Illinois lawmakers push bad housing fixes, but good options exist

Subsidies and rent control will make Illinois’ housing shortage worse. Lawmakers should focus on how they can boost supply.

Illinois state legislators have only been in session for a few weeks and are already focusing on housing, but the bills so far are fated to fail because they focus on demand rather than boosting supply.

Illinois is facing a housing crisis. Some researchers have estimated a 142,000 unit shortage across the state and that Illinois will need to double its rate of production during the next five years to keep up with demand. The housing shortage drives up prices and makes it hard for families to find a place to call home.

But instead of addressing these problems by reducing the government red tape that makes building housing difficult and expensive, lawmakers are trying to force affordability. Their short-term fixes will ultimately make things worse.

For example, House Bill 4283, introduced by state Rep. Michael Crawford, D-Chicago, would “establish and administer a First-Generation Homebuyer Downpayment Assistance Program.” Helping first-time homebuyers afford a down payment may sound nice, but it would likely make Illinois’ housing affordability problems worse.

Multiple studies show high housing prices in Illinois are largely driven by a lack of supply as the result of low production. Subsidizing more buyers without increasing the housing supply would only drive prices even higher, making future homebuyers suffer.

Another flawed bill is Senate Bill 2884, introduced by state Sen. Graciela Guzmán, D-Chicago, entitled the “Let the People Lift the Ban Act.” Illinois currently has a statewide ban on rent control, but this legislation would allow local governments to circumvent that ban through a vote and impose rent control in their communities.

Rent controls would hurt Illinois housing even more than the downpayment assistance program.

National studies have shown 29% of rent-controlled housing is in a deteriorated condition versus 8% of unregulated units. That’s because housing providers consider the cost of upkeep when they’re setting rents.

In cities such as New York, rent control led neighborhoods to deteriorate so severely that it was difficult to tell the difference between a neighborhood that had been bombed and a neighborhood that had been affected by rent control. That is not what Illinois renters or their communities need.

What Illinois needs is to create housing abundance. That requires reforms that remove excessive government bureaucracy and red tape. The right reforms lower the cost of construction and encourage new development.

Members of the Illinois General Assembly have shown they are willing to consider effective supply-side housing reforms. For example, the recent People Over Parking Act passed as a part of the transit omnibus package eliminated parking minimums for housing units in areas where there is a lot of public transportation.

That change matters because parking mandates make housing more expensive. Researchers estimate the cost of parking raises rents by about 17%. When municipalities require parking minimums, all residents within the housing development bear that cost – even those who don’t have cars to park.

Parking mandates also drive up construction costs, making it harder for projects to be worth the investment. With every Illinois metro facing a housing shortage, lawmakers must make building easier and more affordable.

The reform benefits local governments as well. New development grows the population and the tax base, providing more resources to support the community. Outside of Chicago, this will particularly serve metropolitan areas such as Champaign-Urbana, Bloomington and East St. Louis, which have significant areas affected by the change.

There are many other supply-side reforms the Illinois General Assembly could pass. Proposals such as the Missing Middle Housing Act would expand housing options such as duplexes, quadplexes and townhomes. That would increase housing density and diversity, lowering prices, serving middle-income families and offering the next step-up in housing for low-income families.

Another bill, the Accessory Dwelling Unit Permissibility Act would make it impossible for an Illinois city to ban granny flats or other additional dwelling units on single-family lots, while still allowing local governments to implement reasonable regulations. It would have given more property owners in the state the freedom to build units that boost the value of their homes, potentially earn rental income or simply accommodate aging parents, adult children or extended family members.

Instead of chasing feel-good but ultimately harmful “fixes” such as subsidies and rent control, Illinois lawmakers should keep their focus on removing government barriers that prevent new housing from being built. Families can’t buy homes that don’t exist, and no amount of government micromanagement can change the basic reality that prices rise when supply falls behind demand.

Once lawmakers embrace regulatory reform, communities across the state will be able to build more, grow more and make housing affordable again.