The Housing Bubble leading up to the Great Recession of 2008 can be attributed to a myriad of factors, however many experienced in the Real Estate Industry will confirm that home prices were fundamentally over-inflated (no pun intended, but fitting). Due to loose lending practices that fueled the subprime machine, housing prices soared as the perfect storm of supply and demand spiraled out of control, ultimately leading to a global trade collapse of 15% between 2008 and 2009.
In the years after the Great Recession, while the market was undoubtedly different for a multitude of political and economic influenced reasons, the median sales price for homes sold in the United States rose at a rate similar to the pre-housing boom period (Shown in the graph below).
Another significant market change, this time by way of an infectious disease that hit the globe in late 2019 (COVID-19), introduced a shift in the market, which caused US housing prices to sharply rise. Like the Great Recession, the COVID-19 economy experienced an infusion of money which caused the market to inflate “unnaturally”. That is, during the Great Recession, the economy was inflated unnaturally with loose lending practices, and during the COVID-19 economy, the market was inflated via cash payments made directly to taxpayers by the Government. This introduction of cash created a false sense of wealth, which caused housing prices to increase, once again, due to high demand. To exacerbate the situation, the US market was experiencing record-low housing inventory during the COVID-19 period.
Note to the reader:
When Report 1 was released in September of 2023, my original goal was to continue a series of reports that would reveal and highlight mortgage fraud, house flipping, building code influences, the history of housing disasters, and other factors that influence home equity and generational wealth as it relates to Real Estate in Chicago. The Chicagoland political landscape, expanding to Illinois, and ultimately expanding to the US is currently out of control. The City of Chicago specifically, is embroiled in an immigration issue that fundamentally has the greatest attention. Chicago, under the leadership of the Johnson administration, is also undergoing administrative changes that have recently reached the Building Department.
On Friday February 16, 2024, Matthew Beaudet, who was the City of Chicago Building Commissioner, was fired. Prior to his release, Commissioner Beaudet, among many other projects, led the City of Chicago Building Department in the implementation of the Building Code modernization program which, for the first time in as many as 70 years, updated and improved the Chicago Building Code and adopted the 2018 International Building Code Standards. The firing of Beaudet came approximately 2 months after Johnson’s executive order for cross-functional organizations to speed up the Building Department’s permit approval process for developers. It should be noted that the executive order came with a 90-day timeline for the efficiency plan to be implemented.
In addition to changes at the Chicago level that influence Real Estate, the National Association of Realtors (NAR) is amid scrutiny and lawsuits regarding its commission compensation policy. The impact of the lawsuits will undoubtedly change the entire industry…
For these reasons, and others which I have highlighted in a separate writing, despite the obvious impact that unlawful renovations have on home equity and generational wealth, I have decided that the City of Chicago, nor the local real estate industry, is not ready to address the problem.
For the purpose of information sharing however, I have included visualizations (shown below) that identify the impact of unlawful Single-Family Home renovations in each of the predominant Chicago Communities. At the high level and across all Chicago communities (Black, White, Hispanic), the Single-Family Home opportunity for unlawful renovations is valued at approximately $670M (based on the cumulative value of sold homes with an unlawful renovation during the evaluation period).
When, and if, Chicago and the Chicago Real Estate Industry are ready to seriously consider the impact that unlawful renovations have on Home Equity and Generational Wealth, I will be prepared to again revisit the data and help identify solutions…Until then, I am on to my next value-added, data-driven effort.
Vaughn Harrison, a native of Chicago, is the owner of Harrison Vaughn, Inc. Vaughn is a Business Consultant who provides Project and Program Management services and specializes in delivering data-driven solutions for complex problems. Vaughn has an Illinois Managing Real Estate Broker License, HUD Consultant credentials, and a Building Permit Expeditor License in the City of Chicago. With an educational and experiential background in Engineering, Six Sigma, Project Management, and Program Management, Vaughn leverages his unique skill sets to achieve his commitment to improving the socioeconomic conditions of communities in the Chicagoland area. Unmotivated by being in the public eye or receiving approval, Vaughn does not make decisions or act based on dogma or popular public opinion, thus the formation of his corporation's mantra…
Disrupting and Transforming the Status Quo.
Disclaimer: Copies of this report, future reports, or any part thereof shall not be distributed for sale or used for gain without the written authorization of Vaughn Harrison.
Vaughn Harrison can be reached at: