Lake County Stopped Building. Its Home Prices Did Not Get the Memo.

Illinois RDN is opinionated about how to read local housing data. This column argues that Lake County is not in a price decline, and that the familiar framing of a cooling market misses where the damage is actually happening: on the construction side.

The number that should worry you

Lake County authorized 620 new housing units from January through September of 2026. Over the same nine months of 2025 it authorized 912. That is a 32% decline in permitted construction, and it is not a rounding artifact.

The figure comes from the Census Bureau county building permit files, which every Illinois county reports into, and it is the same series behind our building permits tracker. It is the earliest public signal of what the housing stock will look like two years from now.

The split is more telling than the total. Single-family permits fell 6%, from 432 to 405. Buildings with five or more units collapsed by 56%, from 480 units to 211.

That is the county future rental supply disappearing in a single year, and it follows a 2025 that looked healthy on the surface: 1,121 units authorized, the strongest year in the series we track back to 2022. Permits are volatile and one nine-month window is not a trend. But the multifamily collapse is large enough that it would take an extraordinary fourth quarter to erase it.

What did not happen

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Home values did not fall. Zillow home value index puts the typical Lake County home at $398,052 in September 2026, against $375,501 a year earlier: up 6.0%.

The shape of that gain matters. Monthly appreciation stalled in the spring - values rose just 0.10% in May and 0.14% in June - then re-accelerated to 0.53% in August and 0.54% in September. That is not the profile of a market in retreat. It is the profile of a market where supply keeps failing to show up.

Anyone who tells you Lake County prices are falling is looking at asking prices on a handful of listings, or at a county-wide median that mixes a lakefront sale with a ranch house in Round Lake. The index says values are higher than a year ago, and the gap is not marginal.

The tax line nobody budgets for

Here is the number that actually constrains this market. The median Lake County homeowner pays $8,923 a year in property tax on a home worth about $345,700 - the highest median bill in Illinois, at the state highest effective rate of 2.58%. That bill equals roughly 8.1% of median household income.

Those figures come from the American Community Survey, and we publish them for every county on our Illinois property tax page. Lake County sits at the top of both rankings - the largest bill and the highest rate - a distinction that never appears in a listing sheet.

Divide it by twelve and you get $744 a month before a single dollar of principal or interest. At the mortgage rates prevailing this fall - 7.24% nationally for the week of October 29, per Freddie Mac - a buyer at the median price carries a payment where the tax line rivals the interest. That is the real ceiling on this market, and it does not show up in a price index.

It also shows up in the rent-versus-buy math. Against the county market rent of about $2,255 a month, the typical home costs 14.7 years of rent. Against the Census median gross rent of $1,477, it is 22.5 years. By either measure, buying in Lake County is expensive relative to renting, and the tax bill is a large part of why.

Where this goes next

Our base case is uncomfortable for everyone: prices hold, volume thins, and the strain surfaces in places the headlines do not track. The statewide reading has been drifting the same way - the November RDN Market Score moved from 48.6 to 47.0 once October data landed, with the Buy Score at 42.4 and Sell at 38.9.

• Scarcity keeps a floor under values. With construction down a third and existing owners locked into low-rate mortgages, the county is not about to be flooded with supply.
• Rents rise. Market rent is up 3.2% year over year, and the pipeline that would relieve it just halved.
• The buyer pool narrows from the payment side, not the desire side. High rates plus the heaviest tax burden in the state is an affordability ceiling, and it bites hardest on first-time buyers and the entry-level segment where single-family permits are already shrinking.
• The risk to prices is tax-driven, not demand-driven. If assessments rise while rates stay elevated, the constraint becomes arithmetic rather than sentiment.

If you are buying

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Budget the tax bill before you fall in love with a house. On a $345,700 home, 2.58% is $744 a month that never becomes equity and does not disappear at refinance. Ask for the actual bill on the parcel, not the county median, and ask specifically about the exemptions you qualify for - the difference between an owner-occupied bill and an investor bill can be substantial.

Do not underwrite a purchase on the assumption that rates fall. Our November Buy Score is 42.4, which our own model reads as unfavorable, and mortgage rates have held above 7% through the second half of the year.

Look carefully at older homes. About 21% of Lake County 270,618 housing units were built before 1960, according to our housing age analysis. That stock is where renovation value still exists in a county that is barely building, but it is also where lead paint, asbestos and original wiring live. Price the remediation before you bid, and read the lead and asbestos guide if the house predates 1978.

If you are selling

Your competition is not other sellers. It is the absence of new construction: with permits down a third, there is very little new product competing with an existing house.

But your buyer is payment-constrained, not desire-constrained. Price to the monthly number a buyer can actually carry, taxes included, rather than to the last comparable sale. A house that looks fairly priced on price per square foot can look unaffordable once the tax line is added, and that is the calculation your buyer is running.

Expect longer marketing time and prepare for it. A pre-inspection, a documented tax history and a clear list of recent mechanical updates are worth more in this market than staging.

A note on permits

This column refers to permit counts as a measure of construction activity, not as a guide to any individual project. A postal city or ZIP code alone is not authoritative for determining which jurisdiction issues a permit; municipal and county boundaries can differ from mailing addresses. Separate fire, health or septic/well, and road or right-of-way approvals may also apply alongside a building permit. To identify the authority for a specific address, use the Illinois Permit Finder before you apply.

How we would know we are wrong

Opinion should be falsifiable. We would revisit this column if county permits recovered above roughly 900 units on an annualized basis, if the value index posted two consecutive quarterly declines, or if market rents stalled or fell - each would signal that the constraint had moved from supply to demand. Our statewide November score already moved from 48.6 to 47.0 as October data landed; local calls deserve the same standard of revision.