Report: Housing is less affordable due to red tape in Illinois

(The Center Square) – A new report found that Illinois had the third-worst rate in the nation for building new housing units in 2023, with the main culprit being over regulation.

Illinois Policy Institute found that government regulations account for nearly $70,000 of the $292,000 median home price in the state.

Researcher Ravi Mishra said that is preventing new housing construction and aggravating a housing shortage, leading to higher prices and creating what is called “house burden.”

"That is when a household pays 30% or more of their annual income on housing,” said Mishra.

Mishra said the problem is worse among Illinois’ poor because over 81% of low-income households are “house burdened.”

In Chicago, the city ranked last among the country’s 10 most populous metropolitan areas for new units approved. Its land use restrictions also cut into supplies: 25% of the city restricts residential housing development without special approval, and only 21% is currently zoned for multi-family housing.

Taxes also contribute to high housing costs in the state. Illinois has the second-highest property taxes in the country at 2.08%.

The Illinois Policy Institute offered solutions for incentivizing more housing supply, including streamlining housing permit processes, allowing more multi-family housing, and easing regulations on lot sizes, parking minimums and aesthetic requirements.

“It is prohibitively expensive to build housing in Illinois thanks to burdensome regulations and zoning laws,” said Josh Bandoch, head of policy at the Illinois Policy Institute. “Local leaders must remove unnecessary restrictions and limits on new housing units to successfully address this crisis. The plight of housing affordability in Illinois will continue to worsen until they do.”