Which suburbs will go down in value most in the next 10 years? (Chicago: apartment, rental)

[BRU67]

Originally Posted by Peer79

I don't want to get political either, but citizens should take a hard look at which factions have been in power for decades, who are their constituents are, and what have been the results of their policies/leadership.

Yea, to me it seems like a no-brainer but I'm apparently not that bright. Oh well. My prediction assumed we continue down the same primrose path of Democratic bliss.

[fusillirob1983]

Originally Posted by chet everett

Sadly many folks that post in these forums have zero experience with wha forces impact real estate values. For those of us that have been active in real estate for decades we've seen some areas become more desirable while others areas decline. Those trends can generally be traced to simple factors related to employment, schools, taxes and relative value.

Towns that have easy access to good paying jobs either by driving, commuter rail, or other transit have done much better that towns isolated from opportunity.

Towns that have well regarded schools are similarly far more desirable than areas where the schools are mediocre / poor.

Not surprisingly, taxes are a bit more complex. Towns that have such high tax rates that there are issues with affordability are increasingly a negative in towns that have few options to support needed services. In contrast, towns with a mix of commercial property and solid retail sales tax revenues can have nicer amenities with modest property taxes on home owners. At the most desirable tiers there are a handful of towns with much valuable property and very low tax rates, though finding a modestly priced home is rare and thus residents tend to be affluent...

Towns like Skokie with a huge regional shopping mall, nice mix of employers and access to other jobs via all modes of transit as well as well respected schools are in no danger of seeing values fall any more than the overall depression that will come as Illinois fiscal crisis deepens. Similar positives exist for most other nearby towns already mentioned -- Niles, DesPlaines, Norridge, and Harwood Heights might not be especially fashionable but neither are they likely to be burdened with sorts of taxes seen in areas that are facing more pressures to fund things solely on the backs of home owners...

Areas like Oak Lawn, Evergreen Park, and Burbank may not be quite as spiffy as towns to the north or west, but there are a solid base of hospitals, car dealers, retail and commercial as well as good transit and driving routes are all positives.

More likely threatened by the shrinking population are towns built near the fringes with poor rail / congested roads. Folks won't tolerate paying runaway taxes in these poorly conceived areas.

I understand where you're coming from given the proximity of the towns I listed to Chicago. I can see some sections of all 3 towns keeping their value in the next 10 years, but I'd be somewhat concerned about buying there today if I was hoping to sell for a higher price, or at least cover closing costs, in a decade. Oak Lawn's downtown near the train and areas feeding into a couple elementary schools will still probably be okay. The southwest section of Evergreen Park will likely continue to see rising values, while the other 3 sections of town see stagnant values or decline. Burbank doesn't exactly have a downtown, and I could be wrong about declining values in Burbank, but they may just increase much more slowly. Although, buses go through both Evergreen Park and Burbank, neither has a train directly in town. The schools are slightly better in Evergreen Park and Oak Lawn than Burbank, and much better than a town such as Berwyn for instance, but it's interesting to note that prices in a town like Berwyn are on par with the other these 3 towns, I'm guessing due to transit options? I think there's some hope for all these towns, but they'd have to immediately start marketing themselves to appeal to working professionals who want to be close to the city.

Real estate taxes are also pretty high down there. I was able to buy in Naperville and have $2k less in real estate taxes than on some similar priced houses in Oak Lawn, will likely maintain property value, and having access to better schools. As someone mentioned earlier, with more data readily available, more people are likely making similar decisions.

[BRU67]

Originally Posted by IrishIllini

What makes you think inner ring burbs will need to raise taxes for schools? Many inner ring burbs have highly regarded schools without insane tax burdens. Skokie (which Chet mentioned) is an example of this.

Many inner-ring suburbs do not have highly rated schools, including those many of the lower middle and lower class people leaving Chicago are going to. These schools are underfunded and the kids entering them have more learning challenges, which cost more money to address.

Using first hand knowledge as an example, Berwyn D100's enrollment has exploded over the past 10 years. They haven't had a tax rate increase in decades. Their facilities are reportedly crumbling and they spend $6,329 per pupil, which community activists claim is woefully insufficient for their student body. And it probably is given that the residents of tony neighboring Oak Park lavish $12,963 on each one of their diverse pupils. Bleep, Skokie spends $9,468 on each one of theirs.

In 2014, D100 asked its taxpayers to belly up to the bar with $1,000/annual a pop, for just that one school district, so they can fix the leaky school buildings and raise instructional spending to something closer to what they need. And Berwyn also has a high school district which is underfunded. They're going to need another round of drinks soon too.

So I don't know, I'm admittedly no math major but I just see some kind of tax increase, one way or other, in the future, in many of the poorer suburbs. And because we're not dealing with residents flush with disposable income, that's going to have a direct impact on the property values, which will beget a higher tax rate, and so on.

[Rhino4401]

i wonder about Evanston.

[pvande55]

Seems a lot of those mentioned aren't that high now. What about those that were bid up to lofty levels? How about the newer far flung suburbs? Campton Hills, Homer Glen?

[fusillirob1983]

Originally Posted by pvande55

Seems a lot of those mentioned aren't that high now. What about those that were bid up to lofty levels? How about the newer far flung suburbs? Campton Hills, Homer Glen?

Interesting, I didn't realize there were so many expensive houses in Homer Glen. The schools don't seem to match up with those housing prices at all (pretty good but not the best in the SW burbs), so you might be on to something there.

[chet everett]

Originally Posted by pvande55

Seems a lot of those mentioned aren't that high now. What about those that were bid up to lofty levels? How about the newer far flung suburbs? Campton Hills, Homer Glen?

The folks shopping for homes that are laid out in the somewhat "countrified" style of places like Homer Glen or Campton Hills (as well as other spots in similar very low density suburbs / exurbs...) find the "uniqueness" of the larger homes / larger lot is hard to duplicate unless one has the money for much more costly towns like Oak Brook, Burr Ridge, South Barrington , etc.

That said, there is a weird sort of peril that folks who buy these homes face -- many of these homes were built by people that had very distinctive ideas about "luxury" and as such the overly personalized choices become quite dated. To update such homes even clever buyers often end up spending more than they can realistically recoup. The situation becomes more like buying a car that is "depreciating asset" rather than a more stable / appreciating asset.

Coupled with relatively high costs for maintenance (whether the owner has a tractor to cut the lawn, and learns how to keep the pool looking good or they contract out for such services...) the potential buyers for such homes is limited. Many of the folks with the lifestyle for such properties are small business owners -- Illinois' hostile business climate is essentially forcing many such folks to consider relocation to neighboring states or to different parts of the country / offshore...

The offsetting factor is that because there are typically quite small numbers of such homes and sales even in the best of times are much less frequent than in a typical massive tract style subdivision the impact of each sale is muted.

[damba]

Originally Posted by Rhino4401

i wonder about Evanston.

What about it? It is not without significant problems 'under the hood' as well, regardless of whether or not there exists a very liberal (arguably, 'elite') class of citizens there who are seemingly always willing to throw money at problems in a not-so-logical fashion w/o first examining the entire structure. Truly, if the condo boom downtown hadn't happened (tax money=$$$), they would be in somewhat rougher shape financially.

[chet everett]

Condos in downtown Evanston included lots of incentives to developers and their pie-in-the-sky projections have not come true. While I don't predict any precipitous fall off in real estate values (largely due to handsome salaries of NU profs that like living close to campus...) neither is there much evidence that condos are going to be any magic bullet to counter the broader fiscal crisis of the community... Older folks are really being squeezed -- Cook County officials hold property tax seminar in Evanston - Evanston Review

[damba]

Originally Posted by chet everett

Condos in downtown Evanston included lots of incentives to developers and their pie-in-the-sky projections have not come true. While I don't predict any precipitous fall off in real estate values (largely due to handsome salaries of NU profs that like living close to campus...) neither is there much evidence that condos are going to be any magic bullet to counter the broader fiscal crisis of the community... Older folks are really being squeezed -- Cook County officials hold property tax seminar in Evanston - Evanston Review

My point was that the added tax revenue from the condos was helpful but does not fix their budget per se.

cheers