to Milwaukee.
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But his aspiration is doomed to fail unless the administration fixes the policy that’s been hindering new housing for 20 years: the Affordable Requirements Ordinance.
Johnson’s plan calls for updating building codes and supporting high-rise conversions into housing. Those are good steps, but if the ordinance remains in place, developers will continue to steer clear of Chicago. The city’s vacant buildings will stay empty.
It’s time city leaders eliminated the ordinance.
The ordinance was created in 2003 to mandate developers of projects with 10 or more units set aside 20% as “affordable.” It’s been disastrous.
After two decades, the policy has produced fewer than 2,800 units — nothing for a city of 2.7 million. Worse, it likely has chased away large-scale development and driven up prices because of a shrinking supply.
As Arbor Investment Management developer Sam Goldman told Illinois Policy, Chicago policymakers “have been too focused on affordable housing, and not housing affordability.” Mandates have eliminated natural opportunities for empty spaces, teardowns and high-rises.
Developers build fewer big projects here than in almost any other major city. In 2023, Chicago granted permits for 1.36 units of housing per 1,000 residents. Cities such as Los Angeles have developed at more than triple that rate and Houston over five times.
The result? Rents in Chicago for multifamily units have increased by 6% since last year and 35% since before the pandemic. The average rental price in the city is now $2,113. In Philadelphia, it’s $1,881, and it’s just $1,675 in Houston.
Most Gen Z renters in Chicago are already paying over 30% of their income for housing. The growing supply gap will only increase those costs.
Illinois Policy’s newest Lincoln Poll found that housing is among the top three issues for Chicago voters. Cost of living was the No. 1 issue for young voters in 2024.
Now, Gen Z is moving to cities such as Austin, Texas, to chase jobs and affordable living. It’s not hard to see why.
Goldman said new construction and projects work financially in places such as the West Loop, where market rents are high enough to offset Affordable Requirements Ordinance costs. Everywhere else, projects stall because the numbers don’t make sense.
Johnson wants to creatively address the city’s record-high office vacancy rate, currently at 28%, by easing the commercial-to-residential building renovation requirements. That makes sense.
Vacant office buildings in Chicago are often near transit, jobs and amenities that make them desirable locations for young Chicagoans. Plus, these conversion projects are completed faster than developments starting from the ground up — which will help address the housing shortage quickly.
But Chicago’s approach to these conversions is costly and punitive. Rather than offering predictable incentives, it relies on one-off subsidies, tax increment financing and tough affordability mandates that scare off investors.
Johnson previously allocated $166 million in tax increment funding to convert two commercial high-rises into apartment buildings for just 120 affordable units. Other taxpayer-funded housing developments’ costs have mushroomed as well.
New York City offers a road map
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. Facing similar office vacancies, it used a smart mix of incentives — not mandates — to encourage commercial-to-residential conversions. New York’s tax abatement program gives developers 35 years of property tax certainty if they include affordable units. That approach has already spurred dozens of conversion projects, breathing new life into Manhattan.If Chicago wants to truly expand housing, it should follow New York’s lead by replacing its ordinance and penalties with incentives. A property tax abatement model would make conversions feasible while still producing affordable units. If city leaders are unconvinced, sunset the ordinance for a trial period and see how many projects move forward.
Chicago must also streamline approvals, upzone transit-dense areas to allow more multiunit development and fast-track permits for adaptive reuse projects. These steps cost the city nothing but could unleash billions in private investment.
Johnson’s 2026 housing ambitions will remain just that, ambitions, unless he’s willing to confront the root of the problem: The Affordable Requirements Ordinance doesn’t make housing affordable. It makes it scarce. Gen Z can’t afford that.
It’s time city leaders give developers the opportunity to invest in the city and naturally, effectively make housing more affordable.
Micky Horstman is the communications associate for the Illinois Policy Institute and a social mobility fellow for Young Voices.
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