Why School Quality and Walkability Determine Whether Market-Rate Housing Can Exist

Market-rate housing is not a building type. It is an ecosystem outcome.

I have spent years sitting in underwriting meetings for developments in underserved neighborhoods. The projects often look solid on paper. The capital stack works. The design is strong. And yet absorption repeatedly falls short of the proforma.

In project after project, the pattern resolves to the same two variables.

School quality and walkability. They are the first things a prospective resident encounters before they ever engage with the product itself. When these signals are weak, the market never fully forms. Not because the building failed, but because the conditions that allow real demand to exist were never in place.

What Loads Before the Listing

When a family is seriously evaluating a move today, they start with an address. Not a tour. Not a conversation with a leasing agent. An address typed into a search bar.

Before the photos load, before they see square footage or price, a school rating is already sitting next to the listing. Zillow pulls it. Google surfaces it. It is the first real data point a prospective resident encounters, and in most South Side Chicago communities, that number is a 2 out of 10.

Behind that number is the state assessment data that generated it. According to the 2024 Illinois Report Card, 30.5% of CPS students in grades three through eight read at grade level. Math proficiency across the district sits at 18.3%. For Black students, who represent a significant portion of South Side communities, math proficiency drops to 9.3%.

A family reading those numbers is making a rational allocation decision. They are comparing their options and moving toward the neighborhood that signals the most stability for their children and their long-term investment. From a development perspective, this decision happens long before a building ever opens its doors. Demand is either forming or dissipating before the leasing team even has a chance to market the product. When the school rating signals risk, that calculation resolves quickly and demand flows elsewhere.

What Attendance Data Is Really Telling the Market

Test scores are one signal. Attendance tells a deeper story.

In 2024, 40.8% of CPS students were chronically absent, meaning they missed at least 10% of the school year. In 2019, that figure was 24%. Among Black students today it sits at 46.2%.

When nearly half of the students are not showing up consistently, a prospective resident is reading institutional conditions, not just a school metric. They are assessing whether the environment itself is stable enough that families already in the community feel confident in it.

That is the signal underneath the number, and it shapes housing decisions before any other factor enters.

This data carries additional weight. CPS spent over $25,000 per student in operational costs in 2023, roughly $6,500 above the Illinois state average. All-in spending for the current school year reaches $28,702 per student. The investment is above average and the outcomes reflect how deeply systemic the underlying conditions are.

When capital evaluates a development opportunity, indicators like these become part of the broader risk picture. They influence underwriting assumptions about demand, absorption timelines, and long-term neighborhood stability.

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