How will coronavirus affect your property taxes?
Cook County Assessor Fritz Kaegi plans on adjusting the assessed value of every parcel in the county ahead of the August 2021 tax bills, using historical data from past economic crises and market trends before the nationwide coronavirus shutdown.
Normally, only the south suburbs would be in line for a reassessment this year, but Kaegi said he wants his office to be ahead of the effect the economic shutdown is having on the real estate market.
"It won't be a full reassessment, but we will take into account our best estimate," Kaegi said. "We wanted our assessments to reflect what was happening to everyone. This wasn't just having an effect on one-third of the county, so we didn't want to see a disparity."
Some suburban township assessors in other counties are in no rush to follow suit.
"We don't have information and data to really substantiate anything like that from a real estate standpoint," said Naperville Township Assessor Warren Dixon III. "Our job is to accurately value property as of Jan. 1, and that's some time away."
A blanket decrease in property values would have little effect on tax bills without a decrease in the amount of taxes collected by the governments, Dixon said.
In Cook County, Kaegi said property values could drop 10% to 50%, depending on location, sales data and historical values. The decreases wouldn't be reflected on Cook County tax bills until the second installment, due Aug. 1, 2021.
"It's not going to be perfectly accurate, but there was a similar broad-based downward adjustment in 2008 for taxes in 2009," Kaegi said. "But this time it's not a reflection of oversupply or a disruption in the financing chain. In this crisis, it's a complete, full stop of the economy and that's disproportionately affecting businesses that require a physical presence."
That might have a lingering effect on the value of commercial real estate even after the coronavirus threat is over, some real estate experts believe. Because some businesses have seen that having workers do their jobs from home is not only feasible, but could reduce overhead costs, there's a chance some commercial entities will downsize from their current footprint.
"That's one of the things I've been posing on the nine or 10 video conferences I'm on each day, which is what's going to come out of this?" said Brian Kwilosz, designated managing broker at Exit Real Estate Partners in Downers Grove and president of the suburban Mainstreet Organization of Realtors. "There is a new reality to this that will affect commercial properties."
Even some government entities have been surprised by the ease of transitioning from an office setting to remote work stations.
Dan Patlak, a Cook County Board of Review commissioner whose district makes up much of the Northwest suburbs, said his agency's transition to working from home was almost seamless.
"We met with all our analysts and put our plan in action to have them continue working from home," he said. "They took their equipment home with them and most were up and running the next day."
About 90% of the board of review's roughly 100 analysts were signed onto the system the next day without any problems, Patlak said.
The remainder were online the next day. When they moved out of their offices March 17, the agency had yet to fully process about 74,000 of this year's 250,000-plus appeals. By Monday, the remaining appeals were down to 36,000. Patlak believes the agency will easily complete the appeal process before its May 10 deadline.
As for the residential market, there's reason to believe it will rebound faster than the commercial market, experts said.
Interest rates are historically low, making borrowing easier and more attractive. Additionally, there was nothing to indicate a slowdown of the market before the outbreak.
"We were in a robust market and this is kind of like someone just turned the faucet off," Kwilosz said. "People looking to move before this will likely still be looking to move."
Got a tip?
Contact Jake at email@example.com or (847) 427-4602.