Illinois 3rd worst in U.S. for new construction
Illinois’ rate of new housing is the third lowest of any state, driving up prices for residents. Fixing that would make housing more affordable and help Illinoisans stay.
A new report on housing affordability shows Illinois built the third-fewest new housing units per capita in 2023, only 134 new units per 100,000 people annually which drives up costs.
Factors hurting construction are:
- Restrictive zoning policies that prevent new construction in many local municipalities.
- Onerous permitting processes that slow down and hurt incentives for new development.
- Burdensome regulations that raise construction prices by $93,870 – more than Chicago’s median yearly income.
- Property taxes that are the second highest in the nation.
Low housing production worsens existing gaps in housing supply. Recent data from the National Low Income Housing Coalition shows Illinois has 289,419 fewer affordable rental units than it needs for extremely low-income households. That’s almost double the 162,318 existing units. Illinois would have to nearly triple the number of affordable apartments available to sufficiently house all low-income renters.
The housing affordability outlook is bleak. Nearly half of Chicago renters pay more than the 30% of their income the federal government says is affordable.
Recent research from NYU’s Furman Center confirms increased supply of housing lowers housing prices. Illinois’ lack of supply and high demand conspired in the first six months of 2024 to raise Chicago’s median rent 6.2%.
Over a year, that would be 12.4%. Prices would more than double if that continued for six years.
To see more affordable housing or even maintain current prices, Illinois must dramatically increase housing production. There is broad ideological consensus that something must be done.
In Chicago, Mayor Brandon Johnson’s Cut the Tape report aimed to streamline housing production in the city. The report recommended a variety of market-based, supply-side reforms designed to remove barriers to new construction.
There are also promising solutions at the state level, including allowing more mixed-use or residential conversion in commercial zones as Florida and Wisconsin have done. There are also statewide reforms such as California’s regarding granny flats or other accessory dwelling units built on existing single-family lots.
Illinois governments at the state and local levels are getting in the way of new development and driving up prices. To make housing more affordable for Illinoisans, particularly low-income renters, regulatory reforms that boost construction are needed.