Millennials Could Be Key To Illinois' Housing Recovery... But They're Fleeing The State

Tyler Durden's picture

Authored by Madelyn Harwood via IllinoisPolicy.org,

Illinois loses more millennial taxpayers and dependents to other states than any state except New York; this means Illinois’ distressed housing market is losing a big contingent of first-time homebuyers.

Illinois had the nation’s third-highest share of seriously underwater properties as of March 2017, according to a May 2017 report by RealtyTrac. Millennials could be the key to propping up home values: Robust homebuying forces property values up, and millennials were the largest group of homebuyers for each of the past four years, according to NBC News. Unfortunately, Illinois’ millennials are leaving instead of putting down roots.

A home is underwater when the homeowner owes more to the mortgage lender than the home is worth at current prices. If a home is seriously underwater, the homeowner owes at least 25 percent more on the mortgage than the current value of her home. Any money she’s invested in her home in the form of a down payment and mortgage payments is effectively lost if she goes to sell. She will not get any of that money back unless home values rise.

No homeowner wants her home to sink beneath the surface. However, an underwater or seriously underwater homeowner won’t really feel the pain unless she wants or needs to sell her property. Then she faces dim prospects:

  • She could be stuck in her home to avoid taking a loss while hoping the property value recovers.
  • She could absorb the loss and pay more money just to walk away.
  • She could default on her mortgage and allow the home to go into foreclosure.

None of these options is ideal.

Nearly eight years after the Great Recession’s end, 16.5 percent of Illinois’ home mortgages were still seriously underwater as of March 2017, according to RealtyTrac. Only Nevada’s 18.9 percent and Ohio’s 17.1 percent were worse. Nevada’s worst-in-the-nation ranking makes sense because the state was front and center in the national housing crisis: It was the fastest-growing state in the past quarter-century, according to SFGate, which caused a housing construction boom in the early 2000s. Then the housing bubble burst, and Las Vegas became the “center of the housing crisis.”

Illinois’ housing recovery should not be chugging along nearly as slowly as Nevada’s.

But economic weakness and burdensome tax policies keep Illinois’ home values suppressed. And these factors send Illinois’ population and housing demand flooding across state borders.

According to Genworth Mortgage Insurance’s new “First-Time Homebuyer Market Report,” “First-time homebuyers have been the largest growth driver in the housing market since 2014, and that trend is continuing into 2017.” The report notes millennials will likely grow the first-time homebuying market even more in coming years.

Millennials are a key group among today’s first-time homebuyers: As they grow their families, they are buying homes and spurring housing demand. First-time homebuyers’ movement at the bottom of the property ladder serves as the housing market’s engine, because it allows established homeowners to climb up to bigger, more expensive homes.

But Illinois is losing millennials to other states, and their exodus represents a loss of thousands of potential first-time homebuyers – which could slow down the state’s housing recovery.

Illinois lost 80,700 millennial taxpayers and their dependents to other states, on net, over tax years 2011-2012 through 2014-2015, according to the most recent Internal Revenue Service data.

Illinois’ net loss of millennial taxpayers and their dependents over that four-year period ranked second-worst in the nation to New York’s 136,800 net loss.

Employment growth in Illinois has been weak for millennials over the recession era, which could be prompting them to seek more stable labor markets in other states. Fewer Illinoisans ages 25-34 were working in 2016 than were working before the Great Recession, according to data from the Bureau of Labor Statistics, or BLS. This is critical because 25-34 is the age group of many first-time homebuying millennials. The unemployment rate for this demographic in Illinois also increased 1 percentage point to 6.4 percent in 2016 from 5.4 percent in 2015, according to BLS data.

The housing market will likely have a hard time recovering if there’s a shrinking number of first-time buyers. Indeed, single-family housing starts are down 75 percent in Illinois over the recession era, the worst such drop in the country.

Illinois’ mass millennial departure will have far-reaching ramifications. These young people are entering their prime earning years and taking their productivity and earning power to other states. Fewer young people are investing in Illinois, and fewer companies will have reason to as the state’s population ages and the economy sputters. This reduced demand to stay in Illinois could lead home values to recover more slowly compared with states that fare better with millennials, thus prolonging homeowner distress in Illinois.

Policymakers must make Illinois a state worthy of investment. Illinois suffers from the worst personal income growth in the nation over the Great Recession era; 160,000 fewer people are working in Illinois today than before the recession; the labor force is shrinking; and the state’s economic activity has grown at a slower rate over the past decade than U.S. growth during the Great Depression.

On top of that, cost drivers such as government worker retirement benefits create a crushing tax burden for Illinoisans, while some of the nation’s highest property taxes drive down home values and increase homeowner liabilities.

Millennials are getting out while they can. And this could spell trouble for Illinois’ sea of seriously underwater properties that need strong housing demand to bring underwater and seriously underwater homes back above water.

Illinois’ state and local policymakers must break the cycle of spending more than they have and raising taxes. This pattern is driving out jobs and workers, and millennials are leading the way out as it becomes harder to stay afloat in Illinois’ high-cost, low-growth environment.

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Peter41's picture

The wages of sin, since the Illinois voters elected the politicians who caved to the unions and others, to sink their fincancial future beneath the waves.

NoPension's picture

Sweet.... Legalize and tax pot! Turbocharge those revenues.

In five years...half the population are either stoners or compulsive gamblers. Thanks to encouragement by the magnanimous state.

Of course... its always.....

" FOR THE CHILDREN "

hongdo's picture

Doesn't matter, won't work.  No one is going to stay in IL just for legal pot.  It is getting legal all over.  So everyone will still move and there won't be anyone left in the state to buy it there.

greenskeeper carl's picture

No, they won't. Thinking that would make a difference is a sign of desperation. I do enjoy these articles from less doom and gloom type sources, though. If more govt friendly types are starting to talk like this, that can't be a good sign, as they are usually the last to acknowledge what became obvious to us long ago.

 

I did love this, though :their exodus represents a loss of thousands of potential first-time homebuyers – which could slow down the state’s housing recovery.

If you are still waiting on some kind of recovery, or talking about a recovery, this many years after the 'crisis' supposedly ended, thats a tacit admission that things didn't really improve. And at this late stage, when many signs point to a top in the not too distant future (or past, many signs take a while to manifest themselves) then you are already fucked. A lot of those seriously underwater mortgages in IL are going to be looking at losing another 20% plus of their homes value even if things continue to muddle along in the rest of the US because their home state is such a basket case.

Stuck on Zero's picture

Any intelligent state government retiree in Illinois will move to Arizona or a low-tax state. Make sense, huh?

Wood_Vlogs's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do. www.jobproplan.com

Manthong's picture

 

Because this is a “blue state ”: beyond repair…

I told the kids years ago “get the F away from here.

Two MDs, an electronics engineer, and a physicist all live elsewhere now to their great advantage.

F you Madigan and Cullerton……. and you F’s won’t have me  to bother you soon, either.

 

Chuck Walla's picture

Illinois CAN'T stop the deficit spending. How else would these Great Progressives get re-elected? I hope my niece is enjoying her soon to be increased property taxes. They're only around $7000 now. And the Diversity! Oh, the Diversity!

 

Mubashra Uddin, a Chicago woman who threw her newborn baby to her death from an 8th-floor window, has been sentenced to probation and a $579 fine, WLS (Chicago) is reporting.

Uddin, now 21, was just 19 years old when she tossed the newborn infant out of the window from her home in Chicago’s Uptown neighborhood. Initially, she was charged with first-degree murder. However, last week, she took a plea deal and pleaded guilty to involuntary manslaughter. Judge Carol Howard sentenced Uddin to 48 months’ probation, a $579 fine, and she was credited for the 603 days served in the Cook County Jail.

At about 11:15 p.m. on November 11, 2015, a passer-by heard muffled cries coming from the bushes in front of the apartment building. He or she found the naked, bloody baby still breathing but barely alive. The stranger wrapped up the baby in blankets and called an ambulance, but the infant died 90 minutes later at a nearby hospital.

According to Assistant State’s Attorney Patrick Turnock, the baby had skull fractures, a fractured spine, a fractured left shoulder, fractured ribs, a lacerated aorta, and damage to other internal organs.

So why did Uddin get such a seemingly light sentence for such a heinous crime? It seems that the judge took into consideration Uddin’s culture, upbringing, and state of mind when she committed this crime.

D Nyle's picture

Build a Big Mall in South Side Chicago. Call it "The Basement". Offer free video games, Cheap Pot and Free Narcan. Put Gun Free Zone signs everywhere and Advertise it as "The Safe Space of America"

The true Outcome and Deaths of this disasterous Idea will be covered up by the MSM.

This is how to weed out the future Darwin Award winners, Libtards, future leaches and Prison Prospects

cheeseheader's picture

Already been done...South Side (where else?) Chitcago, Blues Brothers scene in the old underground mall (really)--soon to be abandoned after filming.

https://www.youtube.com/watch?v=IIdGxR-aU6o

 

yogibear's picture

The libtard democrats will have thier state of stoned voters.  The people remaining in Illinose probably won't make much because they'll all be on public assistance.

The whole state will be like Detroit.

Never One Roach's picture

One of Jesse Waters funniest on the street episodes:

 

DO MILLENNIALS KNOW WHAT SOCIALISM IS?


https://www.youtube.com/watch?v=DKKNYFVKVio

a Smudge by any other name's picture

Watching all these political PIGS run for the mary jane train is hilarious. LET'S GET INTO THE DRUG TRADE! NOW WE GET TO MAKE REAL MONEY! WHEEEEEEEE!

And they regulate and they tax and they regulate and they tax to the point where THEY KEEP THE BLACK MARKET VIABLE!

BWA HA HA HA HA HA HA! THE PIGS ATE A HOLE IN THEIR OWN TROUGH! AND NOW IT'S LEAKING ONTO THE GROUND! AND THEY DON'T EVEN CARE!

Each pig is just gobbling up as much as it can. It's all about getting as much or more than the pig next to you.

SOUIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII!

yogibear's picture

Both Heather Sterns and Kelly Cassidy that introduced the bill are from Shitcago, it figures.

Shitcago runs the state. Michael Madigan, mob boss, has the final say.

cheeseheader's picture

Michael Madigan been running IL for decades...crucify blame him.

European American's picture

"Fleeing the State" to a safe space. Then again, I don't blame them. In this volatile world we live in, those "spaces" are getting harder to find.

(Back to the Self...Back to the Self.)

Never One Roach's picture

Speaking of safe spaces there are so many libtards moving to places like texas that rep Gov Abbott will have a real fight on his hand in 2018 esp since Soros is spendig millions on his dem opponent.

BarkingCat's picture

The states need to Institute a state citizenship.

It would work just like you a citizenship.

A newly arrived immigrant is not a citizen.

They have to wait 5 years before being able to become a citizen.

That would stop at least the newest arrivals in effecting the elections.

cheeseheader's picture

They have to wait 5 years before being able to become a citizen.

~~~~

 

They have to wait 5 years in line before being able to become a citizen.  Then go and jump into another line....

FIFY

Déjà view's picture

"libtards moving to places like texas that rep Gov Abbott will have a real fight on his hand in 2018 esp since Soros is spendig millions on his dem opponent."

Fight between PRESCIPTION RED/BLUE PILL Adelson & Soros...$hine light on ALL ROACHES!

Gov. Greg Abbott flew to Israel Saturday on a plane belonging to Sheldon Adelson, the billionaire casino owner and megadonor active in Republican national politics.

A spokesman for the governor confirmed that Abbott flew on Adelson’s 737 after Jewish Insider and The Dallas Morning News first reported it Monday.
Adelson is a top spender in Republican politics known for his fierce support of Israel and his friendship with Prime Minister Benjamin Netanyahu. Abbott met with Netanyahu in Jerusalem on Monday to discuss the Texas-Israeli relationship and reiterate Abbott’s opposition to Iran — a nation whose relationship with Israel has long been tense.
http://www.star-telegram.com/news/state/texas/article55442970.html

It was discussed with the prime minister, as well as other leaders in Israel,” Abbott said. “… I made very clear to the prime minister that he has no greater ally on the globe than Texas.”
http://tjpnews.com/texas-gov-abbott-talks-business-alliance-with-israel-...

ROLMFAO!

spieslikeus's picture

Ok, who clicked on the pic to get a better look at her boobs?  Be honest.

troubadourcapital's picture

Once again, people learn that socialism doesn't work. You don't tax your way to prosperity.

jpot34's picture

Blah, blah, blah! Always the Union's fault. Redundancy at it's best!!

bionicknees's picture

The millenials may be progressive but most aren't stupid, they can see the writing on the wall.

Don Sunset's picture

There aren't many basements out here in California so stay the hell away from here.

ONEwarrior's picture

Why, I think there is a glimmer of hope for these millinials. Obvioulsly they see the hand writing on the walls in Ill-nois and New York.

So why the Hell. would you think they would be STUPID enough to go to Calipornia???

Just make sure you stay where you are Sunset.

yogibear's picture

Many people have vacated California and moved to Colorado. Their ruining that state now.

Never One Roach's picture

I read some left wing libtards from Colorado somehow got on the Board of Regents of the UT system and threw out the conservative president Bill Powers ( who was super popular and excellent) and instilled their left wing "reformer" Feurnes (or something like that). Since the liberal left winger (who panders to extremist left groups on campus) got in there's been several gruesome murders on that UT campus in Austin and some serious problems at the once excellent Texas A&M.

The current platform of "liberalism" is so distorted it is a cancer that destroys anything it metastasizes to.

NoPension's picture

It's their duty to stay...and pay those pensioners and didndoos.

Edit....
Isn't it sweet when the pensioners move to South Carolina or Florida when they retire... for the better weather and lower costs? Haha!
Rule should be..." Move out of state, pension cut by 50% "
Steal it here, spend it here.

SilverRoofer's picture

Their pensions won't be cut just 50% when Illinois declares bankruptcy

The pensioners will get paid Penny's on the dollar

And the best thing about it is they can't do nothing about it!

Time for all the good ol boys clubs and stink finger clubs of the .gov employee's to take a hit There is no money to be had from the tax payer

lasvegaspersona's picture

Nope, hyperinflation is the plan...Everyone gets every penny...it just has no purchasing power.

Sure there will be a half assed effort to 'make an example' but in the longer term it is always 'just print more money'. Deflation is slow and painful and simply isn't needed. With hyperinflation it is easy to blame mysterous forces.

downwiththebanks's picture

Noboby fucks workers out of agreed upon contracts like every capitalist do-nothing freeloader.

Finance freeloaders are the worst.  A mass suicide would cleanse humanity.

Normalcy Bias's picture

They made their bed, but no longer want to sleep in it.

Sooo... they move to a lower tax state with more conservative fiscal policies, and then resume voting for the same Democrat bullshit that wrecked the area they ran away from in the first place.

skunzie's picture

That mindset is truly a cancer.  Should be, if you were a registered libtard from the ruined state you came from, you cannot vote for 10 national election cycles in the new state you moved to.

artichoke's picture

I don't see why states could not implement that.  I don't see a problem in terms of the US constitution.

bionicknees's picture

The only safe union job is in the federal gov't.

bionicknees's picture

The only safe union job is in the federal gov't.

GOSPLAN HERO's picture
Yankee go home!  GTFO of DIXIE!
rf80412's picture

The banks will do anything and everything in their power to keep from having to write down the value of the loans.  Paper wealth must be protected at all costs.

Most likely the banks will sit on the houses and rent them rather than sell them at market clearing prices, so even if Millennials stayed put, they'd end up looking at a life of renting unless and until they could afford 20% down on the bubble price of the house.

Haitian Snackout's picture

Our work is done here..........

Normalcy Bias's picture

Like the rats jumping off a sinking ship...

NurseRatched's picture

Every day is Election Day in the Progressive Liberal Utopia known for strong public unions, heavy taxes and oppressive regulation. And every day Millennials and Baby Boomers vote with their feet and leave.

Rick Cerone's picture

Tyler, you couldn't beat me with both arms tied around my back.

JustPrintMoreDuh's picture

Housing recovery ...haha ... good one.

Cordeezy's picture

get rid of the state income tax and more people might want to live there.  I almost took a job in Chicago there but the cost of living differential with the income tax was making it like I was taking a demotion instead of the promotion I was getting.

 

www.escapeamazon.com

 

yogibear's picture

Property taxes in and around the Chicago area are like a mortgage payment.

Michael Madigan and his gang of tax hungry democrats want to ensure the fat public pension gravy train keeps going.

The latest tax increase the democrats pushed though is only the begining. 

What person or business wants to deal with crushing taxes that keep going higher?

Millennials need to settle down to a place that won't make them public union tax slaves.

 

Iconoclast421's picture

Just bring in 80,000 refugees. Problem solved.