Page 22 - Chicago Cooperator Spring EXPO 2019
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22 THE CHICAGOLAND COOPERATOR   — SPRING EXPO 2019   CHICAGOCOOPERATOR.COM  TRENDS  Market Survey  Where We Were in 2018 – and Where We’re Headed   BY A J SIDRANSKY  A  ft er many years of expansion and   growth  nationwide,  most  co-op   and condominium markets saw   both turbulence and some overall decline   in 2018. Th  e market has turned from one   favoring sellers to one more hospitable to   buyers. Markets  like stability—and 2018   was a year marked by uncertainty. Th  is un-  certainty can be pegged to several trends,   the  most prominent of  which  were fl uc-  tuations in interest rates; changes in tax   laws thanks to the 2017 tax bill depressing   the tax benefi ts of home ownership; over-  building (and potential overbuilding); and   – despite the generally good employment   fi gures – an undercurrent of declining con-  fi dence in the overall economic picture.  Chicago  “Chicago isn’t one of the cool kids any-  more” —at least not according to an article   in   Crain’s Chicago Business   from last October.   Th  e Windy City is ranked 49th of 79 markets   in the ‘Emerging Trends in Real Estate’ sur-  vey, down from 42nd last year. Th  e overall   feeling is one of caution. “Wherever they put   their money, survey respondents were cau-  tious about the direction of the broader mar-  ket,” said the article, “wondering how much   longer the good times will last. Th  ey’re not   bracing for a bust, but they can’t see the mar-  ket going much higher, either.”  According to IllinoisPolicy.org, the rea-  sons behind the stagnation and possible im-  pending  decline  in  the  Chicago  residential   market include outmigration, property taxes,   and income taxes—including both Gov. J.B.   Pritzker’s new state tax structure, and the   still-resonating impact of the change in fed-  eral income taxes in 2017. Illinois in general   —and Chicago in particular — is one of only   10 of the largest metro areas in the US to ex-  perience a decline in population last year.  Property taxes have also skyrocketed in   recent years, according to IllinoisPolicy.org,   and that has been aff ecting home aff ordabil-  ity for many. Combined with the reduction   in deductibility for state and local taxes, local   tax burden has had an increasingly dampen-  ing eff ect on the market. Another tax issue is   the recent increase in state income taxes by   the new governor.   Conversely, some of those fi ghting the   good fi ght in the fi eld every day may see   things a bit diff erently. Regarding the con-  dominium and co-op market in downtown   Chicago and surrounding neighborhoods,   Gail Spreen, Senior Vice President of Sales at   Jameson Sotheby’s International Realty, says:   “2018 was a reasonably good year, though a   bit fl at. It really depended on the neighbor-  hood. Projections are that 2019 will be simi-  lar. We see a 2- to 4-percent increase in prices   and volume in the coming year. Th  ings must   be priced right to sell. You can’t really push the   market, because it’s not there to be pushed. It’s   generally more of a buyer’s market.”  Spreen also mentions other trends that   refl ect the concerns described above about   Chicago’s markets. “People are re-evaluating   the own versus rent equations in light of the   change in tax laws.” Downtown seems to still   be the biggest draw, though, and there are   healthy sub-markets in River North and the   West Loop.  New York  According  to  Corcoran’s  2018  fourth   quarter report: “Market-wide closed sales   declined as potential buyers grappled with a   confl uence of factors that created uncertainty   in the market. Buyers’ concerns included ris-  ing mortgage interest rates, tax-law reform,   volatility  in  the  fi nancial  markets,  foreign   capital restrictions, and political distractions.   As a consequence, many prospective buyers   are  choosing  to  wait  on  the  sidelines  until   prices adjust to a more accessible level and   other market factors calm.”  Joanna Mayfi eld Marks, a broker with the   New York-based fi rm Halstead, described the   market this way: “In 2018, there were a couple   ends of the market that were less impacted.   We saw a number of buyers competing in the   $700,000-to-$1.5 million segment. Th  ere was   competition, and even some bidding wars. In   the lower and luxury segments, though, we   saw fewer buyers, and no bidding wars. What   I’m seeing right now is that competition is be-  ginning to return. I’m seeing positive reports   about the economy, consumer confi dence   is better, and interest rates were down at the   beginning of the year. So even at the lower   end of the market, things appear to be pick-  ing up. Th  e truth is that interest rates – even   small increments like a quarter point – aff ect   the market. Two-bedroom units seem to be   the most competitive right now. Th  ere are   even multiple bidding situations. Essentially,   things look positive.”  Boston  “Th  e trajectory of Massachusetts’ sky-  rocketing  real  estate  market  fl attened  as   winter loomed,” reported realestate.boston.  com, “leaving some to wonder whether we’re   glimpsing the end of a 10-year-long bull run.   Like people who predict the end of the Patri-  ots dynasty each year, they will eventually be   correct, but real estate experts say we’re not   there yet.”  As in other pricey markets, signs on the   horizon of a potential end to the Boston real   estate fairy tale are centered around tax policy   and rising interest rates. Like New York and   Illinois, Massachusetts is a high-tax state, and   the result of the reduction of property tax de-  ductibility on federal income taxes is begin-  ning to make itself felt. Rising interest rates   have also played a role, as buyers are very sen-  sitive to every additional penny of monthly   cost, the article continues.  Bobby Wooft er, Principal Broker for   My Boston Condo, sees the market as very   healthy. “Th  ere’s so much new industry mov-  ing into the area: General Electric, Amazon,   and others,” he says. It seems like a new build-  ing is going up every week. Th  at makes for a   healthy market.” Th  e people who work there   need someplace to live. “Th  e luxury boom   continues,” Wooft er adds.  He does see some dark clouds on the hori-  zon, however. “Th  ere may be a lag due to the   climbing price point. It can’t just keep going   up, passing the last deal. Th  ere is more inven-  tory than one year ago on the market – espe-  cially luxury – but mid-market is very bullish   and competitive.”  One of the unique features that Wooft er   mentions is the prevalence of small condo-  minium  associations  in  the  Boston  market   and throughout New England.  Dominated   by three-unit multi-family buildings, owners   oft en see greater value in converting to con-  dominium ownership rather than selling the   property as a whole, and the result is a large   number of very small associations. “Resale of   these units are strong,” Wooft er says. “Th  ey   are typically the ‘starter home.” Even what   were once less popular areas like Roxbury are   now coming around in this sub-market.  Wooft er thinks that Boston is still a robust   seller’s market. Available housing stock for   sale is still very low, and he isn’t expecting a   correction. “Existing zoning regulations don’t   provide for new housing,” he says.   Overall, 2018 was a mixed-to-down year   for  condo  and  co-op  markets  nationwide.   Th  e general expectation for 2019 is more of   the  same.  Clearly,  tax  considerations,  rate   fl uctuations, and political uncertainty are   major factors going forward. Perhaps the   best advice to keep in mind is from Marks:   “Markets are not dictated by what you want   as the seller, but rather what people are will-  ing to spend – as well as what you’re willing   to accept. Sellers like to think about their ‘net’   profi ts, rather than thinking about what buy-  ers are willing to pay.” In a buyer’s market, it   doesn’t work that way.   n  A J Sidransky is a staff  writer/reporter with   Th  e Chicagoland Cooperator, and a published   novelist. 


































































































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