Illinois will need to step up delivery of new housing units by 100% just to keep up with demand, according to a new economic study.
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The state faces a current shortfall of 142,000 units and will need to build about 230,000 more between now and 2030 to stabilize the market and address a growing housing affordability crisis, authors of a joint report from the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois Urbana-Champaign said Tuesday.
“Regardless of where in Illinois you live, it costs dramatically more to own or rent a home today than it did five or ten years ago,” Robert Bruno, a study co-author, University of Illinois at Urbana-Champaign professor and PMCR director, said in a release.
Researchers found that while Illinois remains more affordable than coastal markets, demand is on the rise due to increasing incomes, strong employment, population growth and the state’s higher-than-average rates of homeownership.
But over the past five years, new home listings fell 64% and housing construction permits dropped 13%. Both in Chicago and statewide, rental vacancy rates are at historic lows and rents are creeping up. Chicago rent growth was the fifth-highest in the nation in May at 3.1% versus an average of 1% nationally, according to Yardi Matrix.
Home values rose 37% over the same period, both insurance and property taxes spiked, and would-be homeowners were locked out by investors making cash offers for properties.
To turn the situation around, study authors recommended a series of policy changes, including easing zoning restrictions to spur more multifamily development, parking reform, fast-tracked permitting and tax incentives to convert unused commercial properties into residential units. They also called for a surcharge on short-term rentals to encourage owners to keep units available for permanent renters.
“There are a number of policies that have proven to reduce barriers to new housing construction and improve access to affordable options for prospective buyers, renters, and even developers,” ILEPI Economist and study co-author Frank Manzo IV said.
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