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The ballots have been counted, and thanks to an uphill fight led by the Illinois REALTORS® and supported by the National Association of REALTORS®, voters soundly defeated a detrimental real estate transfer tax proposal in Chicago.
The tax hike, which was positioned as a way to address housing affordability and rising rates of homelessness, was expected to easily pass mere months ago. However, following a massive effort by REALTORS® to educate voters on how the proposal would harm those it was purported to help, Chicagoans rejected the measure in the March 19 primary election.
“This outcome demonstrates how crucial it is to communicate directly with consumers about the real-life impacts of proposed policies,” says NAR Chief Advocacy Officer Shannon McGahn. “And there’s no one better to do that than REALTORS®, who have the pulse on the needs of their communities.”
Illinois REALTORS® CEO Jeff Baker agrees: “This is not a time for celebrations. Everyone in Chicago deserves housing stability; this is what the 17,000 REALTORS® throughout Chicago advocate and work for every day. For our most vulnerable, our city needs a comprehensive strategy for funding and delivering the wraparound services that are desperately needed right now.”
The defeated proposal sought to increase the real estate transfer tax on transactions worth more than $1 million. References to the measure as a “mansion tax” were misleading at best, as most transactions above $1 million in Chicago involve commercial properties, not residential.
“When the policy was first introduced, polls showed strong support for the transfer tax. You don’t often turn the tide on numbers like that,” McGahn notes. “But REALTORS® took the issue head-on, knowing how drastically it could impede the future of housing in the city.”
With the help of NAR Issues Mobilization Grants totaling $850,000, the Illinois REALTORS® and Chicago Association of REALTORS® set out to swiftly correct the record for voters.
REALTORS® shared that the tax burden would be overwhelmingly shouldered by mom-and-pop business owners, which could force out many neighborhood retailers and prevent others from opening.
The measure would have led to higher property taxes for all Chicago homeowners. Other areas that have enacted similar policies have seen the value of commercial properties decline, with homeowners forced to pay higher property taxes to cover the widening valuation gap.
The policy would harm renters, too. As multifamily buildings become more expensive to purchase, those costs would be passed down to tenants in the form of higher rent bills.
It would also exacerbate the housing shortage when inventory is already at historic lows. With property taxes, interest rates and building costs all rising, an additional tax increase would add another expensive hurdle dissuading builders from creating more housing in Chicago.
These messages resonated among Chicago residents, as did the fact that while pushing for this tax increase on an already stressed housing market, the city had access to $37 million in unused federal funds to address homelessness.
“The vote on this referendum echoes the resounding sentiment we hear from Chicago’s homeowners, housing providers, and small businesses that we cannot continue to rely on real estate taxes to fund poorly conceived programs,” Baker says. “It’s time to come together and find real solutions that provide real housing stability to everyone in our city.”