June housing production in Illinois continues to lag the rest of the nation, leading to price problems across the state
Being able to afford a house is a growing concern across the U.S., with Illinois prices driven up from $195,271 in 2018 to $285,813 in June by a lack of supply.
Like many states, Illinois housing prices have increased significantly since the pandemic. Zillow’s Home Value Index for comparing the price of similar homes across time has risen by 46.4% since June 2018. The growth in home prices have not been even across Illinois.
Some cities have seen increases that outpace the state, such as Chicago Heights at 99.3%, Calumet City at 96.5% and Kankakee at 79.2%.
In Illinois, a key factor driving price increases is the decline in housing inventory. Zillow data shows all 26 Illinois metro areas tracked have experienced shrinking housing inventories since March 2018. Chicago’s inventory has plummeted 39%, from 38,581 homes on the market in 2018 to just 23,564 this year. Eighteen metro areas have seen even more dramatic decreases in available housing.
Data from Realtor.com shows Illinois active listings are 36% of what they were before the pandemic. The national average is at 89%. Addressing the lack of inventory requires building more homes, but Illinois metro areas are still building at low rates.
This housing shortage is largely man-made, driven by policy barriers that artificially restrict housing supply. Restrictive zoning laws make it difficult to build new housing, while Illinois’ high tax burden reduces the disposable income residents have available for housing costs.
Communities statewide could make significant progress by taking actions that make housing development easier. Lawmakers could legalize “light touch density” by allowing for 8- to 10-unit buildings in busy areas. Parking requirements could be reduced or dropped in areas near public transit to allow more room for housing, as has recently been done in Chicago. Accessory dwelling units that support older community members or young professionals just starting out could be legalized for construction across the state.
Those reforms won’t solve everything. Illinoisans eventually able to get homes won’t be able to keep them unless Illinois can also fix its highest-in-the-nation property taxes. Budget reform and property tax relief must go hand-in-hand with regulatory reform if Illinois is going to solve its housing issues.
