Taxes & The State of Evanston’s Multifamily Market

I don’t think it’s ground-breaking to say that Evanston has been ground-zero for the new assessment methodology coming out of the Cook County Assessor’s office. Anyone reading the news on this topic has read about instances where the 2019 assessed value of real estate has gone up 100%, 200%, and more in extreme examples. Of the various properties that I’ve sold and analyzed for owners in 2019, I’ve grappled with how to forecast taxes. 

I’ve been working in lockstep with owners as they have been 1) receiving their new assessments, 2) appealing their assessments at the Cook County Board of Review, and 3) receiving their findings from the Board of Review. Here are some key findings: 

Success Upon Appeal

I’ve seen a 200% increase from the Assessor get knocked down to a 60% increase at the Board of Review; 100% tax increases from the Assessor get knocked down to a 30% increase at the Board of Review, and other examples like this. These are still significant increases, however not nearly as bad as it was at the outset. As an avid reader of real estate news, I’m not seeing these successful appeals being written about really at all, certainly not to the degree that the new assessments were covered.  

Underwrite for Changes 

But, this is all immaterial. What matters ultimately is what will happen to taxes. Unfortunately, we’re all going to be waiting in suspense until the second installment tax bills come out in mid-2020. Until then, some people will continue to assume that there will be a tax increase that is proportionate to the assessed value, others will tell you it’s much ado about nothing because the tax rate will be adjusted. I think the right answer lies somewhere in the middle.

Investment Appetite Remains 

With that said, I’m still seeing a steady level of interest from buyers in the Evanston market. I’m of the persuasion that buyers (and rightfully so) at any point in time, will have a single issue that throttles their ability to be more aggressive with offers. Over a year ago, before taxes were the topic of conversation, it was rising interest rates. And now they are very favorable. I also think lower interest rates are also one big mitigating factor of the tax environment.  

My colleague Matt Halper pointed out in a blog that the western Cook County suburbs will be re-assessed in 2020. I think that once Evanston can be used as a case-study many fears of reassessment will be resolved. For Evanston investment questions, please give me a call.