Problem
How dense should city housing be? A few of Chicago's downtown city blocks, due to their numerous high rises, have some of the highest housing densities in the nation. Chicago's City Council has been pondering for several months whether to allow increased housing density in its other neighborhoods, through an Accessory Dwelling Unit (ADU) ordinance. Ultimately, City Council passed an ADU pilot program. The ordinance would permit "coach houses" and "granny flats" to again be constructed in Chicago housing lots. Several neighboring towns in the suburbs are considering similar measures.
Proponents argue that the ADU ordinance would allow for more affordable housing units to be offered on the market, and won't take away from the "feel" of neighborhoods, since those units are often facing the rear of the lots on which they are constructed. The ordinance would also disallow renting those units short term on platforms such as Airbnb and VRBO.
Opponents, however, argue that there is no strong mechanism in the ordinance to ensure rents for those units are truly affordable, and are seeking to impose restrictions in the form of maximum rents (a variant of "rent control") to keep their rents low. Economists tend to oppose rent control measures because, as we discussed in class, they distort incentives to offer and maintain housing units in the first place.
In parallel, the State of Illinois, hungry for more residents (and tax revenue), is considering its own legislation that will allow ADUs and disallow blanket bans on ADUs by cities and municipalities. The issue at hand is the tradeoffs between increased affordable housing supply, government intervention through various forms of rent control as well as through restrictions on property use (such as disallowing short-term rentals), and the potential effects of higher housing densities on neighborhoods.
Take a position on this issue and provide arguments and economic justifications for your position.