The past decade was already a difficult one for the Luxury Real Estate market…
Chicago, Cook County and Illinois have all seen net population loss. And while there are numerous causes — politics, cost of living and business opportunities, among them – the result is undeniable. There are simply less buyers in our market.
Taxes are a big concern, as well, especially in Cook County. The new Assessor’s reforms, though much needed, have, nonetheless, led to startling jumps in assessed valuations and taxes in many instances, often making high end properties significantly less attractive to buyers.
What’s more, the millennial generation, now raising families, is aging out of the luxury condos in high-end hot spots like Fulton Market and River West, and looking for the space and amenities of their suburban childhoods.
And now, our world has changed, virtually overnight.
No one person, no matter how fortunate, has been immune to the upheaval of the COVID-19 pandemic. And that will make today’s Luxury Real Estate Market more challenging than ever.
The stock market has experienced seismic shock. It remains to be seen how permanent the scarring will be, but many potential buyers lost enormous value in their investments.
And while those were mostly paper losses, the speed and magnitude with which those losses hit, and the economic instability and unpredictability in the market at present, have created fear in some buyers, leaving them more hesitant to make major expenditures such as a luxury home.
To add to the difficulty, financing has been further restricted, as lenders have begun to look deeper into borrowers’ employment. In addition to showing employment, lenders may now require proof that the employment is not likely to be threatened by continued or reinstated shutdowns.
With change comes opportunity.
The shutdowns effectuated by the global pandemic have resulted in some silver linings.
We’ve already embraced this forced pause in ‘business as usual,’ as a once-in-a-lifetime opportunity to rethink our real estate industry and reimagine a better one. In just two months, the means by which we now show properties, go through the contract process and close on these transactions have changed more than they have in the last fifty years. And while we’ve quickly adapted to using technology in more ways than ever, we can — and should — push our technology envelopes much further.
Implementing the latest technology is one thing. Innovating new ways to use it will be a game-changer. From the marketing of luxury properties, to the closing table, the more we can match the buying and selling of the product, with the “luxury” of the product being sold, the more we will stand apart from the crowd.
In addition to finding new and better procedures for buying and selling homes, we need to rethink how we design them.
The shutdown demanded we find ways to work remotely and exposed the need for efficient work-from-home spaces. As employers continue to see its value, there will likely be a heavy shift in this direction. Smart sellers will begin to plan accordingly, upgrading home office areas just as they would their kitchens and baths, adding significantly improved tech access, sound barriers and flexible areas easily-convertible to home offices – ones that we are proud to display on a Zoom conference call.
Tax appeals are more important than ever.
While perhaps obvious to many, homeowners should be aggressive in their efforts to appeal and reduce their taxes. Particularly in the luxury market, where taxes can be quite high, consistently fighting to keep those taxes as low as possible can be a marketable feature when selling a property.
Make use of a property tax appeal attorney. They work on a contingency basis, so If they are not successful in reducing the taxes, their services are cost-free.
Shift your target.
Though some big employers have made recent headlines by moving their headquarters into Chicago’s downtown districts, there are plenty of large companies that have kept, and even moved, their headquarters to the suburbs. Zurich Insurance is just one example.
The wide variety of luxury properties in the suburbs are sure to attract those employees grown weary of increased commute times, as well as those looking to raise and spend more time with their families.
Flexibility is key.
Real estate has always been an exhilarating roller coaster ride. And the professionals at Erwin Law have been leaning into all its twists and turns, adapting, pivoting and succeeding, for more than 25 years. We’re here to help you, in times good and bad. For our full scope of services, go to: www.erwinlawfirm.com. Or call Jim Erwin at 773-525-0153.