We’re not in decline
To be clear, Chicagoland is not sliding down the back end of another real estate-cycle bell curve. So far as we can tell, we are not in another recession. In many respects, the market is performing well. New construction spending in the city was up more than 130 percent year-over-year in July; mortgage activity is up; Chicago’s startup activity has been strong, along with the investment property market; and in June, home price growth was once again positive. Those are all indicators of a healing market. However, pending a shift in market trends, the homeownership rate may be at a new normal, which has industry experts asking: how do we buck a falling rate?
“We’re not going to increase homeownership unless we balance our budget,” says Ronald Branch, president and managing broker of Chicago-based RLB Realty group and a past president of the National Association of Real Estate Brokers. “Our lack of a budget is not only detrimental to Chicago’s housing industry, but it hurts every industry throughout the state.”
Illinois has been without a budget for more than a year. The state government has had to lean on court-ordered spending and last-minute appropriations to operate, with no guarantee of future funding. And when legislators in Springfield did finally agree on a solution, it wasn’t a complete one.
On June 30 of this year, Illinois Governor Bruce Rauner signed a stopgap budget that gave the state a spending plan – for six months. Its passage prompted Illinois Comptroller Leslie Munger, a Republican, to say: “If we look at the numbers we are facing, the realities continue to be sobering.”
She’s referring to the state’s impending deficit.
Illinois’ state spending for the 2017 fiscal year, which began on July 1, is projected at $39.5 billion, while the state expects revenues to cap out at $31.8 billion. Republican State Representative David McSweeney called the $8-billion margin “proof that the recently passed unbalanced stopgap measure is making our insolvent state’s fiscal problems much worse.”