The housing shortage in Bloomington-Normal is one of several factors that, if unchecked, could lead to economic stagnation, according to the agency charged with spurring the economy in the Twin Cities.
There are signs it's already sapping growth.
Bloomington-Normal is a college town, right? Great for young people? Not so much, reports the Bloomington-Normal Economic Development Council [EDC].
Yes, there's been a lot of job creation — 9,500 positions in the last decade. They are mostly one-person households. They make between $55,000 and $60,000 a year, or $23-$27 an hour. And the EDC's business attraction director, Casey Peterson, said at a recent EDC Real Estate Summit that most of those jobs do fit young people.
“They’re decent household sustaining wages. But they’re not at the previous white-collar level of income we previously enjoyed for a long time here in McLean County. So, our actual area median income has gone down over the last few years," said Peterson.
People with those $55,000-$60,000 salary levels can afford $1,300 to $1,600 a month in rent. That'll get you a nice one-bedroom apartment in the Twin Cities if you can find one.
Peterson said various sources show young people like urban living.
“We don’t have downtown or Uptown living at any sort of scale," he said. "We have student stuff in Uptown. Downtown has got senior housing, a lot of one-offs here and there. But if you are a young college graduate and have this idea in your head of what your life is going to look like, by and large, we don’t offer it.”
What can Bloomington-Normal offer the average 25-year-old? Sure, quality of life. It’s not cost of living any more, though. EDC CEO Patrick Hoban said that traditional advantage over near neighbors and the Chicago suburbs is gone.
“We are now more expensive than Will County,” said Hoban.
Starter housing is close to impossible to build right now. Building material prices have risen 40% in five years. A house that recently cost $200,000 to build now costs $280,000. This suggests it’s just not profitable to build starter homes in the $150,000 range. And on top of that huge increase, Peterson said, many starter homes that do come on the market get bought up by investors. A third of homes sold in 2024 nationwide, he said, were bought with cash.
Costs to borrow have gone up, too. So, you can forget home ownership for most young people. Peterson gave a real-world example. A Twin City house built in 2014 sold new for $150,000. It sold in 2021 for $205,000. And it's on the market now for $250,000. The mortgage payment four years ago was about $780; it's now more than $1,400, Peterson said.
“Even though the price only went up 50%, with the interest rates you’ve effectively doubled your mortgage over the last four years on a starter home,” he said, adding, "The bad news is that is likely the cheapest it will ever be."
Here's another wrinkle. Even if those young workers get a huge pay bump and can somehow afford a house, they might not be able to start a family. Hoban said the dearth of available child care worries him.
“Our birth rates, if you go on McLean County’s records, are going down. I believe that has to do with costs. If you’ve got one kid, can you afford to have another? If you are paying $2,000 a month in child care, probably not,” said Hoban.
That's more than a mortgage payment — for child care.
Hoban said despite the addition of those 9,500 jobs in the community in the last decade, the size of the workforce that lives in the Twin Cities did not grow as much.
"Our employment only went up 1,500. All the commuters around us went up over 5,000. So, we did not really capture all the ripple that we created in this community," he said.
The amount other communities benefit from Bloomington-Normal jobs is substantial.
Cross-referencing federal databases on where people work, where they live, and how much they make shows a lot of new consumer spending not happening in Bloomington-Normal.
"What that's looking at ... total expenditures after taxes of about $270 million per year. And that is only on the growth," said Hoban.
Before Rivian came to town, about 38% of Bloomington-Normal job holders lived outside the metro area. Now that figure is 45%.
“I’m concerned who is going to be my nurse, who is going to be my doctor going forward, because there is going to be no one there to take care of us because that next generation is not coming nationwide, let alone around here. So, we do have to solve this?” said Hoban.
Hoban said this is the case for new apartment housing incentives and maybe even child care incentives.
And Peterson said a lot of developers are looking for creativity from municipalities to reduce the uncertainty construction materials, interest rates, and rising assessments have created.
