To fund homelessness efforts, the City of Chicago could triple the transfer taxes levied on expensive Chicago properties. Such action would directly affect residential and commercial buyers – but the real estate community has yet to mobilize around the issue.
The Proposal: Bring Chicago Home
In Chicago in 2019, approximately 58,273 people were homeless. And while the full extent of the pandemic’s effect on homelessness is still unclear, recent months have seen a stronger push for the creation of affordable housing.
Local activists are calling for an increase in the city’s real estate transfer tax (RETT) on property sales over $1 million to pay for the construction and preservation of public housing, among other initiatives. And that increase would be steep. The coalition, officially called Bring Chicago Home, aims to increase the RETT by 1.9%: about three times the current figure.
Support for Bring Chicago Home is now widespread. The possibility of an advisory referendum regarding the RETT is officially on the table, and according to Crain’s Chicago Business, the number of aldermen supporting the measure has doubled since April. In the fall, he could very well be on the ballot. And while an advisory referendum would not necessarily result in legal action, its outcome would determine the position of the city, as a whole, on the issue.
So where are the agents?
Opposition to the measure
Estimates of what Bring Chicago Home’s proposal would add to the costs of properties over $1 million range from $158 million to $163 million…the burden of which would fall on buyers. While sellers would see no change, the RETT overhaul would roughly triple the buyer’s tax to $26,500 per million dollars spent. Naturally, this will affect the agents who oversee these expensive transactions.
In Los Angeles, real estate groups are currently battling similar legislation. However, the Chicago Association of REALTORS® (CAR) refrained from campaigning against the potential referendum. At least, until now.
Speaking to Crain’s, CAR Vice President of Government Affairs Kris Anderson said the group is waiting to mobilize until the city council formally considers the proposal. And it may take some time; the measure is not yet on the agenda for next July. But Anderson said he was ready to “activate our 17,000 members against this” at any time.
Mario Greco, a luxury agent at Berkshire Hathaway HomeServices, also spoke to Crain about the proposal. While that would certainly change the outlook for mid-high-income homebuyers, he pointed out that many would simply put up with it. “You might hear some vocal opposition,” Greco told Crain’s, “But probably not in this town that’s used to being bludgeoned with fees and taxes. If you like this town, you might support another tax.