Government red tape pushes up housing costs for Illinois families
Illinois lags other states on approvals for new housing. It has one of the lowest rates for housing approvals in the United States. That drives up costs.
Illinois is slow to approve new housing: 20 smaller states last year did a better job of getting housing OK’d, with one advancing nearly six times as many units as Illinois.
The slow housing growth is not new. Illinois approved just over 269,000 new housing units between 2009-2023, including only 57,070 since 2021. It builds the third-fewest new housing units per capita among all states and the fewest among Midwestern states.
The state’s highest concentration of people is in the Chicago-Naperville-Elgin metropolitan area, which approved just over 15,000 units in 2023. Compare that to the Houston area, which had over 68,000 units despite having 1.75 million fewer residents. The North Port-Sarasota-Bradenton, Florida, area has less than one-tenth the population of the Chicago area, yet approved 900 more new housing units.
It is easy to blame population loss for the Chicago area’s slow permit approval: it lost 16,600 people between 2022 to 2023, while the Houston area gained 140,000. But the Los Angeles-Long Beach-Anaheim area lost over 70,000 people, almost four times the Chicago area loss, but approved more than double the housing permits. Similarly, the New York metro area lost over 65,500 residents and authorized over 63,000 units – four times the Chicago rate.
New housing is needed despite shrinking populations because a certain percentage of housing must be replaced as buildings age, deteriorate and eventually become uninhabitable. Also, market changes regarding what consumers prefer, income changes and other factors can greatly distort the housing and rental market and drive up prices without new construction. Chicago already has a housing shortage, even for the current population.
The Chicago area lags every other large metro area in the rate at which new housing is built, approving only 162 houses per 100,000 residents. The Houston metro again came in first with 915 per 100,000 residents. Even the next lowest, the Philadelphia area, approved 30 more housing units per 100,000 residents than Chicago.
Illinois has a housing shortage: over 113,000 as of 2023. Communities are consistently approving less housing than they need.
Part of the blame goes to Illinois’ many housing restrictions combined with slow approval times. Restrictions such as zoning laws, minimum parking requirements, aesthetics, density and building height limits drive down construction.
Time is money, so slow approvals drive up building costs. In Chicago, as of April 7, 2024, the total time for plan-based buildings permits was 88 days – 33 days of processing and 55 days with the applicant. As of May 11, 2024, the average time from application to issuance of a permit was 112.8 days, according to the Chicago Cityscape research service. That’s a huge barrier for prospective developers.
Illinois can learn from other metro areas that have loosened restrictions and sped up approval times. Chicago could broaden its self-certification program, which allows a certified architect or structural engineer with required trainings to vouch and take responsibility for a project’s compliance with city codes. Chicago should look for ways to bring the program more in line with Phoenix’s, which covers a wider range of projects. Other Illinois cities could do the same, relieving government workers of the job and cutting wait times.
Chicago should also reduce its fees. The minimum fee for any Chicago building permit is $302, and the minimum fee for new residential construction is $3,450. Compare that to the highest minimum fee of $290 per structure in New York City and the minimum fee of $1,500 for a median-sized home in Houston.
Chicago has started to implement some reforms. In 2023 Chicago implemented an Express Permit Program that replaced its previous paper-based application with an online platform to apply for permits and monitor their status.
Illinois has a housing construction problem thanks to government overregulation and inefficiency that is driving up prices. But there are solutions, and Chicago is already making progress.