PEORIA – New home construction is sluggish in the Peoria area in spite of the continuing home shortage.
Among 89 midsized U.S. metros, Peoria is building the fourth fewest homes relative to the number of existing homes, according to a study by Construction Coverage.
In 2022, there were 1.6 new housing units authorized per 1,000 existing homes in the Peoria metro area — a total of 291 new units.
Illinois is among the states building the fewest new homes. Fast-growing states such as Utah, Idaho, Colorado, Texas and Florida lead the U.S. in the rate of new housing development, according to the study.
Even though competition for the small number of homes for sale in the Peoria area has been brisk in the last few years, relatively few new homes are being built because demand is low, said local builder Tom Armstrong.
“I’ve pulled back everywhere," he said. “It’s no longer ‘build as many as you can,’ it’s ‘build as many as you can sell.'”
Armstrong used to build about 50 new homes a year. He told the Journal Star he has three spec homes available in Morton and four in Bloomington.
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The bottom line: Cost
Part of the reason is because, in central Illinois, existing homes typically provide more amenities for the price than new construction. Though supply chain issues have eased since the pandemic, materials are still more expensive than they once were. Worker shortages and wait times for supplies also drive up the cost of new homes.
“A 2,023-square-foot ranch that I built two years ago sold for $475,000. That same house, just different colors, today sells for $525,000,” said Armstrong. “And that’s not because I’m making more money.”
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Real estate agent Mark Monge said many buyers who may have preferred a new home are instead opting to buy older homes they can update.
“For new construction, you pay $450,000 for a 2,000-square-foot house, maybe with a finished basement, versus a $450,000 15-year-old house which is gonna get you 3,000-square-feet plus a finished basement and a three-car garage,” said Monge. “The cabinets won’t necessarily be white, but you sure do get a lot of house for the money.”
While Monge still has clients looking for new homes, options are limited.
“Used to be clients would come in from out of town and we would look at 25 new constructions, in Dunlap or north Peoria or Metamora or wherever. Now, you can look at five new constructions. There’s just not that much to choose from,” said Monge. “When you look at the growth of Dunlap from 2000 to 2008, you had huge subdivisions like Chadwick Place, Chadwick Estates, Hunter’s Trail and Trail’s Edge. Most of those subdivisions are full and completed now, and those homes are now 15-plus years old.”