The number of residential building permits issued in the Chicago area dropped 10 percent last year as the federal tax overhaul dampened the development of rental apartments, according to a study by a Chicago thrift institution.
Housing permits totaled 37,150 last year, down from 41,141 units in 1986, the peak year of this decade, Bell Federal Savings and Loan Association reported in its Survey of Building.
A 4 percent increase in the number of permits for single-family homes, to 24,562 in 1987 from 23,721 in 1986, was offset by a 28 percent decline in permits issued for apartments, to 12,588 units from 17,420 units.
Nonetheless, last year`s permit volume was the second highest of the 1980s. The worst year was 1981 at the depth of the recession, when only 9,650 permits were issued.
The most recent figures, however, trail the 46,066 permits issued in 1978, the last strong housing year of the 1970s; and a peak of 62,961 permits in 1971.
Bell`s 1987 numbers made evident the declining influence of apartments on permit volume. Multifamily permits accounted for about a third of permits last year, down from 42 percent in 1986 and 47 percent in 1985.
Edmond M. Shanahan, Bell Federal president, attributed the decline of apartment construction to tax changes that took effect last year and reduced or eliminated most of the writeoffs for landlords.
The most building by far took place in Chicago, which issued 2,319 housing permits last year, of which only 368 were for single-family homes.
Naperville posted the strongest building activity of any suburb in 1987, with 1,535 single-family permits and 320 multifamily permits, for a total of 1,855 housing units.
Second-place Arlington Heights issued 213 single-family and 935 multifamily permits, for a total of 1,148. Schaumburg presented a more balanced picture, with 662 single-family and 428 multifamily permits totaling 1,090.
Despite the decline in apartment construction, multifamily development remained strong in several of the area`s municipalities.
This might be explained in the suburbs by the resurgence of condominium projects, which are included in Bell`s multifamily permit numbers; and, in the city, by the construction of rental high-rises, though realty observers say this might be the last big push for city rentals for a long time.
