Cook County Assessor Fritz Kaegi has announced the formula his office will be using to reassess properties in Homewood and Flossmoor as part of the tri-annual reassessment process.
Due to the COVID-19 pandemic, Kaegi said he is taking into account the record unemployment and market effects on the communities when setting assessments downward.
The executive summary to his 16-page report follows. The full report can be found at the assessor’s website.
Executive Summary:
The Cook County Assessor’s Office (CCAO) reassesses approximately one-third of the real property in Cook County each year. We began 2020 with the scheduled reassessment of all properties in the South and West suburbs, and of specific properties in the North suburbs and Chicago with divisions, permits, or other special applications.
After we began our work, however, the COVID-19 pandemic led to substantial economic, social and market effects, including the following:
- A record-breaking number of unemployment claims in Illinois.
- Significant downturns in some (but not all) commercial sectors.
- Widespread loss of rental income, both commercial and residential.
- Disaster declarations encompassing Cook County were issued at the federal, state and county levels.
- A statewide stay-at-home order was issued by Gov. J.B. Pritzker and related orders were issued by Cook County Board President Toni Preckwinkle and the mayors of numerous municipalities in Cook County.
These economic and market effects can have corresponding effects on real property values.
Typically, property owners must file appeals to receive reductions in a property’s assessed value. But relying on the appeal system to correct for COVID-19’s effects could create an inequitable tax burden borne by property owners who do not have the resources or access to file an appeal, particularly during a health-related pandemic.
Therefore, to account for the pandemic’s impact on real estate values throughout Cook County’s neighborhoods and communities, the Cook County assessor determined that it is appropriate to apply COVID-19 adjustments to property values in 2020, where applicable. The extent of these adjustments will depend on each property’s use, type, and location.
Scope:
The report contains a summary of the methodologies used by the CCAO to produce COVID-19 adjustments to residential and commercial property values for townships in the South and West Suburbs, which are scheduled for reassessment in 2020.
In the near future, the CCAO will issue a supplemental report describing its approach to COVID- 19 adjustments for townships in the North Suburbs (reassessed in 2019) and Chicago (reassessed in 2018).
COVID-19 Analyses and Adjustments:
Different property types and locations experience different economic impacts of COVID-19.
Residential (Class 2) property value adjustments: Historically, rising unemployment has correlated with falling home values. Our logic is that areas with the largest increases in unemployment will experience the largest declines in home values.
Based on estimates of local unemployment, CCAO created two COVID-19 adjustments for each neighborhood: one for single-family homes and condominiums, the other for multi-family homes.
In neighborhoods throughout the South and West suburbs, for Class-2 residences (e.g., excluding garages), the CCAO has estimated value reductions of:
- 8.0% to 12.2% (median 10.3%) for 942,728 single-family homes and condos.
- 10.0% to 15.2% (median 13.1%) for 166,159 multi-family (2 to 6-unit) apartment buildings.
These reductions in estimated residential property values will be applied to Class-2 residences (excluding garages) during Tax Year 2020.
Commercial and other Non-residential property value adjustments: Our research indicates that non-residential properties have experienced different impacts of COVID-19 that depend on their location, use and investment class. Capitalization rates (cap rates) are one indicator of value used in commercial valuations.
To account for market impacts, the office is making a range of adjustments to cap rates that are often used as a factor in determining property values.
- Basis point adjustments ranged from 0 (all grocery stores) to 200 (neighborhood restaurants).
- These adjustments will apply to “baseline” cap rates that are set as of January 2020. Baseline cap rates can vary by location, use and investment class.