Illinois housing affordability efforts pit tax cuts against new spending

Illinois state Sen. Erica Harriss, R-Edwardsville, shared details of a bill she introduced in February. Senate Bill 3959 would give first-time homebuyers a $500 tax credit, applying to income tax liabilities.

Harriss told senators the average home buyer was 40 years old last year, and only 21% of all homes were bought by first-time buyers, according to Illinois Realtors Association data. She added that the median sale price has increased by 54% since 2017, with current data showing prices are roughly $295,000 statewide.

Additional data from the association shows the Chicago metro’s average is $360,000 as of February.

“As our younger generation delays buying a home, they miss out on years of building up that generational wealth, that's part of the American dream,” Harriss said. “For many young people, the path to home ownership is getting further out of reach. This bill takes a practical step to help.”

Democrats have a different plan to address housing costs in the state. In his yearly address to the General Assembly, Gov. J.B. Pritzker said housing supply is the main issue.

He proposed a plan to remove bureaucratic roadblocks that he says slow down the process while driving up costs. 

The governor’s plan also includes expanding state spending by $50 million on a program providing residents making under specific income thresholds with $15,000 mortgages.

Pritzker has been critical of Republicans’ stance on state property taxes, saying the state is not responsible for property taxes because rates are set by local governments. Republican legislators have recently called for major property tax reform.

Harriss’ bill is part of a legislative package aimed at making housing more affordable, in part by decreasing property tax burden for residents.

In a news conference announcing the package, she said Senate Bill 2093 would make a current tax credit toward residential property taxes refundable.

“It's actually a credit that most homeowners have never even heard of. Here's the problem. If the credit is worth more than you owe in income taxes, the state just keeps the difference,” Harris said.