Suburbs w/ highest and lowest property taxes (Chicago, Woodstock: sale, apartment)

[numberfive]

Originally Posted by JJski

Try to find a affluent spot (like a hinsdale, western springs, la grange, evanston) with great schools walkability and easy commute 20min in new york, boston, san fran, san diego. Don't underestimate the value of our big (world-class destination) city....

We rolled the dice on 750+ 2.5y ago but we were ultra, ULTRA conscious of location, location, location...

So i will report back in 2 years... Hopefully good news...

PS recent bank appraisal puts us up significanly in 2.5y today - so hoping that trend continues...

$750k is not affordable for much of the population. That's top 1-5% households. For the other 95%, they have an hour+ commute into the city, unless they happen to be near a Metra express line or similar.

In other words, $750k is not normal, it shouldn't be used as a comparison for everybody.

The "value" of living by Chicago is non-existent for my family. We're not going to pack up for an hour+ commute (60 minutes assumes no traffic, 90+ with heavy traffic) to overpay for parking, venues, restaurants, etc when we can have just as much fun locally -- for much less.

We could conservatively afford double the house we have now, so $750k is in our wheelhouse. It's not even an option we'd consider though, since there isn't anything in the city worth that pricetag to us.

[numberfive]

Originally Posted by damba

Gloom and doom aside, the truth is there is still a great deal of disposable income in the Chicagoland area, even after large mortgage payments that include hefty taxes each month. IMNSHO, if you are even considering a home so expensive with high DuPage taxes, I just don't see the massive risk unless you are not budgeting conservatively. You might consider find a smaller, less expensive home and opt to fix it up over time.

Expenses outpacing income growth is a problem, even for those that can afford it.

"Just because you can afford something doesn't mean you should buy it" -- some people figure this out early in life, others late in life, and others still never do.

To show a tangible example, we can afford Chicago. At our current savings rate, we'll be able to retire comfortably at 55. If we were to relocate to a similar suburb in a different metro area (like Alpharetta GA, Plano TX, Hendersonville TN, etc), keeping our lifestyle the same (same savings rates, spending habits, etc), we can retire at 45. A full 10 years earlier.

Spending another 10 years working essentially for free just to be near Chicago? What kind of sense does that make when you're not enjoying the city, but instead looking at cubicle walls 5 days a week?

[JJski]

Numfive --- i dont disagree with your points above. I was using tbe 750 as the OP suggested that was the budget.

[BRU67]

Originally Posted by numberfive

$750k is not affordable for much of the population. That's top 1-5% households. For the other 95%, they have an hour+ commute into the city, unless they happen to be near a Metra express line or similar.

In other words, $750k is not normal, it shouldn't be used as a comparison for everybody.

The "value" of living by Chicago is non-existent for my family. We're not going to pack up for an hour+ commute (60 minutes assumes no traffic, 90+ with heavy traffic) to overpay for parking, venues, restaurants, etc when we can have just as much fun locally -- for much less.

We could conservatively afford double the house we have now, so $750k is in our wheelhouse. It's not even an option we'd consider though, since there isn't anything in the city worth that pricetag to us.

They could live in the City. I pay less than $3,000 per year in taxes on one of my rental buildings and it's a nice building in a neighborhood that's attractive and relatively safe. They just don't want to for reasons they won't admit - they don't want their kids around poor people. That and status are what's driving these high prices.

Question is, is it sustainable? I'm betting no at this point. Some affluent areas will survive but a lot of them will get flipped on their head. Not only is the pool of those who can afford even half of what you guys can afford shrinking fast, but a growing percentage of the affluent are choosing to live near the City center. If you're going to throw big money at a property, I'd do it in the South or West Loop or one of the neighborhoods surrounding those, not out in the 'burbs. IMHO.

There's an interesting GIF regarding income growth/decline in Chicago since 1970 on this page.

http://www.citylab.com/work/2014/04/...-one-gif/8786/

Note where and how the green is growing. That's what you want to catch.

[Taco1234]

Originally Posted by damba

This is the part I don't fully understand.

Either your budget is in reality too tight or you are assuming you will need to move within a couple of years. Those would be some reasons to continue to rent, not from the assumption that prices will drop on everything you are looking at. Yes, it's fair to assume that on any one house you like the price could drop, but not likely on everything, especially in more popular areas with good schools.

Gloom and doom aside, the truth is there is still a great deal of disposable income in the Chicagoland area, even after large mortgage payments that include hefty taxes each month. IMNSHO, if you are even considering a home so expensive with high DuPage taxes, I just don't see the massive risk unless you are not budgeting conservatively. You might consider find a smaller, less expensive home and opt to fix it up over time.

At 750 we're under a third of our monthly budget, and no other debt... So yea, we can afford it. No, not assuming we'd have to move in a few years either... The POINT is, if you buy at top of a bubble and prices drop then you LOSE! If Illinois goes down the toilet with taxes rising, jobs leaving, never ending financial crisis and home prices dropping then how is spending nearly a million dollars on a home a good idea? It isn't! This old school mentality that real estate is a good investment is no longer always valid. Are there still some people who sell and make money, sure... But if you deduct the property taxes you pay, home expenses, etc... It's often a break even.

Again- not saying renting forever is a great idea. We are merely doing it because we had a bad feeling about IL and we want to see what happens over next year or so. Are we getting that money back? Nope. If we buy for 7-800k and pay tons of taxes and home values go down the toilet then we would be losing much more than we are renting a home. Things are changing, but many don't see it or want to believe it.

[BRU67]

Originally Posted by Taco1234

At 750 we're under a third of our monthly budget, and no other debt... So yea, we can afford it. No, not assuming we'd have to move in a few years either... The POINT is, if you buy at top of a bubble and prices drop then you LOSE! If Illinois goes down the toilet with taxes rising, jobs leaving, never ending financial crisis and home prices dropping then how is spending nearly a million dollars on a home a good idea? It isn't! This old school mentality that real estate is a good investment is no longer always valid. Are there still some people who sell and make money, sure... But if you deduct the property taxes you pay, home expenses, etc... It's often a break even.

Again- not saying renting forever is a great idea. We are merely doing it because we had a bad feeling about IL and we want to see what happens over next year or so. Are we getting that money back? Nope. If we buy for 7-800k and pay tons of taxes and home values go down the toilet then we would be losing much more than we are renting a home. Things are changing, but many don't see it or want to believe it.

As my Grampy used to say about auto racing, "don't take anything out onto the track that you can't afford to push over a cliff." That's applicable in real estate at this time.

[chet everett]

Originally Posted by Taco1234

At 750 we're under a third of our monthly budget, and no other debt... So yea, we can afford it. No, not assuming we'd have to move in a few years either... The POINT is, if you buy at top of a bubble and prices drop then you LOSE! If Illinois goes down the toilet with taxes rising, jobs leaving, never ending financial crisis and home prices dropping then how is spending nearly a million dollars on a home a good idea? It isn't! This old school mentality that real estate is a good investment is no longer always valid. Are there still some people who sell and make money, sure... But if you deduct the property taxes you pay, home expenses, etc... It's often a break even.

Again- not saying renting forever is a great idea. We are merely doing it because we had a bad feeling about IL and we want to see what happens over next year or so. Are we getting that money back? Nope. If we buy for 7-800k and pay tons of taxes and home values go down the toilet then we would be losing much more than we are renting a home. Things are changing, but many don't see it or want to believe it.

If you sunk $750k into a home where there are MANY other people in for much less you might have a legitimate concern, but in towns where there are a majority of homes selling for DOUBLE that amount it is a whole different level of "risk management".

I just posted a thread that shows what you can get for under $700k in a VERY desirable town IF you are prepared to act on a relatively rare opportunity. The couple that is selling this home has seen their kids finish college and move away. They've taken excellent care of the home but recognize they are not getting younger and don't need the space. The place is not tricked out like a magazine, but that is really a situation that allows the buyer to update the kitchen and baths to their specific taste AND build equity when the house is on par with those that are more up-to-date.

Good be exactly what a prudent shopper needs to stop enriching their landlord AND insulate themselve from just about any downward price trend -- 223 Woodstock Ave, Clarendon Hills, IL 60514 - Home For Sale and Real Estate Listing - realtor.com®

[RJA29]

Chet's right on this one. If the middle is indeed hollowing out, then the middle moves up in places and down in others.

Regarding the lower tax rates in other places, the schools are generally not as good. Yes, you can find outliers, but for top-quality schools one will pay top-quality taxes.

[JJski]

Or you can pay the really big bucks for good schools in chicago proper...

[My Kind Of Town]

Originally Posted by Taco1234

At 750 we're under a third of our monthly budget, and no other debt... So yea, we can afford it. No, not assuming we'd have to move in a few years either... The POINT is, if you buy at top of a bubble and prices drop then you LOSE! If Illinois goes down the toilet with taxes rising, jobs leaving, never ending financial crisis and home prices dropping then how is spending nearly a million dollars on a home a good idea? It isn't! This old school mentality that real estate is a good investment is no longer always valid. Are there still some people who sell and make money, sure... But if you deduct the property taxes you pay, home expenses, etc... It's often a break even.

Again- not saying renting forever is a great idea. We are merely doing it because we had a bad feeling about IL and we want to see what happens over next year or so. Are we getting that money back? Nope. If we buy for 7-800k and pay tons of taxes and home values go down the toilet then we would be losing much more than we are renting a home. Things are changing, but many don't see it or want to believe it.

Two things.

1. Have you considered that buying a home involves more considerations than just the financial aspect?
2. You aren't losing if you don't sell. As with stocks, gains and losses aren't realized until a transaction takes place. If you are planning to stay in your home for more than 6 or 7 years and feel comfortable that your line of work will remain in demand or at least employable, it makes little financial sense to continue renting.