That’s Interesting…
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- Category: Latest News
I figured I’d do something a little different for this Summer 2022 Newsletter. I’m constantly reading stuff in other magazines and newspapers that I think are really interesting, but that can easily be overlooked in our busy lives. So, I figured, why not put some of these random “fun facts” together in one place and see if anyone else finds them interesting? Maybe not – that’s the trouble when you are a geek. You think stuff is cool and everyone else just rolls there eyes. But here goes. Read, enjoy, or send me rotten tomatoes! I’m hoping I’m not the only one who finds this stuff interesting!
#1 – The Week magazine, which compiles a summary of news and public interest stories in other publications, reports that the Wall Street Journal looked at economic data from all 50 states and found that, on average, red states have recovered more quickly from the pandemic than blue states.
Theories for why this is true include the unprecedented expansion of remote work. Many former residents of “more expensive and crowded blue states,” including Illinois but also (of course) New York and California, have suddenly found it not only possible, but preferrable, to relocate to less crowded, less expensive and less stressful places that just so happen to be more commonly found in red states.
The WSJ’s findings were based on a Moody’s Analytics index that concluded 11 of the 15 states with the best performing economies were red, while eight of the lowest ten were blue. In total, all of the red states together have created more than 300,000 net new jobs from previous employment highs before the devastation of the pandemic. As for the blue states, they are still 1.3 million jobs in the hole compared with previous highs just before the pandemic. So, yeah, on a combined basis, we are still not quite back to our pre-pandemic employment highs as an entire country. But don’t blame it on the red states which are outperforming when it comes to employment gains.
#2 – The New York Times reports on the crazy housing market that we are all trying to make sense of in What’s Up with the Crazy Housing Market, published July 12. The basic premise of the article is that the first six months of 2022 saw the insane for-sale market come crashing back to earth, even while the equally insane rental market shows no signs of slowing down. Why the disconnect between for-sale and for-rent? In two words, it’s interest rates which have suddenly made the monthly cost of for-sale housing a whole lot more expensive. This has had the predictable result of pushing even larger numbers of people back to rentals as their only viable housing option – with predictable impacts on rents.
Ronda Kaysen, author of the NYT piece, describes the rental market in most places across the country as a version of “The Hunger Games” as would-be renters “in cities across the country compete with dozens of other applicants” for any available units.
Kaysen describes the double-whammy on for-sale housing of post-pandemic price increases, compounded by the recent rise of interest rates. She cites the 20% average price increase in for-sale units that occurred nationally between May 2021 and May 2022, along with the added cost of higher interest rates which have doubled from about 3% at the beginning of 2022 to about 6% currently.
Despite the sudden fall from grace of for-sale properties, most experts do not expect a repeat of 2008 when housing prices fell significantly and, in some cases (Rogers Park, I’m calling your name), precipitously. Today’s fundamentals point to a continued mismatch between supply (too little) and demand (too much), even in a rising interest-rate environment. Prices may not go zooming up again anytime soon, and rates will probably climb higher before they turn down again. But none of these factors are likely to impact the market with the same force that they did during and immediately after the Great Recession of 2008-2009. That’s good news if you’re a seller, but bad news if you still want to buy.
By the way, Crain’s wrote about the same phenomenon, but with a local focus, in two June 27th articles called “What to know about trends in Chicago’s housing market” and “Downtown apartment rents hit record high.” These articles talk about the same issues as the NYT article that came out a few weeks later – namely, the for-sale market in Chicago is slowing way down even while rents continue to escalate at a rapid pace. For the local perspective, this is a good place to get up to speed.
#3 – Could Fulton Market Save Chicago? There is not just one article here that I can cite. As anyone who reads Crain’s Chicago Business can attest, there is not much this publication likes to talk about more than all the new development and gravity-defying economic expansion that is taking place along the Fulton Market corridor. This is against a backdrop of almost unrelenting bad news about Chicago, whether it’s corporations moving out, crime going up, or just the general feeling that things are not going well in the Windy City.
There was one Crain’s article that especially caught my eye, called “This would be Fulton Market’s biggest project,” a proposal for a full block at Fulton and Racine that would include 500 apartments and 200 hotel rooms in a 50-story building, a 500,000 SF office building rising 25 stories, and a 200,000 SF life sciences building in a 10-story structure. All of this would be in addition to a fitness center and street-level retail and restaurants – in total, a $600 million development.
A rendering of development plans for 1200 W. Fulton St. A massive, $600 million development calls for
office and lab space, apartments, a hotel and a big fitness center in the red-hot Fulton Market District.
Source: Crain's Chicago Business
There’s no guarantee this proposal will get built. A lot of these mega-projects never do. But even if it doesn’t, it’s clear that the Fulton Market corridor is on fire with new buildings popping up like mushrooms after the rain.
Twenty years ago, the downtown skyline did not reach much further west than Presidential Towers. Now, thanks to Fulton Market and its incredible transformation from work-a-day, down-at-the-heels meat market to glitzy, ultra-hip Google-land, downtown Chicago has now extended its westward reach nearly to Ashland Avenue. In fact, Fulton Market is extending downtown Chicago to the west much as Michigan Avenue extended it to the north in the last century – an interesting juxtaposition as one street flourishes and the other seems to wither and die.
The big question is, is there enough juice in Fulton Market to pull the city out of its funk and lead it to a brighter economic future? Or is this phenomenon just a flash in the pan? I don’t know, but it sure is nice to have something as exciting as the Fulton Market transformation to take our minds off of, well, just about everything else.
#4 – If Fulton Market represents what’s good and hopeful about the downtown office market, the recent release of employment data by the Illinois Department of Employment Security (IDES) shows that there’s not much else to celebrate. IDES released their Where Workers Work – December 2021 report which provides detailed job data for the Chicago region. IDES has been tracking the region for decades, so it’s a great way to track what areas of the city and suburbs are doing well, and what areas are lagging.
Ever since the end of the Great Recession, the greater downtown area – defined as the CBD and “Outer Business Ring” – has been the golden goose of the Chicago area job market, adding good paying jobs by the thousands year over year. From a low of 479,199 jobs in 2010 at the depths of the Great Recession, the greater downtown area saw job growth every subsequent year all the way through 2020 when it hit 631,757. This is gain of more than 150,000 new jobs over the eleven years, just shy of a 32% increase. The IDES employment figures are always as of March of each year and we all know what happened in March 2020!
Now IDES has released their employment data for March 2021, one year after the pandemic devastated the downtown market and just about everywhere else in the country. The 2021 data finds just 566,699 jobs in the greater downtown area, a loss of 65,058 jobs or just over 10% of the 2020 total. And those are just the jobs that have been lost. Many thousands of others remain, but are held by people who seldom if ever come downtown to do their work. So, if you think downtown Chicago has seemed a bit lacking in activity and vitality lately, these statistics tell you you’re not wrong. It’s great to see Fulton Market doing so well. But the rest of the Central Area has a lot of lost ground to recover before we can say things are getting back to normal. Unfortunately, we’ll have to wait awhile before we get any jobs data for 2022.
#5 – You might not have known – but surely will not be surprised to learn – that Illinois has the second-highest property tax rate in the country, behind only that bastion of good government – New Jersey. The median real estate tax bill in the state is $4,419, higher than 45 other states and the District of Columbia. And remember, Illinois is NOT the 6th most expensive real estate market in the country. Far from it. This means that our median bill is levied against less valuable homes, making this burden even heavier for beleaguered homeowners and renters.
These fun tidbits (and a few extras that I threw in) were gleaned from another Crain’s article penned by William Johnson, CEO of the Harris Poll, who writes about how close to the edge many Chicagoans feel about their overall tax burdens and how much people associate high taxes with all the other ills that are impacting the region and the state. Mr. Johnson worries that high taxes are just one more reason people are leaving the region, and fears that a point of no return may not be far away as taxes continue to rise much faster than incomes with no relief in sight.
This article, and a whole bunch of others, were part of Crain’s Forum on Property Tax Reform. These articles appeared in the May 2, 2022 edition. It’s good reading for people who share the concern that the city and state pay too much in taxes and get too little in return.
#6 – Just when you thought all the news from Chicago (and the world) was bad, along comes the news that Chicago ranked number two on the list of best cities in the world! At least, this is the conclusion of Time Out magazine which surveyed 53 of the world’s most iconic cities and confirmed that Chicago is indeed the Second City! Even better than our number two ranking, Chicago was the only American city to make Time Out’s list of the top ten! Take that, San Francisco (and New York and, well, all you other flashy coastal usurpers)!
Time Out claims that they surveyed 20,000 people all around the world. As for how they measure greatness, Time Out says:
“So while things like community spirit and resilience were two of the most important factors last year, in 2022 we’ve added extra weight to the things that make cities great places to visit as well as to live. Our top cities this year are the ones with thriving nightlife, amazing food and drink, and art, culture and museums galore. We’ve highlighted places that aren’t boring or overly expensive or overrated, and we’ve ensured that our top picks also score well for practical stuff like walkability, good public transport and safety, as well as sustainability.”
We can all agree that Chicago is anything but boring, is relatively inexpensive, at least compared to so many other places that typically get more attention than we do, and definitely has great nightlife, food, bars, art, culture and museums galore! I guess we do deserve the ranking. And it sure feels good after a long pandemic and all the bad news that seem to fill the airwaves on a daily basis.
And the number one spot goes to – Edinburgh, Scotland.
Really? Cold and rainy Edinburgh? They don’t even have any beaches. We shoulda been number one!
