Housing won’t be affordable until Illinois starts building more units

Illinois municipal leaders didn’t grant building permits to enough new housing in 2024. Low numbers and lack of density indicate Illinois could improve its housing picture with more development.

Nearly four years after the pandemic, Illinois is still struggling to keep pace with the rest of the country to restore the supply of new homes.

But there are three things communities can do to change that: allow more multi-family construction, allow additional dwellings on single-family lots and cut construction red tape.

Single-family zoning, which restricts even small additions such as duplexes and accessory dwelling units added to single-family homes, plays a large role in limiting Illinois’ housing supply. Permit data from 2024 for the state’s metropolitan areas shows just how far Illinois still has to go – and where local leaders can find solutions.

Not enough construction is happening in Illinois

Data shows Illinois, at 33% of active housing listings compared to pre-pandemic levels, is lagging the national average at 69%. This is especially problematic in the densely populated areas of the state. The Chicago metro area authorized construction of just 18.7 homes per 10,000 residents in 2024. Compare that to 23.8 permits per 10,000 residents for the St. Louis bi-state metro area, which has three-fourths of its population in Missouri.

Despite the St. Louis metro area being less than 30% of the size of the Chicago metro area, St. Louis approved building permits for nearly 40% of the Chicago total. Such low numbers in a metropolitan area of over 9 million people reaffirm what policymakers are increasingly admitting: Illinois’ housing affordability challenges are first and foremost issues of supply.

It wasn’t just large cities such as St. Louis that managed to outpace Chicago. Champaign-Urbana issued 26.1 permits per 10,000 residents, and the Davenport-Moline-Rock Island area issued 25.3.

A higher rate of development needs to be seen in metro areas across the state if Illinois is to increase the kinds of housing available and to lower prices.

Multifamily construction tells an even starker story

Illinois’ path to housing abundance is obstructed in part by restrictions on the kinds of housing permitted. The more multi-family housing projects available, the better able cities will be to meet diverse housing needs at an affordable price. That’s not what’s happening.

In Chicago, where many high-rise construction projects should be expected, only 42% of new homes were in buildings with five or more units. While it makes sense for this percentage to be lower in areas with a smaller population, in many Illinois metropolitan areas there were no such projects. Such low rates might have more to do with negative sentiments around this kind of development than a lack of need for it.

For example, in Normal, Illinois, where 22% of new housing was in buildings of five or more units, there was significant negative pushback from the community for a couple multi-family housing projects because of their proximity to single-family homes. The city council ultimately approved the projects. Blocking multi-family construction shuts the door on one of the most affordable ways to add homes where demand is highest.

Charleston-Mattoon stood out with a remarkable 88% of its 2024 permits being for five-plus unit buildings – the kind of “missing-middle” housing that fills the gap between single-family homes and high-rises. Apartments.com reports renting in Charleston, Illinois, is 61% lower than the national average, “making renting in Charleston more affordable than most cities in the U.S.”

The bottom line

If Illinois wants to improve its housing picture, municipalities should look for ways to incentivize housing development. That doesn’t mean putting a 50-unit building in a residential neighborhood. Communities could make significant progress by:

1. Legalizing “light-touch density.” This means allowing 8- to 10-unit buildings on corner lots and in busy corridors. In areas near public transportation, communities can drop the parking requirements that make such projects difficult or impossible.

2. Opening the door to accessory dwelling units statewide. Coach houses, basement suites and garage apartments let homeowners add a unit without changing a neighborhood’s character. These small, affordable units support older community members who want to live near their families or young professionals just starting out. They have been implemented by cities as big as Aurora to villages as small as Bull Valley.

3. Cutting red tape. Streamline approvals, limit unnecessary fees and rein in discretionary design reviews that add months and significant costs to modest projects.

State leaders have made it clear they know the answer to Illinois’ housing woes is to increase supply. That means enacting policies that make it easier to build and to build with a slightly increased density so these numbers improve in the years to come.