Chicago Gentrification

[Sid Franklin]

Does anyone think that Chicago's record tax hikes and the possibility of a tax exemption for property's under $250K will lead to a new round of gentrification largely driven by Millenialls wanting to live in the City but not wanting the costs of staying in neighborhoods that are already gentrified?

What neighborhoods will win with gentrification increasing values?

What neighborhoods will lose value as Millenialls move to greener and cheaper pastures?

Will Millenialls leave the City for the Suburbs?

Will investors chuck the state for areas with more growth potential and more certainty on property taxes and less governmental debt?

http://www.chicagotribune.com/news/sns-wp-blm-news...

[Brie Schmidt]

Being a Millennial and having Millennial friends.... we have no plans on ever living in the suburbs.  We are in our early 30's with no kids, our friends that are still in the city are also in their early 30's with no kids.  This particular group of people chose their career over starting a family before they were 30 and have laid the groundwork financially to afford to stay in the city and raise kids.  We do have friends that left the city when they had kids, but they usually had kids earlier in life before their career was established enough to afford city prices.  

I think our generation has a different view of work / life balance.  Gone are the days of commuting 90 min one way to your job downtown and sucking it up.  I once took a job in Northbrook that had a 6 figure + base salary plus commissions.  It was 18 miles from my house and I quit after the first month because my commute was 45 min - 90 min one way, with one day taking 2.5 hours to get home.  I had no job lined up but did not care, it wasn't worth the life suck that commuting was to me.  After that when recruiters called about the burbs, I didn't even care about the position or the pay, I would immediately decline.  

We are less willing to take the trade off of long commutes for the space the suburbs brings us.  To many people that isn't worth the cheaper cost of the burbs and/or the longer commute to work. City life offers so many amenities like public transit, restaurants, public spaces like parks and the beach, that it is worth the cost to stay here.

I live in the 47th ward and my alderman voted "yes" to the tax increase.  He sends out a weekly newsletter explaining major issues in the ward and explains why he voted a certain way.  This week I responded to his email about his yes vote to say while nobody wants a tax increase, I support his vote because it needed to be done.  The budget problems have been getting bigger and bigger every year, but it did not start with the current administration.  So we either cut funding for police officers and teachers, or we suck it up as a community and pay a little more for the benefits that are provided to us on a daily basis.  According to this at the $544 million increase that was approved, my taxes will increase $1500 next year on my personal residence.  Do I like it? No.  Do I like my already $10k + a year tax bill? No.  Will I move because of it? No.  

Being a landlord, this also affects me and my tenants.  My taxes will increase about $800 a year per property, that will be $266 a year per tenant or $22 more a month.  Are they going to move when I increase their rent by $25 next year? Maybe.  Will I find new tenants who will pay the increase? Yes.  

As far as neighborhoods, I think they will be affected.  Look at Logan Square, Humboldt Park, Albany Park, does anyone remember what those neighborhoods were like 10 years ago?  It is night and day.  

As areas like Bucktown/Wicker Park and Lakeview/Lincoln Square go up in price people are moving to outlying neighborhoods to afford to stay in the city.  I bought a property in Albany Park 4 years ago and already have seen a dramatic change.  Look at Old Irving, Avondale, Portage Park.  Those once sleepy neighborhoods are seeing a ton of development and new buyers that are changing the demographic of the area,

Being a broker, I have seen it happen over the years.  Areas I was concerned about buying in years ago are now thriving areas that I wouldn't think twice about buying in.  I don't think a $627 increase in taxes on a $300k house is going to be that big of a deciding factor for a first time home buyer who wants to live in the city.  I know of the clients I am working with now looking to buy in the city, it is not going to change their decision because all of them have no desire to live in the burbs to save money.