Restrictive zoning laws and policy barriers have prevented new housing construction, driving prices up and Illinois families out.
Illinois families looking to buy homes are facing a harsh new reality: home prices are rising, making what used to be affordable communities increasingly out of reach for working families.
According to Zillow’s Home Value Index, which tracks the price of similar homes over time, Illinois home values have jumped 46.8% since July 2018. The typical home that cost $196,895 six years ago now runs $286,669 – nearly $100,000 more.
But the pain isn’t spread evenly. Some communities have been hit harder. Ford Heights has seen housing prices more than double, rising 143.3% since 2018. Harvey isn’t far behind at 116.4%.
These aren’t just numbers. They represent real families being priced out of communities where they grew up, worked and wanted to raise their own children.
The driving force behind these prices is simple: there just aren’t enough homes to go around. Illinois is experiencing a severe housing shortage that’s getting worse every year. A recent report found Illinois will need to build 227,000 new units of housing during the next five years to keep up with demand. That would mean doubling current production rates. That is unlikely in many metro areas.
Zillow data shows all 26 Illinois metro areas have seen their housing inventory shrink since March 2018. None has bucked the trend.
The Chicago metro, which had the greatest number of homes available for sale in 2018 at 38,581, has dropped 38% to just 24,096 homes for sale seven years later. That drop represents thousands of families who can’t find homes to buy.
Chicago isn’t alone. Nineteen other Illinois metro areas have seen even steeper declines in available housing, creating bidding wars and forcing families to settle for homes they can barely afford or to move away entirely.
The scope of Illinois’ housing shortage becomes even clearer when compared to the rest of the country. While other states have started to recover their housing inventory, Illinois continues to lag far behind.
According to Realtor.com data, Illinois currently has just 39% of the active housing listings it had before the pandemic. Meanwhile, the national average sits at 90% – more than double Illinois’ recovery rate.
This massive gap explains why Illinois families are struggling more than their counterparts in other states to find affordable housing. When there are fewer homes for sale, prices naturally rise as buyers compete for limited options.
The obvious solution is building more homes, but Illinois metro areas continue to construct new housing at disappointingly low rates. Without a significant increase in new construction, the shortage will only get worse.
Illinois didn’t stumble into this housing crisis by accident. The shortage has been created by decades of policy decisions that make it harder and more expensive to build homes where people want to live.
Restrictive zoning laws across the state prevent builders from constructing the types of housing that working families can afford. Illinois’ notorious high tax burden leaves residents with less money available for housing costs, making the affordability problem worse.
The good news is communities across Illinois have proven solutions at their fingertips. Cities could legalize allowing buildings with up to four units automatically in areas usually restricted to single-family zoning.
The elimination of minimum parking requirements, as was recently passed in Chicago, could be adopted in other cities with ample public transportation, freeing up more land for housing. Accessory dwelling units – the small homes added to existing single-family lots that help house young professionals and aging community members – could be legalized statewide.
But housing reforms alone won’t solve the problem. Illinois also needs to tackle its highest-in-the-nation property taxes, which make it difficult for families to afford homes even when they can find them. Budget reform and property tax relief must work together with zoning changes if Illinois wants to give its residents a real shot at homeownership again.
