Illinois home prices jump as inventory plunges

The state’s housing inventory is at just 31% of pre-pandemic levels, driving up prices. Restrictive zoning and the nation’s highest property taxes must be addressed.

Buying a home in Illinois has become dramatically more expensive since before the pandemic. Whether you’re looking in Chicago or Danville, you’ll need a much bigger down payment and a bigger mortgage than just seven years ago.

Illinois home values have jumped 48.8% since February 2019, according to Zillow’s Home Value Index, which compares prices of similar homes over time. A home that cost about $189,000 back then runs almost $282,000 now.

The pain isn’t spread evenly across the state. Housing costs have exploded in some communities, while others have seen more modest increases. Check the chart below to see how your city compares.

The main reason Illinois homes cost so much more? There simply aren’t enough of them for sale.

Zillow data reveals a stark picture: Inventory has shrunk in the past seven years in every one of the 26 Illinois metro areas it tracks.

Chicago’s housing for sale has dropped 53%, from 36,754 homes in 2019 to just 17,268 this year.

The Chicago-area inventory plunge isn’t even the worst in the state. Eleven Illinois metro areas have seen even steeper drops in homes for sale.

When fewer homes hit the market, buyers compete more fiercely for them. That competition drives up prices.

Illinois is struggling more than most of the country. Realtor.com data shows the state has only 31% of the active housing listings it had before the pandemic. By contrast, inventory nationwide averages 75% of pre-pandemic levels.

The obvious solution for Illinois is building more homes. But the state’s metro areas continue to build at disappointing rates, failing to make up the shortage.

Illinois’ housing shortage isn’t accidental — it’s largely the result of policy choices that make building homes unnecessarily difficult.

Strict zoning rules across the state prevent building the types of housing that would address the shortage. Several straightforward reforms could make construction much easier:

Cities could permit higher density in high-demand, transit-rich areas, such as allowing buildings with eight to 10 units where demand is strong.

Requiring off-street parking is often unnecessary, especially near public transit. Chicago and some other places have started relaxing these mandates near transit hubs, freeing up space for housing.

Accessory dwelling units, also known as granny flats, in-law suites or backyard cottages, offer a smart solution. These smaller secondary homes on existing properties can provide affordable options for young professionals, downsizing seniors or multigenerational families while preserving neighborhood character. Legalizing these units statewide would add housing supply with minimal disruption.

Reducing minimum lot sizes for single-family homes is another effective step. Experts estimate this change alone could enable Illinois to build around 10,000 additional units each year.

Beyond building more homes, Illinois families face a major barrier to staying in them: property taxes.

The state has some of the highest property taxes in the nation. That strains household budgets, sometimes pushing even families who can afford a down payment and a mortgage toward foreclosure because they can’t pay their annual tax bills.

Solving Illinois’ housing crisis requires tackling zoning restrictions and property taxes at the same time.

Zoning reforms would increase housing supply and help lower costs by making construction easier. However, without meaningful property tax relief and broader fiscal improvements, many families will still struggle to afford buying and maintaining a home, no matter how many get built.