Chicago’s Housing Future Is in Its Past: Look to the “Missing Middle”

Like the rest of the country, Chicago is facing an affordable housing crisis. Some neighborhoods boast houses that are too pricey for many residents. Other neighborhoods lack sufficient housing for families and are pocked with vacant lots that hurt property values and discourage investment. We can make progress in addressing both challenges by providing incentives for developing new housing across Chicago that echoes a successful model from the past: two-flats and three-flats. 

For decades, such homes provided an opportunity for Chicago residents from various backgrounds to build wealth and move up the ladder to the middle-class. These buildings weren’t just housing. They were flexible, practical investments. Some households rented out the second flat to help pay the mortgage, while others used extra flats to house extended family. This kind of “gentle density,” with more people living within a neighborhood without high-rise development, did more than support households. It helped sustain local businesses, from grocery and furniture stores to banks and corner drug stores, creating vibrant, walkable communities.

Today, in underinvested neighborhoods dealing with depopulation and vacant land, new two-flats and three-flats could help build density that would more quickly attract businesses and other amenities that residents want and need. In better resourced communities, they could provide more families with access to amenity-rich neighborhoods at lower price points than single-family homes.  

Neighborhood density also has significant spillover benefits for the entire city. More residents mean more taxpayers, more riders for Chicago’s transit system, more shoppers to make a grocery store feasible, and more account-holders for a new bank branch. It means a more vibrant, livable city for all residents in all neighborhoods.

Two- and three-flats still make up about a quarter of Chicago’s housing stock, yet in recent years, new, traditional construction has shifted to single-family homes or large apartment buildings. As a result, policymakers are taking a fresh look at how to encourage these “missing middle” housing options, which offer a balance of affordability, flexibility, and neighborhood scale.

Recent budget proposals include programs aimed at expanding this type of housing —smaller, multi-unit buildings – that fall between single-family homes and larger apartment complexes – as one approach to addressing this missed opportunity. Chicago’s Missing Middle initiative is a promising step in that direction, but is constrained by existing city zoning laws and limited private financing options. At the state level, the governor has also proposed incentives to support the development of two- and three-flat buildings, signaling growing momentum behind this approach. Two-flats and three-flats have benefited Chicago in the past, when the city was growing and developing into a world-class metropolis. Today, re-embracing that model of housing may offer part of the solution for many Chicago families struggling to build a good life and a brighter future. And that’s good for everyone.