By James P. Regan, As published by GlobeSt.com, September 2003
The 2003 City of Chicago Reassessment, thus far, has focused principally on the bedroom areas of the city with its high rise condos and multi-family rental buildings. Rental buildings have received new valuation assessments that show increases greater than 100%.
A review of the market provides contradictory valuation indicators. Apartment vacancies ranging from 8% to 15% annually have become common, and costs have soared. Those indicators should warrant lower values.
Despite those operating problems, sale prices have reached new heights. Buildings that were selling at $40,000 per apartment unit two to three years ago are now selling for as much as $55,000 to $65,000 per unit.
Appraisal practice requires a reconciliation of values where different valuation methodologies prescribe vastly different values. Reliance solely on sales, without taking into account the operating difficulties present in the current apartment market, violates the fundamental appraisal principle of reconciliation.
James P. Regan is a partner in the Chicago law firm of Fisk Kart Katz and Regan, Ltd., the Illinois member of American Property Tax Counsel. He can be reached at jregan@proptax.com.