CAR President Tommy Choi on Chicago’s changing housing market, technology’s role for brokers and more

Tommy Choi, co-founder of Keller Williams Chicago-Lincoln Park, took over as president of the Chicago Association of Realtors at an interesting time in Chicago’s real estate cycle.

A residential development boom has added thousands of units in the city, and several proposed mega-developments promise to add thousands more.

While 2018 set a record for the number of luxury home sales, forecasters predict Chicago will have one of the slowest housing markets in the country in 2019.

Meanwhile, the residential brokerage landscape has changed, with newcomers like Compass joining the market at a time when some experts wonder if advancing technology could soon spell the end for the traditional brokerage altogether.

To Choi, who took over as president of the association in September, all these factors add up to show a level of activity in the city’s real estate market that is a good sign no matter what the forecasts say.

“This is a very vibrant, thriving market,” he said.

Choi sat down with The Real Deal to discuss what’s in store for the housing market next year, how the development boom has impacted the industry and how technology will continue to shape residential real estate. Following is a recap of the conversation, edited for length and clarity.

What is your forecast for the housing market in 2019?

The most common question I receive is that question: how’s the market? I truly believe there are only two legitimate answers to the questions, either by saying it’s a buyer’s market or it’s a seller’s market. Since 2013, really arguably since Q4 2012, we’ve seen it be a seller’s market. What we’ve seen in the last at least 90 days has been a little bit of a shift in the market, heading toward a correction. It’s a balance. What comes up must come down. Right now we’re seeing that shift into that correction … that will most likely favor the buyer now, compared to the last five years.

When you say correction, is that a good thing?

Yeah. The nice thing about Chicago, and you can say that about anywhere, is that it’s a cycle. The sky is not falling. There’s no panic in the market. It’s just a natural part of the cycle, where prices increase due to heightened demand and a shortage of supply. Eventually that will correct itself.

How do you assess the recently multifamily boom? Is there too much being built, or is it favoring too much of one product, like luxury?

I think it’s a great thing. It shows that there’s a need for that housing. That millennial group is really dominating (rentals Downtown). That’s why you’re seeing (corporate) headquarters pop up in Downtown chicago. I think a lot of that is to cater to getting the younger talent in the workforce. A part of that is also housing needs.

The recent development boom has favored rentals over condos. Will condos make a comeback?

Yeah, absolutely. There’s a lot of great large projects in the works, actually. You have to look at the trends. A big reason of why the apartment buildings are on the upswing on the development side is there was a point where, of the rentals Downtown, there was 93 percent occupancy rates. So there’s demand there. And then you look at the reward model: A lot of those buildings that came up got 93 percent fill, and private equity groups are coming in and writing large checks. I think eventually, just like the market is cycling toward a correction, that’ll cycle back into more condo developments coming into the city.

Compass’ entrance into Chicago was a big story this year. What has that meant for the industry?

I can’t really comment on Compass specifically. What I can say is this is a very vibrant, thriving market. I think competition is great for our market. When there’s more players that want to join and be a part of our market than people wanting to exit out, it says something great about what we have and what we’re doing here.

Many brokerages are investing heavily in technology. What does that mean for brokers moving forward?

Advancement in technology in our industry is a great thing for our market. The tech piece is important because it adds efficiencies to the agent. This word ‘disruption’ always gets thrown around, especially in our industry. I think the important thing to remember is that all these technologies are great and they’re important to our business, but they’re tools. They’re tools that without a Realtor professional, the tool cannot be utilized. I think it helps the professional be more efficient and enhance what they bring to the table.

What do you see as sort of the end game of technology in real estate? There are people predicting doom-and-gloom for the average broker. Do you think it reaches that level?

I don’t foresee ever a future in our industry where an algorithm takes over the human expertise of a buying process. What it can do is compute information and data. That is important to make a Realtor more efficient and be able to digest that info and repurpose it to the consumer in a very friendly way. All these disruption talks and the “threats” to our industry … I truly believe the biggest threat on our industry is ourselves getting in the way of our growth. It’s not accepting and adopting technology. It’s standing still and complaining about how things were and how things used to be.

Keller Williams’ Lincoln Park office is right in the backyard of Sterling Bay’s proposed Lincoln Yards development. What do mega-projects like Lincoln Yards and others mean for the larger market and the neighborhoods they’re going to inhabit?

I think it’s nothing but a positive effect. One, it continues to put us as a city in the spotlight. The really unique thing about our city, there’s a couple different layers. We’re a very transient city. There’s always a revolving door of people coming and wanting to be apart of our community. And with that, we’re also a major city by a major body of water. Land is at a premium. To be able to see continued development, especially at Lincoln Yards, where A. Finkl & Sons used to be, to be able to repurpose that in a really positive way and add beautiful green space and residential development, it continues to be a beacon for our city.