Despite low interest rates and a U.S. real estate boom, Illinois is constructing homes at one of the slowest rates in the nation, a research group says.
A new report from the nonpartisan Illinois Policy Institute finds Illinois ranks 48th in the nation for home construction by population. Illinois only built 102,010 new single-family homes from 2010-2020, according to U.S. Census Bureau data.
The only states to have constructed fewer homes relative to their population since the Great Recession were Connecticut and New York. In comparison, the states building the most new homes per capita are Idaho, South Carolina, Delaware, Utah, North Dakota, North Carolina and Texas.
The Chicago metropolitan area, the state’s largest real estate market, also ranks near the bottom of the 10 largest cities for single-family home construction rates. Single-family home construction in Chicago is up 85 percent since 2009. In comparison, the Atlanta area has seen home building increase by over 400 percent, while construction in Phoenix and Miami has increased by more than 200 percent.
One major reason why building homes in Illinois hasn’t made sense for an increasing number of families is the state has the second-highest property taxes in the nation, which contribute to higher housing costs, Institute experts say.
How home building has fared in Chicago and Illinois:
• Prior to the 2008 housing crisis, Illinois averaged more than 40,000 permits for single family homes annually. But in the decade since, Illinois built fewer than 10,000 new single-family homes each year.
• The states that have seen the largest spike in new home construction during the decade are Florida, Colorado, Utah, Idaho and Arizona.
• As compared to 2009, when new construction and the real estate market plummeted, Illinois built only 17 percent more homes in 2020.
• The Chicago metro area has built among the fewest single-family homes by population, with 8.1 new single-family homes per 1,000 residents. Los Angeles and New York were the only cities building fewer homes. In comparison, the Houston metro area added over 57 new homes per 1,000 residents, and Dallas, Phoenix and Atlanta each built more than 35 new homes per 1,000 residents.
• Property taxes are so high in Illinois that they are the equivalent of nearly seven monthly mortgage payments each year for new homeowners.
Bryce Hill, senior research analyst for the nonpartisan Illinois Policy Institute, offered the following statement:
“Many families are finding high taxes make purchasing or building a new home unaffordable. The lack of new home construction contributes to a lack of supply in housing inventory, driving up prices. This, coupled with a decline in the value of services residents receive for property taxes, is likely a significant reason why new home investment in Illinois may not be as worthwhile when compared to other states.
“The best way to reverse the trend of higher taxes for fewer services is through a constitutional amendment that will shore up state and local government finances, protect core services and reduce housing costs for Illinois homeowners.”
To read more, visit bit.ly/IllinoisHousing.
The Illinois Policy Institute is a nonpartisan research organization that promotes responsible government and free market principles.