New study points Illinois housing crisis to lack of inventory
ILLINOIS (25News Now) - Illinois is experiencing an affordable housing crisis, and a new study shows that construction crews would need to more than double their current workload to meet that need.
A 37-page study was published this week by researchers at the Illinois Economic Policy Institute and the Project for Middle-Class Renewal at the University of Illinois at Urbana-Champaign. What they found is that the cause of the housing shortage can be attributed to an imbalance of supply and demand.
According to the study, the housing market in Illinois needs 142,000 homes to satisfy the current need among first-time and repeat homeowners.
“That has increased home prices and rents, leaving many families unable to find or afford housing,” said Economist Frank Manzo IV.
Manzo and Professor Bruno at U of I spent all of 2024 researching why statewide trends show a decrease in housing affordability, and they found several causes.
One cause is that Illinois is building about 19,000 new homes per year, but Manzo said that’s not nearly enough.
“Illinois must build about 45,000 new homes per year over the next five years, which is more than double what home construction has been across our state for many, many years,” said Manzo. “The number of homes that are listed for sale are way down; they are down more than 60% compared to where they were in 2019.”
Manzo said that Illinois also has 9% more workers compared to 2010, which means more people are ready to buy a home.
That’s what Michael Maloof at Maloof Realty also sees, with more people moving to Peoria. And because there’s less inventory and more buyers, that makes it a seller’s market.
“‘There aren’t many homes, I’m in competition, I want that home, I’m willing to pay a little more,’ so the affordability index for Peoria still shows us there’s a lot of room to grow in prices,” said Maloof.
While increased home values are a positive for homeowners, it’s not the same for buyers. Manzo said those values show an annual increase of 5%.
The good news is that Illinois currently ranks in the middle of U.S. states in terms of monthly rent or mortgage costs. However, Manzo said that rank is trending in the wrong direction.
The solutions Manzo and Bruno offer in the study to turn that trend around include reduced zoning restrictions, more multi-family construction, fast-tracked permitting, tax incentives, and more low-interest programs.
“If we want to attract and retain residents and not be thought of as a state that is losing population, we should address the affordability crisis and build homes that families want and need to live in,” said Manzo.
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