Decatur is the cheapest place to live in the U.S. It is within the county with the highest percentage of home loans underwater
Decatur, Illinois is the cheapest city in the U.S. with a metro population of at least 50,000 people according to Kiplinger.com. The median home value in Decatur is $92,200, housing costs are 45% lower than the national average, and the cost of living is 22% below the national average. The real estate company ATTOM, using data from the second quarter of 2024, found that Macon County, IL (where Decatur is located) has the second lowest percentage of annualized wages (13.3%) needed to buy a median priced home in the country, and had the most affordable housing in the U.S. relative to its historic averages. Affordable housing is in short supply nationwide, and thus, it is welcome news that Decatur, IL is the cheapest place to live in the U.S.
Unfortunately, the underlying reasons that Decatur’s home prices may be so low could be a result of a substantial decline in housing stock quality as a result of a declining population, a labor force that is declining at an even faster rate than its population, low median household income, a high unemployment rate, a high poverty rate and childhood poverty rate, and a local government whose top priority is community revitalization yet has underfunded improvement initiatives to the point that they cannot keep pace with the rate of neighborhood blight.
DECATUR’S LABOR FORCE HAS DECLINED 20% SINCE 2010
Of greatest concern may be the city’s loss of population and workers. The U.S. Census Bureau recorded the city’s population at 76,122 in 2010 and 70,522 in 2020, and a July 2023 estimate of 68,670 individuals (10% decrease). Decatur’s labor force is declining at a faster rate than its population. According to Illinois Department of Employment Security data, the monthly labor force in Decatur averaged 36,679 in 2010, 30,989 in 2020, and 29,452 in 2023 (20% decrease). Furthermore, the city’s unemployment rate in 2023 averaged 6.8% compared to 5.9% in 2019 indicating that the city’s labor force has still not recovered from the impacts of the pandemic.
The loss of population and workers may have resulted in a substantial inventory of vacant housing units. As of February 2024, city staff estimate that there are between 4,000-5,200 vacant properties in the city (a vacancy rate of 12-16%, using the 2020 estimate of 33,415 housing units). Unfortunately, accompanying the population and labor force declines were significant economic stressors in the form of low median household income ($49,039) and percentage of people living in poverty (20%). Low income and high poverty may make it difficult for individuals to both afford and maintain homes.
MACON COUNTY HAS THE 10th HIGHEST EFFECTIVE PROPERTY TAX RATE IN THE U.S.
Currently, there are thousands of families in Decatur who are mortgage- or rent-distressed. In the second quarter of 2023, Macon County, IL had the highest percentage of home loans underwater in the country (17.6%) and the likelihood of a Macon County property with a foreclosure filing was 12.9 times greater than the national average according to data from ATTOM. Adding to the challenges property owners face, according to a 2023 property tax analysis by ATTOM, Macon County has the 10th highest effective property tax rate in the U.S. at 2.13% (the national average is 0.87%). In other words, as the city’s population declined and family budget’s tightened, decisions by local governmental units have unwittingly resulted in residents paying the 10th highest effective property tax rate in the nation. It is hard to make improvements to your home when paying property taxes is a struggle.
DECATUR LACKS A PLAN, TIMELINE, AND BUDGET TO ADDRESS COMMUNITY NEEDS
The City of Decatur is the unit of local government that is responsible for and best equipped to transform Decatur’s neighborhoods. However, the city lacks a strategic plan, a timeline, and a budget for making needed improvements. Even when the city implements a successful revitalization initiative, it has failed to scale the improvements to other locations. For example, the city received a $1.25 million grant in 2020 to fund demolitions, cleanups, and lot acquisitions in the Johns Hill Neighborhood. The neighborhood has seen a substantial reduction in crime since the neighborhood was improved (36% reduction in the count of offenses in July-June 2022-2023 vs. July-June 2018-2019), and a large increase in civic engagement that is critical to building the community. There are no plans to replicate this effort in other neighborhoods, even though the cost of implementation is relatively small.
Despite demolishing 208 properties from 2021-2023, Decatur continues to have unacceptably high levels of blight. For example, of the 18 neighborhoods within the city’s urban core, 11 have blight scores over 0.25 (a blight score represents a probability that a house will have some characteristic of blight such as a broken window, faulty roof, etc. A blight score of 0.25 corresponds with a 1 in 4 probability of a property showing a sign of blight). As of February 2024, city staff estimate that there are between 500-1,000 properties that may be at risk of demolition. At an average cost of $15,000 per demolition, the city needs $7.5 - $15 million.
$20.7 MILLION PROJECT COULD REVITALIZE ONE NEIGHBORHOOD
There are few people that want to move next door to a distressed property. Thus, if the city wants to attract new people to the city, blight removal should not only be viewed as an improvement to public safety, but also as an infrastructure enhancement in a similar manner to improvements in roads, water, sanitary sewer, and storm sewer infrastructure. The recently announced $20.7 million project to convert the former Garfield School building into 63, affordable senior apartments is an excellent example of how public and private entities can work together to improve people’s lives, transform a neighborhood, and increase the desirability of the city of Decatur as place to live. Time will tell whether the Decatur City Council is up to the task of scaling these revitalization efforts in order to reverse the city’s negative long-term trends.