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When Amy Jewel and her husband, Toby Mitchell, moved from California to Chicago 10 years ago, they kicked around the idea of starting a cooperative apartment building.
By pooling their money together with other like-minded families to purchase a building, the couple thought they could more easily afford to stay in the city and build a close-knit community with their neighbors.
Jewel and Mitchell aren’t alone. Many Chicagoans looking to purchase a home are feeling priced out of the city, but in an effort to stay, some have been exploring an alternative path to homeownership — cooperative housing.
Progress has been slow, the pair said, mainly because of legal considerations and the red tape around purchasing a property with multiple people. So far, Jewel and Mitchell have established a legal entity for their future cooperative, written bylaws and an operating agreement and toured properties.
In the last four years they’ve spent planning, the couple also had to relocate from their apartment in Humboldt Park after the landlord sold the unit to a developer. Mitchell said the unexpected move exacerbated their concerns about affordable housing.
“We came to this area and found what we thought was a good deal on a nice apartment,” Mitchell said. “And then the landlords sold it to a small-time developer because he was going to renovate it into luxury units. We didn’t really want to leave the neighborhood because we really like it here, but we had to pay to move and pay more money for a new place five blocks away.”
While cooperative housing comes in different styles, it’s generally defined as a group of people splitting the purchase of a home or multiunit building and sharing the common spaces.
“I think everybody is squeezed,” Mitchell said. “People who [lived in Humboldt Park] before us were probably squeezed out, and we are kind of getting squeezed too.”
Shared living costs
Moving into a Hyde Park cooperative house was an easy choice for Peter Reimer, who saw it as cost-effective and a way to make friends.
Reimer, their partner and baby currently live in Bowers house, part of the Chicago-based Qumbya Housing Cooperative network. Rooms range in price from $450 to $600 per month, depending on size.
“Before the pandemic, me and my partner thought it would be really nice to own a home,” Reimer said. “But with interest rates and property taxes the way they are now, as well as maintenance costs, we didn’t think the math came out in favor of homeownership. I don’t really think housing should be an investment anyway.”
Bowers was founded as a cooperative house in 1991 and has 18 rooms. Residents have their own bedroom and share common spaces, including the kitchen, living room, coworking spaces, backyard and a library.
Another major draw of the house is the communal dinners and food, Reimer said, which usually runs residents another $200-240 a month and gives them access to fresh, often local, produce and other pantry staples. The extra fee also covers utilities, including internet.
Members also divvy up house chores like cleaning bathrooms or shoveling snow. There’s also have a say on matters relating to the house such as decisions about renovations, starting a garden or throwing a party are handled at bi-weekly meetings.
“I definitely wouldn’t be able to afford to live in a house as big or as nice in this area if it wasn’t for Bowers,” Reimer said. “Being near to public transit and the lake is really important to me, as is the community aspect. I get to live with other people who want to be a part of my life, my child’s life and that is so valuable to me.”
Navigating financial hurdles
Despite being relatively affordable, cooperative housing isn’t as popular because securing loans for non-traditional living arrangements can be difficult, said Dave Glowacz, founder of the Logan Square cooperative Sol House.
That’s because residents jointly own the building through shares in the cooperative’s corporation, as opposed to owning their respective unit that could serve as collateral for a loan, he said.
“Although $90,000 towards a membership here is far cheaper than say $250,000 for a condo, unless you have $90,000 kicking around, you might not be able to get a loan,” Glowacz said. “So we created affordable housing in one sense, but there are wider conditions that don’t make it as available to people as it could be.”
Glowacz owned a single-family home for a number of years but he was tired of the ongoing maintenance costs. So he partnered with a friend, who wanted out of their condo, and some other people to purchase their current Logan Square building, featuring six three-bedroom units, under a not-for-profit entity.
“What we found right up front was that there’s no central place to go for information on forming a cooperative, and that obstacle still exists today,” Glowacz said. “The second obstacle was funding, which also still exists.”
Sol House is a limited equity cooperative, meaning members “buy in” to a share in the cooperative when they join. The last share went for $90,000, Glowacz said, which is well below the market rate for a comparable three-bedroom unit in the neighborhood.
In addition to purchasing a share, members pay between $1,000 and $2,000 a month for expenses like taxes, utilities, insurance and maintenance.
Sarah Kaplan, a Chicago attorney who represents housing cooperatives and co-founder of the HUB Housing Cooperative in Marshall Square, said because most cooperatives have to register as nonprofits, they usually only qualify for commercial loans. But commercial loans usually have higher interest rates compared to mortgages, she said.
“I think people considering this should know there are possibilities available,” she said. “One of the things I’m seeing people do in Chicago is an individual will buy a home or building — the individual mortgage rate has good terms and they want to turn it into a cooperative without losing those terms.”
The building owner could rent to the cooperative — if allowed by the mortgage terms — and give the cooperative the right to buy the property once the owner’s loan is paid off.
Buying a home with friends
Chicago teacher Linda Becker remembers being told by a financial adviser that she couldn’t afford a single-family home.
“They told me that I could really only afford a condo,” Becker said. “But I was really set on having a backyard and garden. I thought if I was going to spend all this money, I wanted some dirt to come with it.”
When Becker’s old college roommate moved to Chicago, the duo started talking about buying a place together. With the help of a lawyer, the friends, and their respective spouses, drafted a housing contract and purchased a two-flat in Logan Square.
“It worked out great,” Becker said. “We ended up having kids, sharing a nanny, fixing up the place. We figured out what vegetables to put in the garden. It was awesome.”
The other couple eventually moved out-of-state. Becker and her husband still live in the building and purchased the second unit, which they now rent out.
The experience of buying a building with friends gave Becker a deeper understanding of how a lack of affordable housing can push people out of a neighborhood or force them to get creative, she said.
“I would love to see affordable housing be an issue that’s addressed at the local, state and federal level,” she said. “But I’m also grateful I was able to achieve a comfortable living arrangement that wasn’t the traditional path. Despite the cost of living, there are creative solutions that can enable you to be comfortable and a property owner.”
