Illinois homebuilders need to pick up the pace in order to alleviate the state’s housing shortage.
The state’s housing stock increased by just 0.2 percent from July 2021 to July 2022, Crain’s reported, citing a study by real estate analytics site ResiClub. Illinois has the lowest rate of new home construction in the nation, tied with Rhode Island and New Jersey.
The United States has a shortage of 6.5 million homes, according to Realtors.com. Low housing inventory has contributed to an affordability crisis in Chicagoland that’s the worst it’s been since the Great Recession.
A contributing factor to Illinois’ homebuilding stagnation is its relatively flat population growth. The state registered a 2 percent population increase over the past decade. By comparison, Utah’s population has grown by 24 percent over the past 13 years, creating a more conducive environment for homebuilders.
Utah led the nation in new home construction from July 2022 to July 2023, raising its housing stock by 3.3 percent. Idaho and Texas trailed with gains of 2.8 and 2.3 percent, respectively.
Illinois builders are wary of taking risks due to market uncertainties, causing a reluctance to invest in substantial construction projects. Unlike national firms that dominate the Chicago market, local builders fear the potential inability to sell completed homes, the outlet reported.
While the housing shortage persists nationwide, the complexities of land acquisition, permitting and construction pose significant challenges for builders attempting to address the crisis. Even states with higher construction rates, including Utah, are unable to keep pace with the escalating demand for new homes.
In a market where existing home sales are down, Homebuilders have more flexibility in pricing. For example, builders can offer “buy-downs.” This tactic allows builders to pay a portion of a home’s cost upfront to lower the interest rate, essentially discounting the property without changing the price.
—Quinn Donoghue
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