Illinois builders eye field of dream houses in Iowa
Iowa is just across the Mississippi River from Illinois geographically, but it's worlds apart when it comes to real estate and construction, a home builder explained on a Chicago-based radio talk show recently.
"Things have progressively gotten worse,” Jim Work, co-owner of Silverthorne Homebuilders, active in the greater Sycamore area, said on Illinois Rising. "The economy, regulations -- but if you look at the country as a whole, Illinois really hasn't recovered in the housing aspect of things. And that's a big driver of a lot of jobs and a lot of different industries. Just the regulations alone is a big part of it. When you have low sales and low home prices, and then all the regulation on top of it, it just makes it really frustrating."
A home his company builds in Illinois that will sell for $300,000 will garner approximately $425,000 to $450,000 in Iowa, Work said. And it isn't just the sale price that has Work thinking about moving all of his operations across the border: It's also the taxes and fees, including the cost of permits in Illinois compared with Iowa.
"The total permit package for a $300,000 house [in Illinois] is $16,000-$17,000," Work said. "Now, transfer yourself over to Iowa: That same $300,000 house sells for between $425,000 and $450,000 with a permit package closer to $2,600."
Work is not the only Illinois business professional thinking about leaving for neighboring states. Population in the majority of Illinois' large cities, including Chicago, is on the decline, according to the U.S. Census Bureau.
Indiana officials are trying to take advantage of the outflow of Chicago area residents, beckoning them to the so-called "affordable shore.”
It's much the same at Illinois’ northwest border, Work, whose wife is from Iowa, said.
"You think to yourself cornfield and tractors, probably, especially if you grew up in the Chicagoland area," he said. "You jump over the river, and it's a world of difference. They're building 300, 400 homes a year, and the Illinois side is building 200. And the regulation; it's just easier to work with all the people there."
He said the regulations in Iowa are far more practical and sensible because they aren’t intended to raise money for local government.
"I can give you a number of examples," he said. "Two big ones: environmental storm water protection and fees. Here in Sycamore, our school district charges a transfer tax which all of us – the real estate community and builders -- pay. Real estate agents jokingly call it the 'Welcome to Sycamore tax.' Anybody who buys a home in Sycamore that is not living in Sycamore pays the ‘Welcome to Sycamore tax.’"
In Iowa, that money can go into the house instead, he said.
"That frees up money to pay the actual people who work on the house, to create jobs and work hard for us every day," Work said.
Iowa is still environmentally friendly and safety-conscious, Work argued, but there aren’t the hidden fees Illinois imposes.
"I like the outdoors," he said. "I'm not anti-environment by any means. I certainly don't want to see it ruined. But here in Illinois, the Illinois EPA and other agencies at the county level regulate this stuff so heavily that we spend more time dealing with that than we do building houses. And then out there in Iowa, the Iowa DNR is responsible for it, they have a bunch of guys inspecting this stuff, looking over plans, that are just practical guys."
Work said his company spent $73,000 last year for storm water protection in Illinois but only approximately $4,000 for the same thing in Iowa.
"The same practical effect was accomplished,” he said. “It's not like we're polluting or something in Iowa. But here in Illinois, because of all the regulations, rules and things they have, it just spirals out of control."