Rising prices and higher mortgage rates are making housing out of reach for an increasing number of Illinoisans. Things could get even worse if the Nov. 8 vote raises property taxes.
Higher mortgage rates and sticker prices mean the cost associated with the first year of home ownership in Illinois has increased by $12,717 for the exact same home compared to 2019 levels.
Home affordability has reached its lowest level since 2007 as a significant rise and soaring mortgage rates have increased costs for potential homebuyers. Illinois home prices rose nearly 19% from the end of 2019 to the first quarter of 2022. Rising house prices have been good for current homeowners, but rising house prices and higher mortgage rates have pushed home prices up significantly. ‘Housing price increases are his third slowest in the nation.
Median Illinois home sales in 2019 were $208,965. Today, the same house can be purchased for an estimated $247,926, a difference of $38,961. Interest rates on 30-year mortgages have risen from an average of 3.94% in 2019 to 5.41% in July 2022.
In the early days, the cost of a 20% down payment on a home (the threshold required to avoid private mortgage insurance payments on traditional loans) increased by $7,792 for the same home from 2019 to 2022. did. The homeowner now has to pay nearly $50,000 as a standard down payment.
Annual costs have also increased. Mortgage payments – principal and interest only – have increased by $3,876 annually for the same home compared to 2019 levels. At the same time, property taxes continue to rise, estimated to cost homeowners an additional $1,048. Property taxes impose about six additional mortgage payments each year on modern homeowners.
Overall, the annual cost of home ownership increased by nearly $5,000 over 2019, not accounting for inflationary changes in Homeowners Association rates and higher repair and maintenance costs.
Rising home ownership costs have significantly outpaced income growth over the past few years, making housing the most affordable it has been since before the 2008 housing market crash. Inflation has also made other necessities more expensive, and disposable income has plummeted over the past 15 months. Foreclosure cases are on the rise for the first time in 12 years as rising costs weigh on household budgets.
Illinois leads the nation in 2022 foreclosure rates with over 14,000 homeowners in foreclosures. Her 1 in 385 homes, or about 0.26% of the homes, received default notices, were scheduled for auction, or were repossessed by banks. Foreclosure cases in Illinois have nearly tripled since last year and are up 12% from two years ago.
Neighboring states all have foreclosure rates significantly lower than Illinois. In Illinois, she is 63% more likely to be foreclosed than a homeowner in Indiana, her second-highest neighbor state. Illinoisans are twice as likely to be foreclosed as Michigan homeowners (0.13%). 2.4 times more likely to be foreclosed than homeowners in Iowa (0.11%). 2.9 times more likely to be foreclosed than homeowners in Missouri (0.09%). Homeowners in Wisconsin (0.07%) are 3.7 times more likely to be foreclosed. 6.5 times more likely to be foreclosed than Kentucky homeowners (0.04%).
At the metro level, Chicago and Rockford ranked fourth nationally with foreclosure rates of 0.3% each.
More homeowners will face the risk of default as the cost of home ownership rises significantly, especially when incomes don’t keep up. Home foreclosures do not happen overnight. People and families often struggle and fight to pay as much as possible, but Illinois faces an especially high hurdle.
Illinois has the second highest property tax in the country. Property taxes are equivalent to six additional mortgage payments for a modern homebuyer. That means many Illinoisans struggle to budget for housing and daily necessities. Many people are faced with a decision between housing and other necessities that could put them in foreclosure.
If the First Amendment passes this November, Illinoisans will face more financial hurdles. The First Amendment would give government unions unprecedented powers and raise the homeowner’s property tax by her $2,149. This tax increase alone will be a devastating blow to those worried about losing their homes. But the First Amendment would also balloon the state’s $313 billion pension liability. Rising pension debt means that tax increases and revenues are diverted to ballooning debt rather than being used to pay for vital programs for the most needy.
While many are forced to choose between daily necessities and ever-increasing housing costs, Illinoisans must remember there is still hope. , Illinoisans should take a closer look at the First Amendment and potential tax increases for families and businesses. Illinoisans also need to continue to fight for responsible pension reform and hold politicians accountable for the tax burden that falls on voters’ shoulders.
Foreclosures and taxes may be high, but Illinoisans have the power to fight for their homes, their livelihoods, and their futures at the November 8th voting booth.