Tag Archives: real estate

The rise in LLC property owners in Chicago

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A new analysis shows that LLCs now own more properties in Chicago compared to two decades ago:

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In the last two decades, LLCs have become an increasingly common way to own real estate in Chicago, according to a first-of-its-kind analysis of 26 million property records by WBEZ, Injustice Watch and the Mansueto Institute for Urban Innovation at the University of Chicago.

The share of multifamily rentals owned by LLCs increased from 3% in 2006 to 16% in 2022, the analysis shows. Their share of ownership among larger apartment buildings with seven or more units, like the one where Carter resides, increased from 9% in 2006 to 34% in 2022.

Why the increase?

But LLCs gained traction with real estate investors in the 1990s when they realized LLCs had very minimal disclosure requirements, Hamill said. In Illinois, for example, only the manager and agent of an LLC — neither of whom are necessarily owners — are required to be publicly disclosed…

“There’s two big advantages with LLCs. One is the tax advantage that you’re not taxed as a corporation. The other big one is the ability to isolate liability and isolate financial assets,” Immergluck said…

But experts say the issue with LLCs isn’t their protection against legal liability. They say the problem with LLCs is the lack of transparency.

This could be told as a story of how a change in bureaucratic structures – the ways a corporation could incorporate – led to unintended outcomes. A new option from the 1970s eventually proved useful for property owners. But that could prove problematic for renters who cannot easily find people who can address important property issues.

This is a similar but different concern that those expressed in recent years about institutional investors buying up housing. What is similar is that some hard to find or hidden or presumed-to-be self-motivated actor is buying up housing and not acting in the best interests of residents or the broader good. What is different is that the concerns in the article above are primarily about the lack of having a person to contact and hold responsible, not about the numbers of units that are less affordable or less accessible because an LLC or corporation is acting rather than an individual owner. So this may not be a question of whether corporations can buy residential properties; it is about whether residents can know who these corporations are and whether they can be counted on to fulfill the landlord’s duties.

It would be interesting to hear from landlords what they would think of changes that would reveal their ownership. Would landlords who want to do the right thing object to this? Would some still want to not have their ownership public but would respond to residents well through property managers?

The percentage of realtors under age 30 went up 400% (*from 1% to 4%)

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Some younger adults are moving into certain careers they feel offer them opportunities in an uncertain world. This includes becoming a realtor.

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Some Zoomers like Marmo are ditching four-year degrees in favor of work that unchains them from a desk, puts money in their bank accounts sooner, and — they hope — will survive the artificial intelligence boom that is already starting to change once-hot professions like software engineering, consulting, and marketing. Some are turning to blue collar work like HVAC servicing and wind turbine installation. Others are trying to start their own ventures via influencing and side hustles. And some see the lure in the licensed white-collar job, including working in real estate or insurance.

That shift in licensed jobs is slow, but growing. The share of Realtors younger than 30 grew from 1% to 4% in 2024, according to NAR’s member profile, and sits at 3% in 2025. Among insurance agents, the median age of an insurance principal who owns 20% or more of their agency is 55, with 22% of principals over the age of 66, according to a 2024 study of agencies conducted by the Big “I,” an association for independent insurance agents. Many are likely eying retirement, which could open up a huge amount of demand for young people to take up the trade.

Several Gen Zers I spoke to for this story told me they find appeal in working in real estate because there’s no ceiling on what they can earn. Rather than invest tens or hundreds of thousands of dollars in a four-year degree, they can spend a few weeks or months training to receive licenses and start working in fields where their hustle correlates to their payday…

Because it’s still something of a rarity to see a baby-faced real estate agent or teenager selling life insurance, the young people in licensure jobs I spoke to say that succeeding means not just learning the trade but competing against ageist stereotypes. The median age of a first-time home buyer has risen to an all-time-high of 38, according to NAR. That’s up from an average age of 33 a decade ago, according to a Zillow analysis. The idea of having a newly minted, 18-year-old real estate agent guide you through the biggest financial decision of your life is jarring. Katie Kenny, a 24-year-old Realtor in Chicago’s suburbs, says people meet her and are surprised, as they “expect the real estate agent to be like double my age,” she tells me. “They’re like, ‘oh, you’re young.’ And then when I open my mouth and start talking, they’re actually surprised because I do know a lot more, and I sound a lot more mature than what a normal 24-year-old would sound like.”

This article, like many articles, is trying to get a handle on a possible trend: younger people are pursuing different fields due to the world around them. There are numerous ways to report on this phenomena. This article uses a mix of statistics and interviews, considering broader patterns and hearing people describe their choices.

In the headline to the post, I highlight one way to report the data cited above. 400% growth in young realtors! 400% of anything sounds like a lot of change. A 100% increase or decrease would be noteworthy so 400% must mean a lot.

Another way to do this would be to take the approach above: the percentage of young realtors increased from 1% to 4%. This is not a big jump as both are small percentages. The odds of having a realtor under 30 years old is still 1 in 25.

Both of these options are factually correct. I would argue the second option is a better representation of the full context. Change happened but it is small change. If the same trend continues for 5 to 10 years, then there might be big change to report. Imagine the 30% of realtors under age 30 or 50%.

Someone will continue to track this data. It makes for interesting stories: “In an age of AI, college debt, and global crisis, more young adults in the United States are choosing to be realtors.” How big of a story it becomes partly depends on how it is told.

Who should benefit more from selling a home: sellers, buyers, realtors, Zillow, others?

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The process by which a single-family home or other residential property is built and sold has been under discussion in recent years. Here is one argument about who should benefit more from the process:

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So, when the National Association of Realtors recently adopted a policy allowing limited off-MLS marketing, Zillow announced it would permanently ban any listing not posted to the MLS within one day. Essentially, Zillow — a company that doesn’t sell homes — is asserting it gets to decide how you can market and sell your home. 

Zillow claims it is protecting consumers from off-MLS marketing, which it says leads to longer market times and lower prices. But a 2024 study by Midwest Real Estate Data — the MLS serving Chicagoland — shows the exact opposite. MRED offers a Private Listing Network that shares listings with all member agents without circulating them to public websites. Homes first marketed through MRED’s Private Listing Network sold 55% faster, for more money, and at a higher percentage of list price (97.5% versus 95.4%) than those listed publicly from day one.

Our own experience across tens of thousands of transactions confirms the findings of this study. At @properties Christie’s International Real Estate, we developed a “private-to-prominent” listing strategy that starts with an off-MLS marketing period and builds to a full public offering. This approach has several benefits. It allows a seller and their agent to prepare the home for sale while building interest and demand. It also gives them an opportunity to test a price without having Zillow or other websites display any reductions that might be made prior to the public listing. And the listing does not accumulate market time during this premarketing phase. (Typically, as market times increase, buyer interest decreases.) 

This approach can result in faster, higher-value sales, often before the home ever hits the MLS, or Zillow. Most importantly, it keeps the seller in control. They choose when to list publicly and can accept or reject an offer at any time. 

The key here is at the end: “it keeps the seller in control.” Should the seller be the one calling all the shots and having the advantages?

Another argument could be made that the seller having the primary options limits potential buyers. Is the home reaching all the possible purchasers? If it is on a private network first, how often does it reach the general public? Could private listings build off existing networks, reproducing inequalities?

Or should Zillow and other actors play the primary role as many Americans look for real estate online? Is this more of a tug-of-war between the established real estate industry and the online competitors who offer information for any searchers without the need to contact an agent? There are a lot of jobs and a lot of money at stake.

Is there any role for communities or people who might want to access certain communities down the road? If the strength of local real estate is often taken as a sign of local vibrancy and status, should this only involve private actors?

I suspect this discussion will continue as different actors look for an edge in real estate. Hopefully this does not come down to solely who can lobby the most effectively.

The front door as the best indicator about a home that is for sale

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What makes a home for sale more or less appealing? Two experts suggest this matters:

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Both our experts confirmed our suspicions. When it comes to your home’s exterior, the front door is the most important element for setting the tone.

“Think of your front door as your headline,” says real estate pro Charlie Lankston. “It’s one of the first details that draws the eye, and sets the stage for the story your home is about to tell.”…

“Far and away, the most important element is the front door of the home,” he says. “It is what every buyer sees first and with which they form their first impressions before even entering.”…

Along with indicating what potential buyers might find inside, Yee says your front door could also signal certain messages around the neighborhood.

Is this like how the eyes are supposedly the windows into the soul? When you enter a house, your eye is going to be drawn to the entryway so you will see the door. You may even have some time to inspect it closely walking up to it and through it.

But what exactly does it tell you? Some sense of the style of the rest of the home? Something about the upkeep? How much the door costs is going to say something about other upgrades?

I have also seen experts claim front doors have a high return on investment. Compared to other house projects, putting money into the door may be worthwhile.

I imagine there have to be at least some examples of an impressive front door leading to squalor elsewhere. Even if the front door is impactful, can it overcome other significant issues?

It might not matter how wrong Zillow’s price estimates are

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When you see a Zestimate on Zillow, how accurate is it?

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Just how accurate are those numbers, though? Until the house actually trades hands, it’s impossible to say. Zillow’s own explanation of the methodology, and its outcomes, can be misleading. The model, the company says, is based on thousands of data points from public sources like county records, tax documents, and multiple listing services — local databases used by real-estate agents where most homes are advertised for sale. Zillow’s formula also incorporates user-submitted info: If you get a fancy new kitchen, for example, your Zestimate might see a nice bump if you let the company know. Zillow makes sure to note that the Zestimate can’t replace an actual appraisal, but articles on its website also hail the tool as a “powerful starting point in determining a home’s value” and “generally quite accurate.” The median error rate for on-market homes is just 2.4%, per the company’s website, while the median error rate for off-market homes is 7.49%. Not bad, you might think.

But that’s where things get sticky. By definition, half of homes sell within the median error rate, e.g., within 2.4% of the Zestimate in either direction for on-market homes. But the other half don’t, and Zillow doesn’t offer many details on how bad those misses are. And while the Zestimate is appealing because it attempts to measure what a house is worth even when it’s not for sale, it becomes much more accurate when a house actually hits the market. That’s because it’s leaning on actual humans, not computers, to do a lot of the grunt work. When somebody lists their house for sale, the Zestimate will adjust to include all the new seller-provided info: new photos, details on recent renovations, and, most importantly, the list price. The Zestimate keeps adjusting until the house actually sells. At that point, the difference between the sale price and the latest Zestimate is used to calculate the on-market error rate, which, again, is pretty good: In Austin, for instance, a little more than 94% of on-market homes end up selling for within 10% of the last Zestimate before the deal goes through. But Zillow also keeps a second Zestimate humming in the background, one that never sees the light of day. This version doesn’t factor in the list price — it’s carrying on as if the house never went up for sale at all. Instead, it’s used to calculate the “off-market” error rate. When the house sells, the difference between the final price and this shadow algorithm reveals an error rate that’s much less satisfactory: In Austin, only about 66% of these “off-market Zestimates” come within 10% of the actual sale price. In Atlanta, it’s 65%; Chicago, 58%; Nashville, 63%; Seattle, 69%. At today’s median home price of $420,000, a 10% error would mean a difference of more than $40,000.

Without sellers spoonfeeding Zillow the most crucial piece of information — the list price — the Zestimate is hamstrung. It’s a lot easier to estimate what a home will sell for once the sellers broadcast, “Hey, this is the price we’re trying to sell for.” Because the vast majority of sellers work with an agent, the list price is also usually based on that agent’s knowledge of the local market, the finer details of the house, and comparable sales in the area. This September, per Zillow’s own data, the typical home sold for 99.8% of the list price — almost exactly spot on. That may not always be the case, but the list price is generally a good indicator of the sale figure down the line. For a computer model of home prices, it’s basically the prized data point. In the world of AVMs, models that achieve success by fitting their results to list prices are deemed “springy” or “bouncy” — like a ball tethered to a string, they won’t stray too far. Several people I talked to for this story say they’ve seen this in action with Zillow’s model: A seller lists a home and asks for a number significantly different from the Zestimate, and then watches as the Zestimate moves within a respectable distance of that list price anyway. Zillow itself makes no secret of the fact that it leans on the list price to arrive at its own estimate…

So the Zestimate isn’t exactly unique, and it’s far from the best. But to the average internet surfer, no AVM carries the weight, or swagger, of the original. To someone like Jonathan Miller, the president and CEO of the appraisal and consulting company Miller Samuel, the enduring appeal of the Zestimate is maddening. “When you think of the Zestimate, for many, it gives a false anchor for what the value actually is,” Miller says.

Multiple factors are at play here. Who has what information about housing and housing values? How is the value calculated? And what is the distribution of the comparison of the estimated value to the actual sales value? Some of this involves data, some involves algorithms.

It also sounds like part of the story is that Zillow has built one of the more effective brands in this space. Even if the estimates are not exactly right, people are drawn to Zillow. What would happen if competitors advertised that they are more accurate? Would this be enough to move people from using Zillow?

Given all of this, who can build the most accurate number might not be the “winner.” Is the goal to best model the housing market or is the goal to attract users? These two goals might go together but they might not.

American home sales still down

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Existing home sales in the United States are down to levels not seen for almost two decades:

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Sales of existing homes in the U.S. are on track for the worst year since 1995—for the second year in a row.  

Persistently high home prices and elevated mortgage rates are keeping potential home buyers on the sidelines. Sales of previously owned homes in the first nine months of the year were lower than the same period last year, the National Association of Realtors said Wednesday.

Existing-home sales in September fell 1% from the prior month to a seasonally adjusted annual rate of 3.84 million, NAR said, the lowest monthly rate since October 2010. Economists surveyed by The Wall Street Journal had estimated a monthly decrease of 0.5%. 

Three quick thoughts in response:

  1. The article hints at the consequences of this low level of sales. The mortgage industry is not originating as many mortgages. Potential homebuyers do not have as many options to choose from and the prices are higher. Not mentioned: does this mean this is helping to keep home values high? Or how much less economic activity does this all add up to?
  2. Why are home sales measured in absolute numbers? Compared to 1995, I assume there are more potential homes that could be sold in the United States because there are more homes. If we looked at the percentage of existing homes sold, wouldn’t the lower activity even be more clear?
  3. The expectation in this article and elsewhere seems to be that home sales should be at a higher level or should be growing in number. How cyclical are these numbers? How realistic is it to expect ongoing growth in this area? Looking at the chart in the article going back to 1981, it looks like there are 3 rises in growth followed by periods of lower numbers.

By itself, I am not sure what this particular figure compared to change over time means. What happens in the long run if the trend continues or it does not?

Rents set by algorithm and how housing prices are set

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New tools allow landlords to set rental prices and this has led to lawsuits:

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Instead of getting together with your rivals and agreeing not to compete on price, you can all independently rely on a third party to set your prices for you. Property owners feed RealPage’s “property management software” their data, including unit prices and vacancy rates, and the algorithm—which also knows what competitors are charging—spits out a rent recommendation. If enough landlords use it, the result could look the same as a traditional price-fixing cartel: lockstep price increases instead of price competition, no secret handshake or clandestine meeting needed…

According to the lawsuits, RealPage’s clients act more like collaborators than competitors. Landlords hand over highly confidential information to RealPage, and many of them recruit their rivals to use the service. “Those kinds of behaviors raise a big red flag,” Maurice Stucke, a law professor at the University of Tennessee and a former antitrust attorney at the Department of Justice, told me. When companies are operating in a highly competitive market, he said, they typically go to great lengths to protect any sensitive information that could give their rivals an edge.

The lawsuits also argue that RealPage pressures landlords to comply with its pricing suggestions—something that would make no sense if the company were merely being paid to offer individualized advice. In an interview with ProPublica, Jeffrey Roper, who helped develop one of RealPage’s main software tools, acknowledged that one of the greatest threats to a landlord’s profits is when nearby properties set prices too low. “If you have idiots undervaluing, it costs the whole system,” he said. RealPage thus makes it hard for customers to override its recommendations, according to the lawsuits, allegedly even requiring a written justification and explicit approval from RealPage staff. Former employees have said that failure to comply with the company’s recommendations could result in clients being kicked off the service. “This, to me, is the biggest giveaway,” Lee Hepner, an antitrust lawyer at the American Economic Liberties Project, an anti-monopoly organization, told me. “Enforced compliance is the hallmark feature of any cartel.”

The company disputes this description, claiming that it simply offers “bespoke pricing recommendations” and lacks “any power” to set prices. “RealPage customers make their own pricing decisions, and acceptance rates of RealPage’s pricing recommendations have been greatly exaggerated,” the company says.

It will be interesting to see how the courts decide in this area.

I would be curious to hear how this process differs from the way housing prices are determined. The “correct price” does not just emerge. There are a set of actors – such as realtors, appraisers, and websites – that contribute. There are local histories that inform current and future prices. The housing market follows particular patterns and I recommend reading sociologist Elizabeth Korver-Glenn’s 2021 book Race Brokers: Housing Markets and Segregation in 21st Century Urban America on this topic.

Is the primary difference that there is not a centralized tech source for housing prices? (But maybe there is – how much has Zillow and its Zestimate changed the game?) Or are the new actors viewed with more suspicion than others (tech sector versus realtors)? Or are we in a particular social moment where high costs of housing prompt more questions and thoughts about alternative?

Slowed condo construction in downtown Chicago

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Who was going to buy all those expensive condos going up in downtown Chicago? The condo building pace has slowed significantly:

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For the first time in years, there are no new large condo projects under construction in downtown Chicago.

Roughly 2,500 condos have been developed downtown since 2015 as multiple towers were constructed, and about 600 of those units are still available, said Gail Lissner, managing director for Integra Realty Resources.

But the high cost of construction and high interest rates, which are discouraging luxury home sales, have brought large-scale condo construction to an end, Lissner said…

Apartment developers can better handle high construction costs because downtown renters, many needing quick housing after starting new jobs, fill up new rental units much faster than buyers, who typically need to make far bigger commitments, especially with interest rates so high…

Most of the condos built in recent years are large, ultra-luxury homes, with multimillion-dollar price tags and more than 2,000 square feet, Lissner said. Those can be tough sells, especially since according to brokers the downtown is now attracting fewer upper-income empty nesters from the suburbs, who often seek homes easier to maintain.

This is cast as the result of the current economic and housing market conditions. There are fewer buyers because of higher mortgage interest rates.

How much of this is possibly due to less interest from people to move to Chicago? With the city slowly losing residents, is there still the same latent market for downtown condos? If market conditions were better, would there be robust demand for new condos?

Tracking the construction and filling of apartments could help answer this. How many new apartments are available and how demand is there for those? Any chance existing condo buildings will go the rental route?

Why not use President’s Day to sell homes rather than mattresses?

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American presidents for at least 90 years have supported homeownership. See these thoughts from Herbert Hoover in 1931. So why not tie President’s Day in February to selling and buying homes?

February might seem a bit early to promote buying and selling homes. It is still cold in parts of the country. The school year still has months to go.

However, I have heard that the housing market tends to pick up after the Super Bowl. Warmer weather is on the way. Families might be more willing to move with less time left in the school year.

Americans like sales and shopping. Why leave President’s Day to mattresses and furniture? Why not kick off the home real estate market every year? Pepper the weekend with quotes from Presidents Obama and Bush. Find some quotes from Lincoln, Washington, and other famous presidents that seem to support the modern idea of homeownership. Match patriotism, capitalism, and holidays.

The reasons behind a low housing inventory

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Why are there few homes to purchase in the United States? Here are several reasons:

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One reason inventory is so low nationally is that many homeowners were able to lock in record low interest rates in 2020 and 2021. Mortgage rates have skyrocketed since then—the rate for a 30-year fixed mortgage reached 6.7% on March 9, nearly double that of a year ago, according to Freddie Mac. That means that homeowners who bought or refinanced with low interest rates are reluctant to sell their homes and buy another with a mortgage with a much higher interest rate.

The low inventory makes house hunting an even more painful and emotionally charged process than usual, because buyers are finding that there just aren’t that many options. They have to choose between paying a high price for the inventory that is available, or waiting—potentially for a long time.

There are factors at play that make some markets especially brutal. In January, according to Redfin, the places out of the top 100 most-populated metro areas in the country with the lowest inventory were Rochester, N.Y. (1.2 months’ supply); Buffalo, N.Y. (1.4 months’); and Allentown, Penn. (1.5 months’). Rounding out the top ten were Grand Rapids, Mich.; Worcester, Mass.; Greensboro, N.C.; Hartford; Boston; and Montgomery County, Penn…

One other reason that there’s low inventory? The influx of investors who have bought properties, including single-family homes, to rent. Investors bought 24% of all single-family homes in 2021, up from around 15-16% each year going back to 2012, according to a Pew Stateline analysis.

Add to this that many places in the United States are short units of affordable housing.

I have not seen many hints that this is a short-term problem or one that will be addressed soon. The mortgage rate issue will take time to see through. The housing crunch in particular markets may require hyperlocal policies as well as changing national conditions. Investors will continue to act in the market. The construction that is taking place is often aimed at higher ends of the market.

What I am still surprised at: how come no national politician is making this a centerpiece of a campaign? Imagine a politician promoting homeownership opportunities, new housing starts, seeking ways to boost construction, and wanting to help people achieve the American Dream. This could appeal to both sides of the aisle. This would not necessarily require major changes to national policy beyond a consistent message, helpful incentives, and a desire to help address the foundational issue of housing that many face.