Affordable housing crisis deepens in Illinois – Alton Telegraph

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With concern about affordable housing widespread, you’d think a fundamental question would be asked more often: Is more housing being built?

A new study has the unfortunate answer: Not in Illinois. Illinois ranks dead last among the states, tied with New Jersey and Rhode Island. It’s from ResiClub, a real estate research firm.

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Their report earlier this month says Illinois’ housing stock grew by just two-tenths of one percent from July 21 to July 22. That’s tiny compared to many other states, six of which grew their housing stock at over ten times that rate.

You might think that’s no surprise since Illinois’ population has been shrinking, but there’s more to it than that. It’s important to ask why? And how can housing still be so expensive? After all, the cost of housing, like anything else, boils down to supply and demand, regardless of population changes. Is this a supply issue, demand issue or both?

The answer, again unfortunately, is that the numbers say Illinois has been the worst state to own a home, according to several key measures. And builders know that buyers know that.

First, Illinois ranked dead last among the states in home appreciation from 2000 to 2022. Illinois homes have only appreciated 13 percent over the past two decades.

States like Montana, Idaho and Texas have seen appreciation over 100%.  Even Illinois’ neighbors’ prices – though worse than the national average – still managed to grow home value two to three times more than in Illinois. It’s true that Illinois has done comparatively well in the last couple years as a housing downturn hit those high-growth states harder than Illinois. Still, the longer term results aren’t good, which has shatter confidence in the market.

Second, Illinois is home to 12 of the nation’s 50 housing markets “most at-risk” of a downturn according to ATTOM Data Solutions.

Third, and perhaps most importantly, property taxes in Illinois are second highest in the nation. Our state continuously ranks along with New Jersey as the very worst.

More broadly, our overall status as a high tax state surely doesn’t help. Crain’s Chicago Business noted, respecting the slow home building numbers, that Illinois and the other two states tied at the bottom for growth in housing stock are each among the ten states with the highest tax burden.

Crain’s also talked to a few builders who said pretty much the same thing. Illinois builders are reluctant, said a broker who represents the houses of several small homebuilding firms, because they “don’t want to take the risk that they can’t sell the house when it’s finished, so most won’t build until they have the buyer.”

Net all that out and you have a bad mix of supply and demand problems. Nervous buyers make for nervous builders. Supply dwindles even though the inventory of homes for sale is low, as it currently is in many places, especially the Chicago area. Housing remains expensive.

Breaking that cycle will be no small feat. Surely it includes lower property taxes which have long made Illinois homeowners furious.

But a full solution requires economic growth. Only with that growth will buyers regain confidence in what they are buying in to and builders regain confident that those buyers will be there. 

Gov. JB Pritzker has said that Illinois is the most progressive state in the nation and proud of it. Maybe that’s to your liking for other reasons, but when it, comes to housing, economic growth is what counts. Restoring that economic growth will require a wholesale turnaround in our state government’s mentality, including drastic reforms cutting spending and helping employers.

Mark Glennon is founder of Wirepoints, an independent research and commentary non-profit organization.

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