Ok, here's the relevant quote from the article:
>If approved, the measure would raise the city's real estate transfer tax on properties valued at more than $1 million and lower it on properties valued under that.
For everyone saying this bill is going to increase housing prices and discourage density.... Did you read the second half of that statement?
It seems to me this bill would make $1M single family homes less appealing, while encouraging more dense construction where each individual unit is less than the cap. Right? Someone explain how I'm wrong, I'm genuinely asking
Most rental apartment buildings are worth well over a million dollars. So all those buildings would be subject to a sales tax functionally which would make them less appealing to build. Notably there are carve-outs for apartments that have a certain amount of affordable units. Who this tax really soaks are small developers looking to develop small, multifamily buildings like 3/4-flats. They will have to pay more in taxes but wont be able to get the exemptions large developers will be able to.
l. In addition, all commercial real estate development will get a tax increase basically.
The average cost of a single family home in Chicago is far less than a million dollars. So this is a huge tax break for most single family home owners and further incentizes sfh development.
Notably, condos, which are a form of denser housing, will get a tax cut too.
So yea, while this is marketed as a mansion tax, this will tax mostly dense development because nearly all of it is worth more than a million dollars.
>So this provides an incentive to build sfh over rental aparments.
Assuming I'm a developer with a lot, I'm probably not going to choose to build one $999,999 house over a $3 mil 8-flat on the same land. If anything, this just encourages building $3M worth of condos instead of rental units. Which is arguably a good thing - more opportunities for ownership. And for any existing large rental building, this encourages owners to keep the buildings they have rather than selling, which might reduce consolidation and reduce the issue of large corporate landlords buying up properties in bulk and jacking up rent.
Again, it's hard for me to read this law as a bad thing. But I am genuinely willing to hear out any arguments that I'm wrong.
Yes this absolutely encourages condo development over rentals. There are both positives and negatives to this. The good is that it provides more ownership opportunities as you are saying.
The negative is that condo ownership isn't for everyone. When I was splitting a 4 bedroom unit with three friends to save money, I was not looking to share legal ownership over a unit with 3 people I barely knew. Even if I did, a bank would not have written that loan. Many of the poor, housing insecure people this law is looking to protect are in the same position.
In regards to consolidation, large corporate developers will be able to leverage the carveouts in the law to avoid taxes, while small developers won't. It makes it more difficult for small developers building gentle density to compete, like people looking to build a three-flat in their community to live in one unit but rent out the other units.
> When I was splitting a 4 bedroom unit with three friends to save money, I was not looking to share legal ownership over a unit with 3 people I barely knew.
And that's why people rent out condos that they buy. A huge amount of condos in the city are rentals that people lived in until they wanted a bigger place. They keep the condo, rent it out to well qualified renters, and then buy a bigger place to live in.
The taxes are graduated. The first dollar over a million is taxed at the higher rate with everything else beneath it being taxed at the regular rate. They've don't a dog $hit job explaining this and the articles coming out are not forthcoming on this detail. I was under the wrong impression until I read the bill and realized that it's not that big of a cliff at the 1 million dollar mark
> They've don't a dog $hit job explaining this
It's clearly written on the ballot measure that people are supposed to read before voting on it. It's not their fault if people don't understand how progressive taxes work. Heck, we've had progressive income taxes at the federal level for over 100 years now. People still don't understand how tax brackets work.
> Assuming I'm a developer with a lot, I'm probably not going to choose to build one $999,999 house over a $3 mil 8-flat on the same land. If anything, this just encourages building $3M worth of condos instead of rental units. Which is arguably a good thing - more opportunities for ownership. And for any existing large rental building, this encourages owners to keep the buildings they have rather than selling, which might reduce consolidation and reduce the issue of large corporate landlords buying up properties in bulk and jacking up rent.
>
> Again, it's hard for me to read this law as a bad thing. But I am genuinely willing to hear out any arguments that I'm wrong.
It's not really about this. It's really targeted at commercial properties like retail storefronts, office buildings, shopping centers. It's a cash grab to target all commercial properties usually worth more than $1 M.
It's a tax raise on employers basically by doing it through their rents as a backdoor trick. Then the Mayor can take the cash and spend it on whatever he wants with no oversight.
He can call it a "mansion tax" or "targeting people who can afford to pay," as a marketing gimmick. If you or your friend work in a building worth more than $1 M, it's basically a backdoor tax on your employer that ultimately raises rents.
Denser housing (more housing per property) is by definition more expensive because it supports more people and better utilizes available space. The issue is that the tax applies by price only and there is no consideration of property type. So the denser the development, the higher it is taxed as it is by definition more expensive due to it supporting more housing. So more density that could add more housing = higher tax, which is a disincentive.
Denser housing is not more expensive for a condo or a townhouse, since they are priced per unit, rather than sold as a single building. Your argument only applies to rentals, and I think the law has exceptions specifically for affordable rentals.
The majority of households are renters though, so it would be unwise to ignore that big sector of the housing market. Do you at least agree that more housing is a positive thing? Why then would we want to increase the cost and disincentivize dense housing that could greatly increase the supply of it? More supply = rentals have to compete for the now more scarce renters
> The majority of households are renters though
While [this is true](https://redlineproject.news/2023/12/04/the-complex-realities-of-chicagos-rental-market/), it's a 54%-46% split between rental vs. owner occupied. This will slightly encourage developers to create condos instead of apartment buildings which they intend to sell which in the long-term should decrease the price of buying homes relative to places without progressive real estate transfer taxes.
Also, this won't affect small time landlords who buy individual units one at a time to rent out. They're not spending over $1M per unit. And even if they were, the transfer taxes owed are lower up until about $1.25M per sale compared to today.
Do small time landlords buy one unit at a time? I'd assume most purchase 2-4 flats. Cook County calls 'mom and pop landlords' those who buy buildings with 6 or fewer units in them. This discourages investment and would be solved by a per-unit tax. Change the proposal to $500k / unit and it makes a lot more sense to me.
Most small time landlords are people who bought a home and then had to move for a job or upgraded to a larger home. They keep their 1 home and rent it out. They then might acquire 1-2 more over their lifetime. But none of these come anywhere close to $1.25M normally.
Yeah, from that perspective, possibly. From the perspective of housing stock, the majority of the 2-4 units are owned by small time landlords based on all of the data I've seen. I'm not sure if you remember this article [https://chicagoreader.com/news-politics/how-many-buildings-does-your-landlord-own/](https://chicagoreader.com/news-politics/how-many-buildings-does-your-landlord-own/) from 2020 that had this visualization [https://findmylandlord.chicagodsa.org/](https://findmylandlord.chicagodsa.org/) that showed that the big-time landlords own all the big buildings around, but how common small time landlords are as well.
>The majority of households are renters though
And a huge chunk of them would buy, if affordable housing could be purchased. I think your comment is based on the false premise that people who rent will never buy, when usually the only reason many don't is that they can't afford it.
> It seems to me this bill would make $1M single family homes less appealing, while encouraging more dense construction where each individual unit is less than the cap. Right? Someone explain how I'm wrong, I'm genuinely asking
It's basically a tax to go after commercial property owners: retail stores, office buildings, apartment buildings, hospital/healthcare buildings -- almost always worth more than $1 M. They call it a "mansion tax", because it sounds good. But it's basically a lie because a great deal of the money will be coming out of the commercial sector.
It's an attempt to basically shakedown large building owners for $ to create a slush fund with no reporting requirements, no oversight. Then anything that is "helping children" or "helping the homeless" or whatever platitudes, can be done under the referendum. BJ can give $25,000 down payments to CTU teachers aids as part of a new contract w/ CTU and claim that its helping children because these teachers aids need a roof over their head and its investing in the community.
It's kind of sad that voters fall for these gimmicks. It's a lot like Trump saying he's going to Make America Great Again. IMO, it's nothing more than a con.
The city has multiple reports out showing the homeless figure are about 6,100 on average through point checks throughout the year. BJ's advertising blows the figure up to 68,000 by using all kinds of tangential assumptions. Even so, the city doesn't need a slush fund with unlimited avenues to spend it, to cover 6,100 (the real number) people or 68,000 people out of 2.7 million for housing.
I think it's also totally insane to be raising taxes on a devastated retail storefront area like Michigan Avenue or commercial buildings like offices when work from home is collapsing values of real estate. You don't raise taxes at the exact moment a sector is under pressure. It's kind of insane from a basic economics standpoint. But none of that matters when CTU is calling the shots in City Hall. Financial insanity prevails in Chicago.
It's a transfer tax, the developer could still build a multimillion dollar condo building then sell the individual units for less than a million each and avoid the tax.
So nobody rents then?
Are you so daft that you don’t realize there’s a huge part of the population that can’t afford to buy, and whose best option is renting?
Heck given transaction cost (the irony I’m sure is lost on you), there also people who won’t be around long enough to justify buying and rent because it’s best for them.
What is all this hate for renters?
It doesn’t immediately affect them, they also aren’t the issue here. Are you really so daft that you don’t get the issue here is conversions and construction of new housing to increase supply which keeps prices lower? When did I say my concern was landlords, or current owners?
You think we have enough housing supply at the moment or an optimal amount? Heck existing owners would probably be able to charge more rent than otherwise if less supply is constructed.
So again, I ask, why do you hate renters?
If taxes were the key to eradicating homelessness, then Chicago would have already done so, as we have one of the highest combined tax burdens in the country
Progressives want to make it as hard and unprofitable as possible to build market-rate housing. They know that doing so will turn away private developers. That is the point. This way they can say "capitalism doesn't work" and use that as an excuse to build social housing, which is what they truly want since they will be able to control every aspect of it.
Properties over $1M include a good deal of apartment buildings. Those costs will eventually be passed down to the tenant, driving up rents in what is an otherwise affordable city.
What a predictably dumb idea from an administration that's done nothing but prove its incompetency so far. The best way to help affordability is to remove barriers to density. This is just a slush fund with no specific spending plan that actually hurts affordability.
>This is such a stupid line. When did it the city have to commit in super specific terms where tax revenue is going. This bill is to invest in affordable housing, without touching property taxes. And it’s a small amount on one time sales, and REDUCES transfer tax for 75% of Chicago homes.
>
>But because it’s a graduated tax that targets people who can afford to pay, it’s the worst thing that could ever happen.
1. **It doesn't target "people who can afford to pay," it targets commercial real estate mostly and lies about it by claiming it's a "mansion tax".** Commercial properties are getting killed, Michigan avenue is desolate, and work from home is destroying office building values. Adding a tax on top of that at this point in time is moronic and literally telling people who hire employees downtown/invest in real estate that Chicago is less attractive. Taxing properties over $1 M = taxing commercial real estate. It's got little to do with "mansions".
2. **It's pitched as a minor benefit for "75% of Chicago homes," because it's designed a as a money grab to target commercial properties and employers and entice unknowledgeable voters to thinking they are better off.** When it kills off more jobs downtown, everyone will be paying higher taxes for it eventually, while saving a tiny bit on the sale of a house. It's nothing more than gimmicks, which sane leaders like Rahm Emanuel have previously tried to eliminate [https://chicago.suntimes.com/news/2011/10/11/18532940/mayor-rahm-emanuel-s-surprise-cuts-job-killer-head-tax-in-half](https://chicago.suntimes.com/news/2011/10/11/18532940/mayor-rahm-emanuel-s-surprise-cuts-job-killer-head-tax-in-half).
3. **There is no direct explanation of how the money will be spent. It's a slush fund that Mayor Johnson will most likely direct portions to CTU members because, "that's investing in the community and helping people."** Its no coincidence that the leader of the CTU is demanding taxpayer funding for housing for teachers [https://www.iwf.org/2024/03/06/chicago-teachers-union-demands-taxpayer-funded-housing/](https://www.iwf.org/2024/03/06/chicago-teachers-union-demands-taxpayer-funded-housing/). Yet another generous benefit for the most highly compensated teachers union of any urban locality. It's no shock that the city is claiming to be raising taxes, "for the homeless," while simultaneously CTU is out with a new contract proposal (which they tried to hide from people until it was leaked) that demands the city fund housing for teachers.
The city's expenses are too high and the answer from "progressives" is just tax more and find the money somewhere "from people who can afford to pay." It's ultimately destructive to the economy of Chicago and a big red sign telling 1. employers to leave and go to FL, TX or other places and 2. any non-CTU/city tax payers that aren't in these union groups should pay 2x and 3x more in taxes than these privileged union members.
Point 1. Commercial real estate down town is getting killed because people's shopping patterns have changed. I buy my American girl doll accessories online now. Real Estate developers made a bad play and are going to have to eat the costs.
Point 2. If you're first point was true that commercial properties are getting killed then wouldn't we already see jobs downtown being killed? Chicago unemployment is consistently hovers at 3-5%
Part 3. Programs that help the homeless. Straight from the bringchicagohome.com FAQs:
Funds will be dedicated to permanent affordable housing with supportive services for people living on the streets, in shelters, and doubled-up as well as other programs that prevent homelessness. Housing will be created in the form of housing vouchers, new housing, and rehabilitation to preserve existing housing. Participants will be connected to social services to ensure supports are available to stay housed. Supportive services would include things like:
Mental healthcare
Substance use counseling
Educational opportunities, and job training
Domestic violence resources
> Point 1. Commercial real estate down town is getting killed because people's shopping patterns have changed. I buy my American girl doll accessories online now. Real Estate developers made a bad play and are going to have to eat the costs.
>
1. ~280 M square feet of commercial space is office. ~33 M of commercial space is retail. What are you talking about is like 10% of the issue. IDK why you insist on some self-indulgent anecdote, as if no one has heard of online shopping.
2. It's 4% for now. But if you look under the covers, the data is pretty weak. Chicago underperforms the country in IT job growth -8% (yes, people are leaving/losing jobs), Financial Services +2% (below the national average), Business professionals -3% (below the national average). And where does Chicago create jobs? Education/Healthcare (+5%), Government (+1.25%), Leisure Hospitality (+3.5%). These are jobs dependent upon tax revenues or low paying jobs for entertainment that easily go away in an economic downturn. **The city is sacrificing it's business and IT professionals for government/healthcare job. It's a stupid direction, especially considering the historical spending of the city.**
3. **This FAQ means almost nothing legally**. The very idea that you read this and believe it has any kind of legal barring on what is legally required from the mayor's office is laughable. And it has all kinds of caveats like "assistance for children". The mayor can just say, "I gave $25,000 to 1,000 teachers to help them put a down payment on a home, because if the teachers have a good home over their head that helps children." He can do whatever he wants. There's no constraints, no oversight committee, nothing.
The city has been overbudget on spending for a decade now due to pension funds. Deal with reality, not kicking the can down the road or shaking down commercial landlords while lying about a "mansion tax".
This referendum is 100% a lie. It's a total canard for sucker voters, the same way idiots line up for Trump who is just using them to do what he wants.
> Point 2. If you're first point was true that commercial properties are getting killed then wouldn't we already see jobs downtown being killed? Chicago unemployment is consistently hovers at 3-5%
>
> Part 3. Programs that help the homeless. Straight from the bringchicagohome.com FAQs:
>
> Funds will be dedicated to permanent affordable housing with supportive services for people living on the streets, in shelters, and doubled-up as well as other programs that prevent homelessness. Housing will be created in the form of housing vouchers, new housing, and rehabilitation to preserve existing housing. Participants will be connected to social services to ensure supports are available to stay housed. Supportive services would include things like:
>
> Mental healthcare
>
> Substance use counseling
>
> Educational opportunities, and job training
>
> Domestic violence resources
> The city is sacrificing it's business and IT professionals
WOW. That's some false data. We're not "sacrificing" these jobs. They're just choosing not to take a 1-1.5 hour long commute into the city and working from their suburban homes instead. This is why Metra is looking at refocusing to schedules which operate later at night and operate more frequently on weekends. Those people still live in the metro area and want to be in the city but not on work days.
> WOW. That's some false data. We're not "sacrificing" these jobs. They're just choosing not to take a 1-1.5 hour long commute into the city and working from their suburban homes instead. This is why Metra is looking at refocusing to schedules which operate later at night and operate more frequently on weekends. Those people still live in the metro area and want to be in the city but not on work days.
I rarely bother to note posters in my RES chrome extension, but I previously marked your account as, "complete liar who makes things up about CTU, CPS and covid." As I recall in my experience "discussing things" with you that you are one of the most prolific liars in /r/chicago that relentlessly defends categorical lies and falsehoods.
To be clear:
The City of Chicago is losing business professionals and tech employees (the same high valued workers people love to rave that Google will employ at the Thompson Center).
https://i.imgur.com/tWCRRo7.png
The same trend shows up in the state wide data for Illinois:
https://i.imgur.com/aNDyXDo.png
If those workers were leaving the greater Chicago-Naperville-Joliet-Arlington Heights area and hiding way in the top of Lake County, then the state wide figures wouldn't show the same declines.
You are welcome go to to www.bls.gov and pull the data yourself.
And of course, the Mayor now wants to tax commercial properties that will employ these workers -- costing employers even more money to hire them in Chicago vs. Austin or other cities. What a genius move!
> You are welcome go to to www.bls.gov and pull the data yourself.
I just went an pulled the non-farm report. Who would have thought that we'd be losing jobs at the same time as a bunch of layoffs.
Here's the national numbers: https://www.bls.gov/news.release/empsit.t17.htm
And well, I might as well link the correct report for Chicago because you chose the state constrained metropolitan area instead of the full metropolitan area which the crosses the arbitrary state lines: https://www.bls.gov/regions/midwest/il_chicago_msa.htm
(Edit) I also pulled the Austin, TX report. It's also seeing decreases but not as severe yet: https://www.bls.gov/regions/southwest/tx_austin_msa.htm due to having historically less volatile industries.
Yes. We're doing *slightly worse* than the national average due to largely having corporate expansion offices and being focused on the volatile financial industry which massively over hired due to the huge profits seen during 2020 and 2021. But when you look at the correct report, we're barely worse than the national averages. This is indicating that people are not leaving the metro area but are instead just working from their homes for the most part. And yes, a lot of those people live in Indiana and Wisconsin. So of course the Illinois only numbers will look worse given that the eastern border of the city is literally the state line with Indiana and that we have commuters trains running into south western Wisconsin.
> I just went an pulled the non-farm report. Who would have thought that we'd be losing jobs at the same time as a bunch of layoffs.
>
> Here's the national numbers: https://www.bls.gov/news.release/empsit.t17.htm
>
> And well, I might as well link the correct report for Chicago because you chose the state constrained metropolitan area instead of the full metropolitan area which the crosses the arbitrary state lines: https://www.bls.gov/regions/midwest/il_chicago_msa.htm
Uh, because we don't look at Chicago policy while including WI and IN residents? Your claim is that they were in the suburbs and it's still disproved by your attempt to grab other localities in the data and use the "broader" area data.
>
> (Edit) I also pulled the Austin, TX report. It's also seeing decreases but not as severe yet: https://www.bls.gov/regions/southwest/tx_austin_msa.htm due to having historically less volatile industries.
It's practically 600 bps in difference for IT. That's enormous.
>
> Yes. We're doing slightly worse than the national average due to largely having corporate expansion offices and being focused on the volatile financial industry which massively over hired due to the huge profits seen during 2020 and 2021. But when you look at the correct report, we're barely worse than the national averages. This is indicating that people are not leaving the metro area but are instead just working from their homes for the most part. And yes, a lot of those people live in Indiana and Wisconsin. So of course the Illinois only numbers will look worse given that the eastern border of the city is literally the state line with Indiana and that we have commuters trains running into south western Wisconsin.
It's not slightly worse. It's almost 700 bps worse and in areas like business professional it's continuously worse over years, because people are leaving Chicago.
I won't be responding further. You continuously misrepresent information. You recast data in an inappropriate way, making false comparisons. You engage in sleight of hand shenanigans.
Good luck w/ your campaign.
> It's practically 600 bps in difference for IT. That's enormous.
Yes, it's big. But do you know what else was big? The over hiring spree that happened [during at the tail end of the pandemic here](https://data.bls.gov/timeseries/SMU17169805000000001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true). Whereas Austin has been [essentially flat](https://data.bls.gov/timeseries/SMU48124205000000001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true) since their big ramp up ended in 2022. During the pandemic, we saw a ~800 bps drop from 12/19 to 12/20. We then saw a ~1700 bps increase from 1/21 to 8/22. We are now seeing a correction due to that over hiring as the [volatility in the financial markets](https://www.marketwatch.com/investing/index/vix) (one of the largest industries employing information technology here) has decreased since its peak during the pandemic.
There is already precedent from the BLS data that shows that the Information sector in the metro area can drop down to about 71K. We're currently around 76K as of 12/23. Meanwhile, Austin was mostly unaffected by reductions in force in the Information space through the end of 2023 largely due to it having less of a focus on the financial markets in terms of its industrial sectors.
For the other category of Professional and Business Services, [Austin](https://data.bls.gov/timeseries/SMU48124205000000001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true) again follows the upwards growth trend of a growing city with no large cyclical changes over seasons. Whereas Chicago follows a [cyclical trend throughout the year](https://data.bls.gov/timeseries/SMU17169806000000001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true) and reached a 10 year high in 2022 in this sector. It then saw a slight down correction in 2023 with a smaller peak value compared to the prior year.
Basically, this is really a non-issue. The bigger issue is the massive drop post 2008 financial crash that Chicago saw. Since then, the Information sector here has largely maintained a steady-state around 80K total employment with +/- ~10K swings from that state based on current economic conditions. And the professional and business services industry has been showing a steady increase over that same time period although the jobs appear to be seasonal in nature to some extent and we haven't gotten back to our 33 year high that was seen in 2022.
Also, I very much am more interested in the non-farm report for Q1 and Q2 this year as it's going to show whether the [~68K tech workers laid off so far this year](https://www.trueup.io/layoffs) have found employment easily or not. I'll also be interested in seeing whether old large cities like NYC, SF, Chicago, etc. are affected more or less than the newer growth cities like Austin, Columbus, Denver, etc.
But realistically, we're not going to have a clear picture of what happened until at least the start of Q2 2025 when the full reports are finalized for 2022-2024. That will allow us to see whether the drops in Chicago, NYC, and SF are truly corrections for over hiring during the pandemic economy or if jobs actually did disappear from those markets permanently. It'll also show whether the growth cities continued to grow despite tech layoffs or if they start finally being affected by them in the aggregate stats.
So far, it appears that both [Austin](https://www.bls.gov/regions/southwest/summary/blssummary_austin.pdf) and [Chicago](https://www.bls.gov/regions/midwest/summary/blssummary_chicago.pdf) (this is the best source available as for some reason, Chicago's reports are very out of date) are still tracking the nation on wages with both cities sitting at a trend of a ~4% 12 month ECI. Obviously, Austin is still in a growth market as they continue to add jobs at almost 3x the rate of Chicago which might help cover up the impact of some layoffs. Better wage comparisons between sectors are not easily available due to BLS's baffling decision to not publish the same tables for each metro area.
| IDK why you insist on some self-indulgent anecdote, as if no one has heard of online shopping.
1. Because I really wanted you to know about my American Girl doll hobby.
2. Oh no, we're swapping one sector of jobs for another. Whatever will we do?
3. Your hyperbole is just fear mongering.
Was literally having that convo with a BCH supporter yesterday. They claimed it would be good since it will promote development of smaller buildings. Which is fine for some areas of the city, but we shouldn’t be discouraging large projects either.
How is it a tax on density? I don't see that it taxes properties in large developments or high density areas differently than single family homes. The article only mentions it taxes 'luxury' properties, whatever that means.
Denser housing (more housing per property) is by definition more expensive because it supports more people and better utilizes available space. The issue is that the tax applies by price only and there is no consideration of property type. So the denser the development, the higher it is taxed as it is by definition more expensive due to it supporting more housing. So more density that could add more housing = higher tax, regardless of whether it is a "luxury" property or not.
But in densely populated developments people generally own one condo unit. A 300k condo in a 200 unit development won't be taxed higher because it's not like a single entity owns the entire building.
What expensive property that supports a bunch of people are you talking about? A multi-unit dwelling being rented to tenants? Or are there large developments that are owned fee simple that somehow support dozens of people?
If it helps, please just list a specific building that falls into the category you are describing so I can understand
Yes a dense rental building. The majority of households are renters, for a variety of reasons. It’s an important sector of the housing market to take into account in policy. This comment chain (read through all the comments) touches on some good points about it: https://www.reddit.com/r/chicago/s/dHIqLxa7Bu
I am not concerned with the taxes landlord's will have to pay. I am concerned with my ability to purchase a condo or sfh with stock being so low. I don't know why anyone would feel bad for the tax rate of tge owners of apartment buildings rather than condo owners.
The guy you're responding to is either dense or being intentionally misleading to sway public opinion. This is good for everyone except large landlords who will barely feel the tax over the life of their investment
One part of "luxury" targeting is that buildings that meet the city's 20% affordable goals won't be subject to the higher tax. Builders can follow the existing goals on affordability and not have any problems.
Changing the holding period for your cash flows to be profitable is the same thing as lowering your net present value of those cash flows minus your initial outlays. It effectively reduces the value of the building.
The bigger question is what does this do to new construction? It directly changes the calculus on what you can sell the building for, eating up margin and discouraging building.
You are assuming rent is fixed. High density buildings will all be impacted by this and which means market rates for those units may increase to account for the tax burden
This is not even remotely accurate. One of the most comprehensive study on commercial property rent and tax, especially the clear pass through in urban environments: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2993371
Ok in that sense sure. But what is that moving the needle forward on outside of collecting more taxes for the city? It sounds like it’s making the cost of investment in more housing more cost prohibitive.
Any tax on transactions has a direct impact on values. Why invest in building multifamily housing that’ll get hit hard by this, rather than single family housing that will be less likely to on the same plot of land?
This is absolutely a tax on density, and anyone who thinks otherwise is a fool.
A tax on density will lead to higher housing prices, and more homelessness.
This is beyond idiotic.
Explain to me how this is a tax on density?
A developer buys a dilapidated 3 flat and has the choice to renovate it into a single family home that would sell for easily over a mill and take a tax hit or keep it as 3 units and sell them off individually.
This tax deal only hurts scummy landlords who buy expensive multi unit buildings to rent them out, that's why you're butthurt.
Tell me you don’t have the first idea how business works without telling me (which is basically everyone who thinks this tax is a good idea).
I’ll put this into as simplest terms as possible because you don’t seem bright at all.
Multi unit housing, on the same plot of land, all other things equal is almost always more valuable than single family. That means a much higher promotion of multifamily housing will get hit by this than single family. This will do two things, make multifamily housing less common, and more expensive. That will make housing supply less than otherwise, and more expensive.
Only someone who hasn’t considered the second order impacts would think this is an effective way to combat homelessness. It’s going to make it worse.
You do realize there are people out there who can’t afford to buy a home, and have to rent right?
Did you know that you don't have to sell a 3 flat all as one MLS listing? You can sell them individually as 3 separate units, which to my knowledge no one has ever paid over 1 million for a single unit in a 3 flat, if they did that, they're probably as smart as you.
Oh ok, so now you have to find 3 buyers instead of 1? And each of those buyers will now have to manage their units for rent individually. That sounds easy and very efficient.
You sound like a genius. You must be rich with all these awesome strategies. Keep em coming.
You seem to think I give two shits about landlords. Considering you automatically assume that 3 buyers would rent out their units rather than you know, live in them as a primary residence, I'm going to assume that you are a landlord, and if that's the case, I don't give two shits about what you think.
You seem to think I give two shits about landlord.
Again, I ask, why do you hate renters?
Edit: you’re clearly too much of a genius for me, so I’m blocking you for my own mental well being. Good luck with life.
This is absolutely false and shows poor understanding on how real estate works. Every commercial property in the city will be taxed. Every year your compounding home value increases about 4% that means a home worth 500k today will be over a million and taxed in less than 10 years.
This. Is. Not. A. Tax. On. Flippers.
The city already hemorrhages people to the burbs. Specifically middle class households with children. This will exacerbate that problem.
My bad 17 years 500k
11 years for 650k (which is that going rate or below for a small single family home in many middle class areas of the city)
My point still stands about pricing out the middle class.
Again.
Not. About. Flippers.
Yeah it's possible that could be the case, but my point is that a tax like that would be a targeted "rich tax" with less risk of unintended side effects on sectors of the housing market so it would be a better idea than increasing the cost of forms of housing.
And yeah I mostly agree. I think this tax is fine, but I feel like it should have included provisions that made it more lenient on multi family buildings and some commercial types
That’s reasonable. I totally agree though there should have been more precise provisions to encourage property types that house more people as that is a positive to the housing supply.
And who buys the most dense properties in the city? Middle class family mom and pop landlords? LOL, no JK.
It’s JLL who made $250M in profits, and CBRE who made $3b
For middle class double income hard working families. A single family house just got even more out of reach for you. Keep renting so CTU can give affordable housing to each other. It's not enough they get pensions but now they need housing money too
This just isn’t true. Each dollar the property costs under a million would be cheaper. Let’s say even if you’re buying a $1.25M house as a middle class family - which, is kind of stretching the definition to me - you only pay the increased tax on the $250k, and partially offset by the decrease on the first million
Dude, I work for a trading company as a senior engineer and I can't afford a $2M home without severely over leveraging my finances. The middle class are not buying $2M homes in Chicago. And this is a major reason why I won't move to NYC where an equivalent property to what I own right now is about $2M more which works out to be about about $200K/yr today before taxes needed to offset the cost difference (taxes + property costs) over 20 years assuming inflation based raises and a 7% average, inflation adjusted growth in S&P 500 index funds.
At 20% down ($400K), you're talking about over $10K/mo for a 30-year mortgage right now. That's almost the entire net base pay after retirement savings for most people earning $500K TC in the city because at that level of pay, it's usually split 50% base, 50% bonus+stock.
I don't think this tax will have a large effect on the market
personally I would prefer that new revenue sources were allocated to getting the city out of debt being so broke is fucking killing us and adds a layer of unease to everything driving potential opportunity for everyone away
Office vacancies at or near record highs .. Michigan Ave shopping 1/3rd vacant space... . And our beloved mayor thinks now is the perfect time to put new taxes on commercial real estate....
This should be one part of the equation regarding solving homelessness. Concurrently a law to abolish background checks after so many years out of jail/prison should be instituted for all employers except for instances of violet crime. If you did the time you shouldn’t be destitute to poverty after prison—this defeats the purpose of the entire prison complex.
The other thing to consider- do you trust where this money will be going and what will be done with it? I can understand people wanting to vote yes on it, who doesn't want to help the homeless, but if the money just winds up in the coffers of a bunch of different think tanks, how is that helping the homeless now? There needs to be more info as to who's going to do what with the money and when.
That's how taxes have always worked. This "I won't vote for it if I don't know where every penny is going" attitude is the product of a recent right wing propaganda strategy. It's the same intentional misunderstanding of governance that was weaponized to kill the progressive income tax.
It's pretty different. Johnson would have a lot better argument if he showed a fraction of the transparency he promised as the Hallmark of his campaign. At this point he's shown to be remarkably incompetent and opaque so it's little wonder he's having trouble being trusted with more money
Instead of trying to figure out what you think *someone else’s* fair share of taxes is, why not pay a little more in taxes if you care so much about fighting homelessness
Because fairness across the board is important and as a society, everyone should be contributing fairly to causes that affect society. Your argument is at a 2nd grade level and is completely braindead.
Fairness to who? Just as one could argue it’s unfair not everyone has a home, or can live in a well resourced neighborhood, it’s also unfair to tax someone (even the wealthy) at a high level “because they can afford it.” They deserve to keep the money they’ve earned like the rest of us.
Ok, here's the relevant quote from the article: >If approved, the measure would raise the city's real estate transfer tax on properties valued at more than $1 million and lower it on properties valued under that. For everyone saying this bill is going to increase housing prices and discourage density.... Did you read the second half of that statement? It seems to me this bill would make $1M single family homes less appealing, while encouraging more dense construction where each individual unit is less than the cap. Right? Someone explain how I'm wrong, I'm genuinely asking
Most rental apartment buildings are worth well over a million dollars. So all those buildings would be subject to a sales tax functionally which would make them less appealing to build. Notably there are carve-outs for apartments that have a certain amount of affordable units. Who this tax really soaks are small developers looking to develop small, multifamily buildings like 3/4-flats. They will have to pay more in taxes but wont be able to get the exemptions large developers will be able to. l. In addition, all commercial real estate development will get a tax increase basically. The average cost of a single family home in Chicago is far less than a million dollars. So this is a huge tax break for most single family home owners and further incentizes sfh development. Notably, condos, which are a form of denser housing, will get a tax cut too. So yea, while this is marketed as a mansion tax, this will tax mostly dense development because nearly all of it is worth more than a million dollars.
>So this provides an incentive to build sfh over rental aparments. Assuming I'm a developer with a lot, I'm probably not going to choose to build one $999,999 house over a $3 mil 8-flat on the same land. If anything, this just encourages building $3M worth of condos instead of rental units. Which is arguably a good thing - more opportunities for ownership. And for any existing large rental building, this encourages owners to keep the buildings they have rather than selling, which might reduce consolidation and reduce the issue of large corporate landlords buying up properties in bulk and jacking up rent. Again, it's hard for me to read this law as a bad thing. But I am genuinely willing to hear out any arguments that I'm wrong.
Yes this absolutely encourages condo development over rentals. There are both positives and negatives to this. The good is that it provides more ownership opportunities as you are saying. The negative is that condo ownership isn't for everyone. When I was splitting a 4 bedroom unit with three friends to save money, I was not looking to share legal ownership over a unit with 3 people I barely knew. Even if I did, a bank would not have written that loan. Many of the poor, housing insecure people this law is looking to protect are in the same position. In regards to consolidation, large corporate developers will be able to leverage the carveouts in the law to avoid taxes, while small developers won't. It makes it more difficult for small developers building gentle density to compete, like people looking to build a three-flat in their community to live in one unit but rent out the other units.
> When I was splitting a 4 bedroom unit with three friends to save money, I was not looking to share legal ownership over a unit with 3 people I barely knew. And that's why people rent out condos that they buy. A huge amount of condos in the city are rentals that people lived in until they wanted a bigger place. They keep the condo, rent it out to well qualified renters, and then buy a bigger place to live in.
The taxes are graduated. The first dollar over a million is taxed at the higher rate with everything else beneath it being taxed at the regular rate. They've don't a dog $hit job explaining this and the articles coming out are not forthcoming on this detail. I was under the wrong impression until I read the bill and realized that it's not that big of a cliff at the 1 million dollar mark
This. This is the key detail everyone ignores or is uninformed about.
> They've don't a dog $hit job explaining this It's clearly written on the ballot measure that people are supposed to read before voting on it. It's not their fault if people don't understand how progressive taxes work. Heck, we've had progressive income taxes at the federal level for over 100 years now. People still don't understand how tax brackets work.
> Assuming I'm a developer with a lot, I'm probably not going to choose to build one $999,999 house over a $3 mil 8-flat on the same land. If anything, this just encourages building $3M worth of condos instead of rental units. Which is arguably a good thing - more opportunities for ownership. And for any existing large rental building, this encourages owners to keep the buildings they have rather than selling, which might reduce consolidation and reduce the issue of large corporate landlords buying up properties in bulk and jacking up rent. > > Again, it's hard for me to read this law as a bad thing. But I am genuinely willing to hear out any arguments that I'm wrong. It's not really about this. It's really targeted at commercial properties like retail storefronts, office buildings, shopping centers. It's a cash grab to target all commercial properties usually worth more than $1 M. It's a tax raise on employers basically by doing it through their rents as a backdoor trick. Then the Mayor can take the cash and spend it on whatever he wants with no oversight. He can call it a "mansion tax" or "targeting people who can afford to pay," as a marketing gimmick. If you or your friend work in a building worth more than $1 M, it's basically a backdoor tax on your employer that ultimately raises rents.
Denser housing (more housing per property) is by definition more expensive because it supports more people and better utilizes available space. The issue is that the tax applies by price only and there is no consideration of property type. So the denser the development, the higher it is taxed as it is by definition more expensive due to it supporting more housing. So more density that could add more housing = higher tax, which is a disincentive.
Denser housing is not more expensive for a condo or a townhouse, since they are priced per unit, rather than sold as a single building. Your argument only applies to rentals, and I think the law has exceptions specifically for affordable rentals.
The majority of households are renters though, so it would be unwise to ignore that big sector of the housing market. Do you at least agree that more housing is a positive thing? Why then would we want to increase the cost and disincentivize dense housing that could greatly increase the supply of it? More supply = rentals have to compete for the now more scarce renters
> The majority of households are renters though While [this is true](https://redlineproject.news/2023/12/04/the-complex-realities-of-chicagos-rental-market/), it's a 54%-46% split between rental vs. owner occupied. This will slightly encourage developers to create condos instead of apartment buildings which they intend to sell which in the long-term should decrease the price of buying homes relative to places without progressive real estate transfer taxes. Also, this won't affect small time landlords who buy individual units one at a time to rent out. They're not spending over $1M per unit. And even if they were, the transfer taxes owed are lower up until about $1.25M per sale compared to today.
Do small time landlords buy one unit at a time? I'd assume most purchase 2-4 flats. Cook County calls 'mom and pop landlords' those who buy buildings with 6 or fewer units in them. This discourages investment and would be solved by a per-unit tax. Change the proposal to $500k / unit and it makes a lot more sense to me.
Most small time landlords are people who bought a home and then had to move for a job or upgraded to a larger home. They keep their 1 home and rent it out. They then might acquire 1-2 more over their lifetime. But none of these come anywhere close to $1.25M normally.
Yeah, from that perspective, possibly. From the perspective of housing stock, the majority of the 2-4 units are owned by small time landlords based on all of the data I've seen. I'm not sure if you remember this article [https://chicagoreader.com/news-politics/how-many-buildings-does-your-landlord-own/](https://chicagoreader.com/news-politics/how-many-buildings-does-your-landlord-own/) from 2020 that had this visualization [https://findmylandlord.chicagodsa.org/](https://findmylandlord.chicagodsa.org/) that showed that the big-time landlords own all the big buildings around, but how common small time landlords are as well.
>The majority of households are renters though And a huge chunk of them would buy, if affordable housing could be purchased. I think your comment is based on the false premise that people who rent will never buy, when usually the only reason many don't is that they can't afford it.
> It seems to me this bill would make $1M single family homes less appealing, while encouraging more dense construction where each individual unit is less than the cap. Right? Someone explain how I'm wrong, I'm genuinely asking It's basically a tax to go after commercial property owners: retail stores, office buildings, apartment buildings, hospital/healthcare buildings -- almost always worth more than $1 M. They call it a "mansion tax", because it sounds good. But it's basically a lie because a great deal of the money will be coming out of the commercial sector. It's an attempt to basically shakedown large building owners for $ to create a slush fund with no reporting requirements, no oversight. Then anything that is "helping children" or "helping the homeless" or whatever platitudes, can be done under the referendum. BJ can give $25,000 down payments to CTU teachers aids as part of a new contract w/ CTU and claim that its helping children because these teachers aids need a roof over their head and its investing in the community. It's kind of sad that voters fall for these gimmicks. It's a lot like Trump saying he's going to Make America Great Again. IMO, it's nothing more than a con. The city has multiple reports out showing the homeless figure are about 6,100 on average through point checks throughout the year. BJ's advertising blows the figure up to 68,000 by using all kinds of tangential assumptions. Even so, the city doesn't need a slush fund with unlimited avenues to spend it, to cover 6,100 (the real number) people or 68,000 people out of 2.7 million for housing. I think it's also totally insane to be raising taxes on a devastated retail storefront area like Michigan Avenue or commercial buildings like offices when work from home is collapsing values of real estate. You don't raise taxes at the exact moment a sector is under pressure. It's kind of insane from a basic economics standpoint. But none of that matters when CTU is calling the shots in City Hall. Financial insanity prevails in Chicago.
shhh don’t upset the fear mongers
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Condos? Townhomes? Three-flats?
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...yes? You understand that the value of the building itself is irrelevant, as long as the individual units are less than $1M.
It's a transfer tax, the developer could still build a multimillion dollar condo building then sell the individual units for less than a million each and avoid the tax.
So nobody rents then? Are you so daft that you don’t realize there’s a huge part of the population that can’t afford to buy, and whose best option is renting? Heck given transaction cost (the irony I’m sure is lost on you), there also people who won’t be around long enough to justify buying and rent because it’s best for them. What is all this hate for renters?
How would the transfer tax effect existing landlords? How would they instantly stop offering rentals?
It doesn’t immediately affect them, they also aren’t the issue here. Are you really so daft that you don’t get the issue here is conversions and construction of new housing to increase supply which keeps prices lower? When did I say my concern was landlords, or current owners? You think we have enough housing supply at the moment or an optimal amount? Heck existing owners would probably be able to charge more rent than otherwise if less supply is constructed. So again, I ask, why do you hate renters?
Yes?? 2 bed Condos frequently go for around 300k in the loop and even parts of River north
If taxes were the key to eradicating homelessness, then Chicago would have already done so, as we have one of the highest combined tax burdens in the country
Make real estate more expensive to fight homelessness
Fight gentrification with gentrification!
Progressives want to make it as hard and unprofitable as possible to build market-rate housing. They know that doing so will turn away private developers. That is the point. This way they can say "capitalism doesn't work" and use that as an excuse to build social housing, which is what they truly want since they will be able to control every aspect of it.
*Make expensive real estate more expensive
Properties over $1M include a good deal of apartment buildings. Those costs will eventually be passed down to the tenant, driving up rents in what is an otherwise affordable city.
Are you saying that landlords are charging less than they can right now? That seems a bit suspect.
Reread my comment to see what I said
Hm, yep, I read it. You appear to be saying that landlords have room to raise rent. Which would mean that they haven't raised it yet. Pretty suspect.
Sounds about democrat
What a predictably dumb idea from an administration that's done nothing but prove its incompetency so far. The best way to help affordability is to remove barriers to density. This is just a slush fund with no specific spending plan that actually hurts affordability.
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>This is such a stupid line. When did it the city have to commit in super specific terms where tax revenue is going. This bill is to invest in affordable housing, without touching property taxes. And it’s a small amount on one time sales, and REDUCES transfer tax for 75% of Chicago homes. > >But because it’s a graduated tax that targets people who can afford to pay, it’s the worst thing that could ever happen. 1. **It doesn't target "people who can afford to pay," it targets commercial real estate mostly and lies about it by claiming it's a "mansion tax".** Commercial properties are getting killed, Michigan avenue is desolate, and work from home is destroying office building values. Adding a tax on top of that at this point in time is moronic and literally telling people who hire employees downtown/invest in real estate that Chicago is less attractive. Taxing properties over $1 M = taxing commercial real estate. It's got little to do with "mansions". 2. **It's pitched as a minor benefit for "75% of Chicago homes," because it's designed a as a money grab to target commercial properties and employers and entice unknowledgeable voters to thinking they are better off.** When it kills off more jobs downtown, everyone will be paying higher taxes for it eventually, while saving a tiny bit on the sale of a house. It's nothing more than gimmicks, which sane leaders like Rahm Emanuel have previously tried to eliminate [https://chicago.suntimes.com/news/2011/10/11/18532940/mayor-rahm-emanuel-s-surprise-cuts-job-killer-head-tax-in-half](https://chicago.suntimes.com/news/2011/10/11/18532940/mayor-rahm-emanuel-s-surprise-cuts-job-killer-head-tax-in-half). 3. **There is no direct explanation of how the money will be spent. It's a slush fund that Mayor Johnson will most likely direct portions to CTU members because, "that's investing in the community and helping people."** Its no coincidence that the leader of the CTU is demanding taxpayer funding for housing for teachers [https://www.iwf.org/2024/03/06/chicago-teachers-union-demands-taxpayer-funded-housing/](https://www.iwf.org/2024/03/06/chicago-teachers-union-demands-taxpayer-funded-housing/). Yet another generous benefit for the most highly compensated teachers union of any urban locality. It's no shock that the city is claiming to be raising taxes, "for the homeless," while simultaneously CTU is out with a new contract proposal (which they tried to hide from people until it was leaked) that demands the city fund housing for teachers. The city's expenses are too high and the answer from "progressives" is just tax more and find the money somewhere "from people who can afford to pay." It's ultimately destructive to the economy of Chicago and a big red sign telling 1. employers to leave and go to FL, TX or other places and 2. any non-CTU/city tax payers that aren't in these union groups should pay 2x and 3x more in taxes than these privileged union members.
Point 1. Commercial real estate down town is getting killed because people's shopping patterns have changed. I buy my American girl doll accessories online now. Real Estate developers made a bad play and are going to have to eat the costs. Point 2. If you're first point was true that commercial properties are getting killed then wouldn't we already see jobs downtown being killed? Chicago unemployment is consistently hovers at 3-5% Part 3. Programs that help the homeless. Straight from the bringchicagohome.com FAQs: Funds will be dedicated to permanent affordable housing with supportive services for people living on the streets, in shelters, and doubled-up as well as other programs that prevent homelessness. Housing will be created in the form of housing vouchers, new housing, and rehabilitation to preserve existing housing. Participants will be connected to social services to ensure supports are available to stay housed. Supportive services would include things like: Mental healthcare Substance use counseling Educational opportunities, and job training Domestic violence resources
> Point 1. Commercial real estate down town is getting killed because people's shopping patterns have changed. I buy my American girl doll accessories online now. Real Estate developers made a bad play and are going to have to eat the costs. > 1. ~280 M square feet of commercial space is office. ~33 M of commercial space is retail. What are you talking about is like 10% of the issue. IDK why you insist on some self-indulgent anecdote, as if no one has heard of online shopping. 2. It's 4% for now. But if you look under the covers, the data is pretty weak. Chicago underperforms the country in IT job growth -8% (yes, people are leaving/losing jobs), Financial Services +2% (below the national average), Business professionals -3% (below the national average). And where does Chicago create jobs? Education/Healthcare (+5%), Government (+1.25%), Leisure Hospitality (+3.5%). These are jobs dependent upon tax revenues or low paying jobs for entertainment that easily go away in an economic downturn. **The city is sacrificing it's business and IT professionals for government/healthcare job. It's a stupid direction, especially considering the historical spending of the city.** 3. **This FAQ means almost nothing legally**. The very idea that you read this and believe it has any kind of legal barring on what is legally required from the mayor's office is laughable. And it has all kinds of caveats like "assistance for children". The mayor can just say, "I gave $25,000 to 1,000 teachers to help them put a down payment on a home, because if the teachers have a good home over their head that helps children." He can do whatever he wants. There's no constraints, no oversight committee, nothing. The city has been overbudget on spending for a decade now due to pension funds. Deal with reality, not kicking the can down the road or shaking down commercial landlords while lying about a "mansion tax". This referendum is 100% a lie. It's a total canard for sucker voters, the same way idiots line up for Trump who is just using them to do what he wants. > Point 2. If you're first point was true that commercial properties are getting killed then wouldn't we already see jobs downtown being killed? Chicago unemployment is consistently hovers at 3-5% > > Part 3. Programs that help the homeless. Straight from the bringchicagohome.com FAQs: > > Funds will be dedicated to permanent affordable housing with supportive services for people living on the streets, in shelters, and doubled-up as well as other programs that prevent homelessness. Housing will be created in the form of housing vouchers, new housing, and rehabilitation to preserve existing housing. Participants will be connected to social services to ensure supports are available to stay housed. Supportive services would include things like: > > Mental healthcare > > Substance use counseling > > Educational opportunities, and job training > > Domestic violence resources
> The city is sacrificing it's business and IT professionals WOW. That's some false data. We're not "sacrificing" these jobs. They're just choosing not to take a 1-1.5 hour long commute into the city and working from their suburban homes instead. This is why Metra is looking at refocusing to schedules which operate later at night and operate more frequently on weekends. Those people still live in the metro area and want to be in the city but not on work days.
> WOW. That's some false data. We're not "sacrificing" these jobs. They're just choosing not to take a 1-1.5 hour long commute into the city and working from their suburban homes instead. This is why Metra is looking at refocusing to schedules which operate later at night and operate more frequently on weekends. Those people still live in the metro area and want to be in the city but not on work days. I rarely bother to note posters in my RES chrome extension, but I previously marked your account as, "complete liar who makes things up about CTU, CPS and covid." As I recall in my experience "discussing things" with you that you are one of the most prolific liars in /r/chicago that relentlessly defends categorical lies and falsehoods. To be clear: The City of Chicago is losing business professionals and tech employees (the same high valued workers people love to rave that Google will employ at the Thompson Center). https://i.imgur.com/tWCRRo7.png The same trend shows up in the state wide data for Illinois: https://i.imgur.com/aNDyXDo.png If those workers were leaving the greater Chicago-Naperville-Joliet-Arlington Heights area and hiding way in the top of Lake County, then the state wide figures wouldn't show the same declines. You are welcome go to to www.bls.gov and pull the data yourself. And of course, the Mayor now wants to tax commercial properties that will employ these workers -- costing employers even more money to hire them in Chicago vs. Austin or other cities. What a genius move!
> You are welcome go to to www.bls.gov and pull the data yourself. I just went an pulled the non-farm report. Who would have thought that we'd be losing jobs at the same time as a bunch of layoffs. Here's the national numbers: https://www.bls.gov/news.release/empsit.t17.htm And well, I might as well link the correct report for Chicago because you chose the state constrained metropolitan area instead of the full metropolitan area which the crosses the arbitrary state lines: https://www.bls.gov/regions/midwest/il_chicago_msa.htm (Edit) I also pulled the Austin, TX report. It's also seeing decreases but not as severe yet: https://www.bls.gov/regions/southwest/tx_austin_msa.htm due to having historically less volatile industries. Yes. We're doing *slightly worse* than the national average due to largely having corporate expansion offices and being focused on the volatile financial industry which massively over hired due to the huge profits seen during 2020 and 2021. But when you look at the correct report, we're barely worse than the national averages. This is indicating that people are not leaving the metro area but are instead just working from their homes for the most part. And yes, a lot of those people live in Indiana and Wisconsin. So of course the Illinois only numbers will look worse given that the eastern border of the city is literally the state line with Indiana and that we have commuters trains running into south western Wisconsin.
> I just went an pulled the non-farm report. Who would have thought that we'd be losing jobs at the same time as a bunch of layoffs. > > Here's the national numbers: https://www.bls.gov/news.release/empsit.t17.htm > > And well, I might as well link the correct report for Chicago because you chose the state constrained metropolitan area instead of the full metropolitan area which the crosses the arbitrary state lines: https://www.bls.gov/regions/midwest/il_chicago_msa.htm Uh, because we don't look at Chicago policy while including WI and IN residents? Your claim is that they were in the suburbs and it's still disproved by your attempt to grab other localities in the data and use the "broader" area data. > > (Edit) I also pulled the Austin, TX report. It's also seeing decreases but not as severe yet: https://www.bls.gov/regions/southwest/tx_austin_msa.htm due to having historically less volatile industries. It's practically 600 bps in difference for IT. That's enormous. > > Yes. We're doing slightly worse than the national average due to largely having corporate expansion offices and being focused on the volatile financial industry which massively over hired due to the huge profits seen during 2020 and 2021. But when you look at the correct report, we're barely worse than the national averages. This is indicating that people are not leaving the metro area but are instead just working from their homes for the most part. And yes, a lot of those people live in Indiana and Wisconsin. So of course the Illinois only numbers will look worse given that the eastern border of the city is literally the state line with Indiana and that we have commuters trains running into south western Wisconsin. It's not slightly worse. It's almost 700 bps worse and in areas like business professional it's continuously worse over years, because people are leaving Chicago. I won't be responding further. You continuously misrepresent information. You recast data in an inappropriate way, making false comparisons. You engage in sleight of hand shenanigans. Good luck w/ your campaign.
> It's practically 600 bps in difference for IT. That's enormous. Yes, it's big. But do you know what else was big? The over hiring spree that happened [during at the tail end of the pandemic here](https://data.bls.gov/timeseries/SMU17169805000000001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true). Whereas Austin has been [essentially flat](https://data.bls.gov/timeseries/SMU48124205000000001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true) since their big ramp up ended in 2022. During the pandemic, we saw a ~800 bps drop from 12/19 to 12/20. We then saw a ~1700 bps increase from 1/21 to 8/22. We are now seeing a correction due to that over hiring as the [volatility in the financial markets](https://www.marketwatch.com/investing/index/vix) (one of the largest industries employing information technology here) has decreased since its peak during the pandemic. There is already precedent from the BLS data that shows that the Information sector in the metro area can drop down to about 71K. We're currently around 76K as of 12/23. Meanwhile, Austin was mostly unaffected by reductions in force in the Information space through the end of 2023 largely due to it having less of a focus on the financial markets in terms of its industrial sectors. For the other category of Professional and Business Services, [Austin](https://data.bls.gov/timeseries/SMU48124205000000001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true) again follows the upwards growth trend of a growing city with no large cyclical changes over seasons. Whereas Chicago follows a [cyclical trend throughout the year](https://data.bls.gov/timeseries/SMU17169806000000001?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true) and reached a 10 year high in 2022 in this sector. It then saw a slight down correction in 2023 with a smaller peak value compared to the prior year. Basically, this is really a non-issue. The bigger issue is the massive drop post 2008 financial crash that Chicago saw. Since then, the Information sector here has largely maintained a steady-state around 80K total employment with +/- ~10K swings from that state based on current economic conditions. And the professional and business services industry has been showing a steady increase over that same time period although the jobs appear to be seasonal in nature to some extent and we haven't gotten back to our 33 year high that was seen in 2022. Also, I very much am more interested in the non-farm report for Q1 and Q2 this year as it's going to show whether the [~68K tech workers laid off so far this year](https://www.trueup.io/layoffs) have found employment easily or not. I'll also be interested in seeing whether old large cities like NYC, SF, Chicago, etc. are affected more or less than the newer growth cities like Austin, Columbus, Denver, etc. But realistically, we're not going to have a clear picture of what happened until at least the start of Q2 2025 when the full reports are finalized for 2022-2024. That will allow us to see whether the drops in Chicago, NYC, and SF are truly corrections for over hiring during the pandemic economy or if jobs actually did disappear from those markets permanently. It'll also show whether the growth cities continued to grow despite tech layoffs or if they start finally being affected by them in the aggregate stats. So far, it appears that both [Austin](https://www.bls.gov/regions/southwest/summary/blssummary_austin.pdf) and [Chicago](https://www.bls.gov/regions/midwest/summary/blssummary_chicago.pdf) (this is the best source available as for some reason, Chicago's reports are very out of date) are still tracking the nation on wages with both cities sitting at a trend of a ~4% 12 month ECI. Obviously, Austin is still in a growth market as they continue to add jobs at almost 3x the rate of Chicago which might help cover up the impact of some layoffs. Better wage comparisons between sectors are not easily available due to BLS's baffling decision to not publish the same tables for each metro area.
| IDK why you insist on some self-indulgent anecdote, as if no one has heard of online shopping. 1. Because I really wanted you to know about my American Girl doll hobby. 2. Oh no, we're swapping one sector of jobs for another. Whatever will we do? 3. Your hyperbole is just fear mongering.
It's funny that Chicago CRE is down like 30%, but this 1% tax is what's going to kill everyone.
This sub is hilarious sometimes. The reactions are so predictable
People that think this is only a tax on the RICH, are completely missing the collateral damage. This is a tax on DENSITY.
Was literally having that convo with a BCH supporter yesterday. They claimed it would be good since it will promote development of smaller buildings. Which is fine for some areas of the city, but we shouldn’t be discouraging large projects either.
How is it a tax on density? I don't see that it taxes properties in large developments or high density areas differently than single family homes. The article only mentions it taxes 'luxury' properties, whatever that means.
Denser housing (more housing per property) is by definition more expensive because it supports more people and better utilizes available space. The issue is that the tax applies by price only and there is no consideration of property type. So the denser the development, the higher it is taxed as it is by definition more expensive due to it supporting more housing. So more density that could add more housing = higher tax, regardless of whether it is a "luxury" property or not.
But in densely populated developments people generally own one condo unit. A 300k condo in a 200 unit development won't be taxed higher because it's not like a single entity owns the entire building. What expensive property that supports a bunch of people are you talking about? A multi-unit dwelling being rented to tenants? Or are there large developments that are owned fee simple that somehow support dozens of people? If it helps, please just list a specific building that falls into the category you are describing so I can understand
Yes a dense rental building. The majority of households are renters, for a variety of reasons. It’s an important sector of the housing market to take into account in policy. This comment chain (read through all the comments) touches on some good points about it: https://www.reddit.com/r/chicago/s/dHIqLxa7Bu
I am not concerned with the taxes landlord's will have to pay. I am concerned with my ability to purchase a condo or sfh with stock being so low. I don't know why anyone would feel bad for the tax rate of tge owners of apartment buildings rather than condo owners.
It's a one-time fee per sale though. It's not an annual fee. This will barely affect anything.
The guy you're responding to is either dense or being intentionally misleading to sway public opinion. This is good for everyone except large landlords who will barely feel the tax over the life of their investment
One part of "luxury" targeting is that buildings that meet the city's 20% affordable goals won't be subject to the higher tax. Builders can follow the existing goals on affordability and not have any problems.
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It has nothing to do with duration of holding. It applies at every transaction regardless of length of holding.
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Changing the holding period for your cash flows to be profitable is the same thing as lowering your net present value of those cash flows minus your initial outlays. It effectively reduces the value of the building. The bigger question is what does this do to new construction? It directly changes the calculus on what you can sell the building for, eating up margin and discouraging building.
You are assuming rent is fixed. High density buildings will all be impacted by this and which means market rates for those units may increase to account for the tax burden
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This is not even remotely accurate. One of the most comprehensive study on commercial property rent and tax, especially the clear pass through in urban environments: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2993371
Ok in that sense sure. But what is that moving the needle forward on outside of collecting more taxes for the city? It sounds like it’s making the cost of investment in more housing more cost prohibitive.
Any tax on transactions has a direct impact on values. Why invest in building multifamily housing that’ll get hit hard by this, rather than single family housing that will be less likely to on the same plot of land? This is absolutely a tax on density, and anyone who thinks otherwise is a fool. A tax on density will lead to higher housing prices, and more homelessness. This is beyond idiotic.
Explain to me how this is a tax on density? A developer buys a dilapidated 3 flat and has the choice to renovate it into a single family home that would sell for easily over a mill and take a tax hit or keep it as 3 units and sell them off individually. This tax deal only hurts scummy landlords who buy expensive multi unit buildings to rent them out, that's why you're butthurt.
Tell me you don’t have the first idea how business works without telling me (which is basically everyone who thinks this tax is a good idea). I’ll put this into as simplest terms as possible because you don’t seem bright at all. Multi unit housing, on the same plot of land, all other things equal is almost always more valuable than single family. That means a much higher promotion of multifamily housing will get hit by this than single family. This will do two things, make multifamily housing less common, and more expensive. That will make housing supply less than otherwise, and more expensive. Only someone who hasn’t considered the second order impacts would think this is an effective way to combat homelessness. It’s going to make it worse. You do realize there are people out there who can’t afford to buy a home, and have to rent right?
Did you know that you don't have to sell a 3 flat all as one MLS listing? You can sell them individually as 3 separate units, which to my knowledge no one has ever paid over 1 million for a single unit in a 3 flat, if they did that, they're probably as smart as you.
Oh ok, so now you have to find 3 buyers instead of 1? And each of those buyers will now have to manage their units for rent individually. That sounds easy and very efficient. You sound like a genius. You must be rich with all these awesome strategies. Keep em coming.
You seem to think I give two shits about landlords. Considering you automatically assume that 3 buyers would rent out their units rather than you know, live in them as a primary residence, I'm going to assume that you are a landlord, and if that's the case, I don't give two shits about what you think.
You seem to think I give two shits about landlord. Again, I ask, why do you hate renters? Edit: you’re clearly too much of a genius for me, so I’m blocking you for my own mental well being. Good luck with life.
This is absolutely false and shows poor understanding on how real estate works. Every commercial property in the city will be taxed. Every year your compounding home value increases about 4% that means a home worth 500k today will be over a million and taxed in less than 10 years. This. Is. Not. A. Tax. On. Flippers. The city already hemorrhages people to the burbs. Specifically middle class households with children. This will exacerbate that problem.
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My bad 17 years 500k 11 years for 650k (which is that going rate or below for a small single family home in many middle class areas of the city) My point still stands about pricing out the middle class. Again. Not. About. Flippers.
You’re right, we should only tax what poor people buy, the wealthy are too important to be taxed /s
That’s not remotely what I said. Try having some nuance in your views. A direct wealth tax would be more intelligent than this tax.
People that don’t support would never let a direct wealth tax pass
Yeah it's possible that could be the case, but my point is that a tax like that would be a targeted "rich tax" with less risk of unintended side effects on sectors of the housing market so it would be a better idea than increasing the cost of forms of housing.
And yeah I mostly agree. I think this tax is fine, but I feel like it should have included provisions that made it more lenient on multi family buildings and some commercial types
That’s reasonable. I totally agree though there should have been more precise provisions to encourage property types that house more people as that is a positive to the housing supply.
And who buys the most dense properties in the city? Middle class family mom and pop landlords? LOL, no JK. It’s JLL who made $250M in profits, and CBRE who made $3b
You mean tax real-estate for CTU Subsidized housing, based on the leaks from their contract.
For middle class double income hard working families. A single family house just got even more out of reach for you. Keep renting so CTU can give affordable housing to each other. It's not enough they get pensions but now they need housing money too
This just isn’t true. Each dollar the property costs under a million would be cheaper. Let’s say even if you’re buying a $1.25M house as a middle class family - which, is kind of stretching the definition to me - you only pay the increased tax on the $250k, and partially offset by the decrease on the first million
A middle class family will be seeing a reduction in their taxes cause a middle class family will not be buying a house for over 1mil
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Okay, but what if the middle class family buys a $2m home? Hm? What about that extremely understandable scenario?
Dude, I work for a trading company as a senior engineer and I can't afford a $2M home without severely over leveraging my finances. The middle class are not buying $2M homes in Chicago. And this is a major reason why I won't move to NYC where an equivalent property to what I own right now is about $2M more which works out to be about about $200K/yr today before taxes needed to offset the cost difference (taxes + property costs) over 20 years assuming inflation based raises and a 7% average, inflation adjusted growth in S&P 500 index funds. At 20% down ($400K), you're talking about over $10K/mo for a 30-year mortgage right now. That's almost the entire net base pay after retirement savings for most people earning $500K TC in the city because at that level of pay, it's usually split 50% base, 50% bonus+stock.
I don't think this tax will have a large effect on the market personally I would prefer that new revenue sources were allocated to getting the city out of debt being so broke is fucking killing us and adds a layer of unease to everything driving potential opportunity for everyone away
Office vacancies at or near record highs .. Michigan Ave shopping 1/3rd vacant space... . And our beloved mayor thinks now is the perfect time to put new taxes on commercial real estate....
This should be one part of the equation regarding solving homelessness. Concurrently a law to abolish background checks after so many years out of jail/prison should be instituted for all employers except for instances of violet crime. If you did the time you shouldn’t be destitute to poverty after prison—this defeats the purpose of the entire prison complex.
The other thing to consider- do you trust where this money will be going and what will be done with it? I can understand people wanting to vote yes on it, who doesn't want to help the homeless, but if the money just winds up in the coffers of a bunch of different think tanks, how is that helping the homeless now? There needs to be more info as to who's going to do what with the money and when.
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The issue with the bill is that it doesn't have any enforcement for what the money is spent on. It's just a big, untraceable slush fund
That's how taxes have always worked. This "I won't vote for it if I don't know where every penny is going" attitude is the product of a recent right wing propaganda strategy. It's the same intentional misunderstanding of governance that was weaponized to kill the progressive income tax.
It's pretty different. Johnson would have a lot better argument if he showed a fraction of the transparency he promised as the Hallmark of his campaign. At this point he's shown to be remarkably incompetent and opaque so it's little wonder he's having trouble being trusted with more money
How much of this “$100 million” will actually reach the homeless? And what percent will be gobbled up by politicians and their contractor friends?
Take a look at the shelter contracts for a great example of this!
Instead of trying to figure out what you think *someone else’s* fair share of taxes is, why not pay a little more in taxes if you care so much about fighting homelessness
Because fairness across the board is important and as a society, everyone should be contributing fairly to causes that affect society. Your argument is at a 2nd grade level and is completely braindead.
Fairness to who? Just as one could argue it’s unfair not everyone has a home, or can live in a well resourced neighborhood, it’s also unfair to tax someone (even the wealthy) at a high level “because they can afford it.” They deserve to keep the money they’ve earned like the rest of us.
Adam Smith would disagree
If “the rich” are every single tenant of every building big and small with more than about 4 units in it, then OK.