Link to full article on Crain's Chicago Business
With housing costs rising sharply in recent years, a statewide real estate industry group has unveiled a package of five legislative proposals aimed at easing the burden on buyers and renters.
“The biggest pain point for consumers right now is housing affordability, housing options,” said Tommy Choi, president of Illinois Realtors, the statewide association. Choi is also co-owner of the Keller Williams OneChicago brokerage. “It’s super important to focus on solutions that can help,” he said.
In the past two weeks, state legislators have introduced five bills they wrote in collaboration with Illinois Realtors, all intended to reduce obstacles to building, buying and renting housing. They include proposals that would allow construction of multi-unit homes on many lots now reserved for single houses, get rid of bans on accessory dwelling units and hold the line on impact fees homebuilders pay to municipalities.
Also on the agenda is creating a tax-deductible savings account to help first-time homebuyers accrue a down payment. The fifth plank is prohibiting “crime-free housing” ordinances that opponents claim often result in evictions of renters who were victims of a crime or who unwittingly hosted criminals in their homes.
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That promotes housing instability, which, along with lost affordability, contributes to the breadth of the housing crisis the real estate group is targeting.
Together, the five bills should “create more housing stock and more affordability and keep people (stable) in their housing,” Choi said.
The biggest legislative package to come out of Illinois Realtors in at least seven years, the quintet of bills is intended to combat “a housing supply shortage that has reached the crisis level,” said Jeff Baker, CEO of the Springfield-based Illinois Realtors, which has about 50,000 members.
Not every proposal is certain to pass. In particular, plans to get rid of zoning that only allows for single-family homes sometimes raises the hackles of homeowners who want to maintain the traditional look of their neighborhood. But Baker said the group’s emphasis was on devising solutions that seem likely to be palatable to legislators.
Baker was a member of an advisory commission on housing whose report Gov. JB Pritzker used in December as a springboard to call for ways to accelerate the development of more housing across the state.
“If we are going to build on this state’s record of growth and prosperity, lower costs for Illinois’ working families and be a state that everyone can call home,” Pritzker said in December, “we must build more housing in every Illinois community from Cairo to Chicago.”
The rapid erosion of housing affordability is under the spotlight nationwide, in part because of its role in persistent inflation. Housing, a major part of every household’s costs, represents more than one-third of the Consumer Price Index. An economist at the Bureau of Labor Statistics told NPR’s Marketplace last month that “as long as housing costs remain high, inflation can only go so low.”
Outside the legislative package, there are other efforts to soften the housing crisis. Lawrence Yun, chief economist for the National Association of Realtors, said in Chicago last week that the organization is urging Congress to increase the capital gains allowance as one step toward unlocking housing inventory.
Longtime homeowners who are sitting on big capital gains from a booming housing market, he said, are often unwilling to put their homes up for sale because of the high taxes they’ll pay. Exempting more of the gain could generate more inventory for younger buyers to choose from. That, in turn, would help slow fast-rising prices.
A prime way to lower housing costs, though it can’t happen overnight, is to build more housing. “Increased supply affects housing costs, and (it) especially affects housing costs at the lower end of the housing market,” said Ben Wolfenstein, state legislative lead for Abundant Housing Illinois, part of the nationwide YIMBY (Yes In My Back Yard) Action group that advocates for expanding the supply of housing.
At the upper end of the market, affluent households may have to stretch but can generally afford to pay today’s higher housing costs. At the lower end, sharply rising costs “contribute to increasing homelessness,” Wolfenstein said.
Even some relatively affluent people feel the pain of the housing shortage acutely, Choi said. “For a young professional family who can sell their two-bedroom condo at a premium price, it’s a pretty big jump up to the price of a single-family home in the city,” he said. He’s had clients forsake Chicago for less expensive home markets in smaller Midwestern cities.
Keeping people like that local is part of “the economic development of Chicago,” Choi said. The city’s slow embrace of accessory dwelling units might be accelerated by the legislative package, potentially reducing the cost of a single-family home by allowing construction of a rent-generating extra on the site.
Abundant Housing’s agenda largely overlaps with the Illinois Realtors package, Wolfenstein said, although it also includes a goal of eliminating parking requirements for new housing built near public transit.
Baker said the five proposals are the result of working with Illinois elected officials to find “reasonable, common-sense solutions” to a problem that has been rising for years but has recently commanded everyone’s attention.
“When we walk into a legislator’s office,” Baker said, “nobody is arguing that there’s no housing crisis. The awareness of this problem has never been as high as it is now, and (legislators’) interest as never been as high. The increased cost of housing touches everybody statewide."