The city of Chicago and the state of Illinois are swimming so deep in debt that desperate politicians are pushing a massive gambling expansion that would bring new casinos to the city and suburbs — a roll of the dice that could generate up to $1 billion in new annual revenue.

However, casino critics say this last-ditch fundraising effort to bail out Chicago and Illinois could push the Windy City to the dark side and transform it into the Las Vegas of the Midwest.

A more wholesome approach to bringing about a financial rebound may be to create programs to stimulate the housing sector in Chicago and Illinois.

New data released by the Illinois Association of Realtors shows that expenditures made by buyers and sellers in connection with a residential property transaction has a significant economic impact to the state’s economy. Each existing home sale in Illinois pumps $28,581 into the state economy — or a total of $3.2 billion in annual expenditures for all home sales occurring in the state, the Realtors’ study found.

When the economic impact among related industries such as moving and warehousing, the retail trade and financial services are factored into the equation, annual Illinois existing home sales pump an estimated $7.9 billion into the Illinois economy.

The study, conducted by Chicago-based RCF Economic and Financial Consulting, analyzed typical expenses on both sides of a residential real estate transaction when someone buys or sells a home. To prepare a home for sale, the seller may pay for repairs and home improvements to make the home more marketable. A buyer will spend money after they purchase a home on remodeling, new furnishings and household items.

Both parties in the home sale transaction may hire professional service providers such as attorneys and real estate professionals, as well as incur fees from home inspectors, appraisers and the title company and pay taxes to local, county and state government agencies.

“In addition to the direct expenses there are substantial economic ripple effects when a single home is bought or sold,” said Sheryl Grider, president of the Illinois Association of Realtors.

“If the buyer purchases paint from a hardware store or moving services, for example, the hardware store and moving firm will have expenses of their own such as labor and delivery,” Grider said. “These are just two examples to illustrate how the real estate industry affects many other industries and generates jobs, wages and salaries adding up to an economic impact that exceeds $7.9 billion annually in the state of Illinois.”

In 2010, more than half of the existing homes sold in Illinois were purchased by first-time buyers who were motivated in part by the federal tax credit incentive, according to a profile of home buyers and sellers. In the RCF study, gross state product impact attributable to activity by first-time buyers was $1.9 billion.

RCF analyzed Illinois home sale transactions of residential attached and detached single-family homes for a 12-month period from the fourth quarter of 2009 to third quarter of 2010. Researchers obtained expenditure data from a survey of 415 Illinois home buyers and sellers during the same period as well as a survey of title companies, research reports and other data sources.

The expenditure analysis considered various industry categories including construction, retail trade, transportation, finance and insurance, professional and real estate services, and public administration. The end result is a multiplier effect on the economy of $4.7 billion in indirect expenditures from annual Illinois home sales.

The Realtors are also urging Congress to preserve the mortgage interest deduction, which has been in the federal tax code since 1913 and helps many families become homeowners by reducing the carrying costs of owning a home.

According to data from the Internal Revenue Service, the deduction is claimed most often by taxpayers in the 35 to 45 age group and 65 percent of taxpayers who made less than $100,000. In 2008, more than 1.7 million taxpayers in Illinois claimed a deduction for mortgage interest on their federal taxes at roughly $11,593 for the average taxpayer who had a mortgage.

Don DeBat’s weekly real estate column is syndicated by DeBat Media Services. For more home-buying information visit his website at: www.dondebat.net.

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By grandma from Douglas
Posted: 06/16/2011 8:14 AM

Excuse my typo for haven't 'we". I pushed "w" but it did not show up when submitted.

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By grandma from Douglas
Posted: 06/16/2011 8:11 AM

I think upscale outdoor cafe's along the lakefront would be a better choice around McCormick Place and the Michael Reese site than a casino. World class chef's could be recruited and this location could be a real tourist destination. Haven't e seen many fantastic restaurants facing the oceans. Maybe we could create the same dramatic affect in this region or am I just a dreamer.