Pritzker proposes at least $250 million for affordable housing

The money would be spread across several programs meant to create more units.

Gov. J.B. Pritzker wants to spend at least $250 million to target the state’s housing affordability crisis, and the money would not attack the root problem — low supply.

Pritzker’s deregulatory proposals are much more likely to help.

The governor’s affordability proposals, in his budget for fiscal 2027, come as Illinois faces a shortage of 142,000 homes, according to a report from the University of Illinois. To meet demand, Illinois needs an estimated 227,000 new units over the next five years.

The state got a “C” and an affordability ranking of 30th in the U.S. in an analysis from Realtor.com and scored worst among all its neighboring states.

Pritzker’s proposed financial supports to spur homebuilding for low- and middle-income people include:

• $100 million for a new Missing Middle Housing Infrastructure (M2I) Grant Program at the Illinois Department of Commerce and Economic Opportunity.
• $100 million for missing middle and other affordable housing programs at the Illinois Housing Development Authority.
• $50 million for Opening Doors and SmartBuy down payment assistance programs at IHDA.
• Connect developers to the capital needed to construct new, affordable homes.

In the budget address, the governor highlighted two other initiatives:

• Financial support for the Next Generation Capacity Building Initiative, which provides capital, training and technical resources for affordable housing through tax credits.
• Closing financing gaps, “from targeted funds for smaller projects to direct support to local communities so they can clear initial hurdles and make housing sites build-ready.”

If these are in addition to those outlined in the proposed budget, the total funding could surpass $250 million.

Pritzker believes Illinois’ housing problem is that costs are too high because not enough homes are being built. That aligns with a proven principle: “The key to achieving housing affordability is to increase housing supply.”

Unfortunately, the funding and incentives Pritzker proposes are unlikely to improve housing affordability for low- and middle-income households because they do not address the root cause: low supply.

With these initiatives, the state would simply be trying to offset the costs of its regulatory and fiscal environment by compensating developers to build homes they otherwise choose not to build. If the projects were financially viable, developers would already be building them.

Other policies meant to increase the supply of affordable housing generally have limited supply and increased prices. One of those is inclusionary zoning, which requires developers to set aside a portion of units at an affordable price. In Chicago, more than 20 years of that policy has yielded only 2,798 units.

The best way to make housing more affordable for all Illinoisans, especially low- and middle-income people, is to increase supply by making it easier to build. The state should address the root regulatory burdens that make it unnecessarily expensive for developers to build homes.

Such moves include adopting by-right zoning statewide, streamlining permitting, legalizing family-friendly housing types and eliminating aesthetic restrictions.