A new report from the non-partisan Illinois Policy Institute has found that Illinois currently ranks 48th in the country for homebuilding by population.
The state only built 102,010 new single-family homes from 2010 to 2020, or about eight homes per 1,000 families. Meanwhile, Illinois’ population declined by nearly 20,000 over the decade, according to US Census Bureau data, making the state the second largest gross decline of any state in years. 2010.
It hasn’t always been that way.
Before the 2008 housing crisis, Illinois averaged more than 40,000 permits for single-family homes per year. Today, less than 10,000 new homes are built in Illinois per year.
“Before 2008, you saw that new construction was probably 80% for sale – like condos, single-family homes – and 20% was apartment buildings. Now you see the opposite, ”Stephens said.
But with decades of bad state-level policy, mounting pension debts, sky-high property taxes, and tough trade restrictions, people are pouring in from Illinois.
Illinois faced some of the highest homeownership costs in the country as a result of the financial crisis. While nationally the cost of owning a home has fallen 19% from the numbers before the housing bubble burst, in Illinois the costs have risen. Property taxes are now so high in Illinois that recent buyers are paying the equivalent of nearly seven additional mortgage payments – per year – for a typical home.
This means that many Illinois homeowners cannot be sure their home is worth the investment, especially as growth in property taxes outpaces growth in home values.
Not only is Chicago building new homes at one of the slowest rates among major metropolitan areas, it also shows virtually no population growth over the decade.
Meanwhile, large metropolitan areas with rapidly growing populations have been building new homes at a much faster rate. Houston, Dallas, Phoenix, and Atlanta all built more than 35 new homes per 1,000 residents between 2010 and 2020.
As a result, Illinois manages to crumble amid a nationwide real estate boom as Utah, Idaho, Texas and North Dakota lead the country in home construction. Their population grows each year, welcoming new residents and businesses.
During the pandemic, Illinois experienced a temporary spike in house prices, created by low interest rates, increased federal stimulus funds, and low housing stock; however, the trend did not last.
Without pro-business policies, there is no reason to expect housing stock to increase or downward demographic trends to reverse.
“We need to fix our pensions and our infrastructure so that they really thrive and are a viable place where people want to buy, live and invest again,” Stephens said of the state.
The Illinois real estate market will not recover until the state gets its economy in order. Tough political decisions must be made for the long-term health of Illinois and its residents.
The state government must make planting roots in Illinois a wise move for individuals and businesses.
Bryce Hill is the Senior Research Analyst at the Illinois Policy Institute, a non-partisan research organization.