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Tuesday, January 28, 2020

Indiana is building far more single family homes than Illinois

Their View

By Austin Berg, Illinois Policy Institute | Jan 7, 2020

Indianabuilding

Indiana has issued more permits to build single-family homes than Illinois for 10 years running, according to data from the U.S. Census Bureau.

That streak is unprecedented for the Hoosier State.

With the exception of 2009-2018, Indiana had bested Illinois on this measure in just one other year since 1960. That anomaly was in 1980, with a difference of less than 1% in the number of permits issued for single-family housing between the two states.

Now, Indiana is consistently floating more of those permits than Illinois. And the gap is widening.

In 2009, Indiana issued 9,666 permits for single-family housing versus 7,844 in Illinois, or 23% more.

In 2018, Indiana issued 16,416 permits versus 10,041 in Illinois, or 63% more. That’s the largest margin for Indiana over Illinois on record.

From 2009-2018, Indiana issued 30,508 more permits for single-family homes than Illinois. For context, that’s more than entire states such as Virginia (21,427), Washington (23,674), Colorado (26,134) and Tennessee (28,021) issued in 2018.

The Census Bureau uses the Building Permit Survey to estimate the number of building permits issued for new, privately owned residential construction across all 50 states, as well as the number of housing units associated with each permit. While the number of permits issued is not a perfect measure of the number of new homes started or completed, the three measures are highly correlated.

Shockingly, even when including permits for multi-unit housing – not just those for single-family housing – Indiana is competing with and even beating Illinois. Indiana has bested Illinois in four of the last 10 years when including permits for all types of housing. In 2018, the count was nearly identical, with 21,510 permits in Illinois versus 21,480 in Indiana for housing of all sizes. Prior to 2009, Indiana had never beat Illinois on this measure, according to Census Bureau data.

Indiana contains just over half as many people as Illinois, and the population of Indianapolis is just a third of Chicago’s.

Sky-high property tax bills, two major income tax hikes over the last decade and working-age population loss have caused demand for Illinois homes – and therefore housing prices – to remain weak.

What’s driving those tax increases? Pension costs. Since 1996, total property tax extensions in Illinois have increased 52% after adjusting for inflation. This took Illinoisans’ property tax burden from around the national average to among the highest of any state. But less than 50 cents of every tax hike dollar actually went toward services residents value. Instead, most of the increase went toward pension costs and debt. Without constitutional pension reform, this trend will continue.

The Census Bureau is scheduled to release final housing permit data for 2019 on Jan. 27, 2020. Illinoisans will know then whether Indiana extended its streak to an 11th year.

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