How Chicago’s Zoning Reforms Could Lower Housing Costs

Zoning rules shape what gets built, where it gets built, and who can afford to live there. In Chicago, two big zoning changes are poised to open the door for more housing—and potentially lower costs. For homeowners, small-scale developers, and people who care about housing access, this is worth paying attention to.

No More Mandatory Parking Near Transit

For decades, Chicago required developers to include off-street parking with most new construction. That might sound harmless, but those mandates added tens of thousands of dollars per unit. In neighborhoods where people rely on buses and trains, that requirement made little sense.

That’s changing.

As of July 2025, new legislation eliminates parking minimums near public transportation for most developments across the city. If a property is:

• Within a half-mile of a CTA or Metra station, or
• Within a quarter-mile of a frequent bus route,

…developers no longer have to provide parking by default. They can still include it—but they don’t have to. That decision is now based on what’s best for the project and the neighborhood, not a one-size-fits-all rule.

This matters. Cutting the parking requirement can:

• Lower construction costs
• Reduce the need for zoning adjustments or variances
• Let smaller builders take on infill or renovation projects that wouldn’t pencil out otherwise

In short, this opens the door to more housing in places where people actually want to live—and lets developers focus on homes instead of car storage.

Accessory Dwelling Units May Expand Citywide

Coach houses. Basement apartments. Backyard cottages. These are all forms of Accessory Dwelling Units (ADUs), and they’re a big part of how other cities are tackling housing shortages.

Chicago has allowed ADUs in a limited pilot program since 2020. But this summer, the City Council considered legislation to legalize them more broadly.

Here’s what that could mean:

• Homeowners might be able to add a rental unit over a garage or in a basement
• Older homes could be retrofitted to create a small apartment for a relative
• More neighborhoods could see gentle increases in density without major redevelopment

And when paired with the new parking reforms, homeowners wouldn’t be required to add parking for these units either.

That’s especially helpful for families who want to support aging parents, recent grads, or tenants who don’t drive. It’s also a way to generate rental income, build equity, or make a mortgage more manageable.

What This Means for Housing Affordability

Chicago isn’t building enough homes to meet demand. The zoning code—with its limits on density and its costly parking mandates—has been part of the problem.

These new reforms won’t solve everything. But they do remove two major roadblocks:

1. Parking mandates that made small projects infeasible
2. Restrictions that kept ADUs illegal in most neighborhoods

If you reduce the cost to build and allow more types of housing, prices become more flexible. Developers can build smaller buildings on smaller lots. Homeowners can create rental space without jumping through hoops. It doesn’t flood the market overnight, but it does increase the number and variety of available units.

Over time, that helps balance supply and demand—and reduces pressure on prices.

Why This Matters for Our Clients

At Birchwood Law, we work with developers, investors, and homeowners across the Chicago area. We’ve seen firsthand how zoning can stall projects or make them financially impossible. When rules change, opportunities open up—but only if you understand what’s changed and how to move forward.

Here’s what we’re telling clients right now:

• If you own land near a train or bus line, you may be able to build without providing parking. That could change the economics of what’s feasible.
• If you’ve considered adding a coach house or basement unit, pay attention to the ADU expansion. Your property may soon qualify.
• If you’re planning a new project, now is a good time to revisit your site plan. You might be able to simplify your approach and cut costs.

Next Steps for Property Owners and Developers

If you’re trying to understand how these changes affect your property, start with a few basics:

• Look up your zoning district
• Map your property’s proximity to CTA or Metra lines
• Check whether you’re in an area served by frequent bus service

Then talk to someone who understands how the new rules interact with your goals.

We’re helping clients:

• Evaluate ADU potential on residential lots
• Review development opportunities with lower parking requirements
• Navigate zoning adjustments and permitting under the new framework

What These Zoning Changes Mean for Your Property Strategy

Chicago’s decision to eliminate parking minimums and move toward citywide ADU legalization isn’t just a policy update—it’s a shift that impacts the bottom line for property owners, developers, and investors. These reforms make it easier to add units, reduce project costs, and rethink what’s possible on a given lot.

Whether you’re evaluating infill opportunities near transit, considering a basement or backyard rental unit, or reassessing a stalled project, the path forward just became more flexible—and more valuable.

Birchwood Law helps clients unlock value in their land. If you’re ready to explore what’s now possible under Chicago’s updated zoning laws, let’s talk.