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New home construction rising in Pekin as market stays red hot

Pekin is increasing the number of permits for single-family home construction from six in 2023 to 50 in 2024.
Wayne Parry
/
AP
Pekin is increasing the number of permits for single-family home construction from six in 2023 to 50 in 2024.

The City of Pekin issued just six single family home construction permits in 2023. This year, they’re on track to have 50.

John Wray, director of Economic Development for Pekin, said most of these homes are being built in Tax Increment Financing districts, also known as TIF districts.

“Basically the TIF incentive for the residential side is that over time, you get a free lot,” Wray said. “The lot gets paid for by property tax rebates. So when you have a vacant lot, the value of the land is not very much when you build a house on it, the property value goes up a lot, and the city can rebate back a portion of those property taxes.”

Wray said they’ve been marketing the residential TIF districts because it doesn’t cost the city anything, but still incentivizes single-family home construction.

On top of the new homes, they also plan to add a 34-unit duplex development in the next couple of years.

“We want to have a good balance of residential, commercial and industrial,” he said “But adding to the population base helps grow everything else, the retail and the shopping, the dining, that all tends to follow the population. So if you can increase the population, there will be more businesses that want to come serve that population.”

Jennifer Bradshaw is a realtor in Pekin. She says the city is facing a similar situation to other Central Illinois towns: there’s a lot of buyers but not a lot of houses.

“The market is still very, very hot, especially for sellers,” she said. “We're listing them and they're going within hours, not days. So it's been very important for buyers to know of new listings when they come up because they go so quick.”

Read more: First-quarter figures show ongoing decline in Peoria area home sales

Bradshaw said the market has gotten stronger since this trend began in 2020, but inventories are down.

Some homeowners are turning to home improvements instead of purchasing a new house outright. Kolton Begeman is the owner of KB Builders in Pekin. They’ve been open for a year and a half, mainly doing remodeling work.

“I would say business is really good,” he said. “I haven't had any downfalls. Since I opened the business, it's been about a year and a half now, I've had probably a week off total. I'm beyond ready for a vacation.”

Begeman said he wants to start constructing new homes, but it’s hard to hire skilled tradespeople.

“It's the manpower,” he said. “If I could get my hands on four or five good framers, I would already have been doing it.”

But construction of new single-family homes is still expected to hit the highest rate since the 2008 financial crisis despite the labor crunch, according to Marketplace.

Bradshaw said she welcomes the 50 new homes, but doesn’t predict it will have a major impact on the Pekin housing market.

“There'll be people who will obviously sell their homes to buy the newer construction,” she said. “I would love to see some new construction and some building going on. But will it really dramatically affect the market? No.”

The biggest thing preventing people from selling is that they don’t want to pay more for a new house than they’d make by selling their current one.

“The pricing of homes has gone up dramatically,” Bradshaw said. “I don't know the exact percentage wise it's gone up but a house that may be sold for 150 might sell for now in the low to hundreds or higher rates.”

Bradshaw said a lot of people buying homes in Pekin already live there. Some are also moving back to the area.

“In general it comes down to family, they want to be closer especially once they get grandkids and so some of them do permanently move back as well,” she said. “And some people do keep their home where they're at and then buy a house up here as well just to spend more time with their loved ones.”

Bradshaw’s advice for anyone looking to purchase a home is to move fast to beat the competition. She adds her clients to an automatic email program which sends them listings as they’re posted, so they can jump on opportunities right away.

Camryn Cutinello is a reporter and digital content director at WCBU. You can reach Camryn at cncutin@illinoisstate.edu.