Suburbs w/ highest and lowest property taxes (Chicago, Orland Park: 2015, foreclosure)

[My Kind Of Town]

Originally Posted by numberfive

Exactly. And for those of us that don't want to take the hour+ trip into the city to pay inflated prices on everything, what's unique about the suburbs here that you can't get from any of the other major metro suburbs across the country?

Thats why we're moving out of state, lower tax bills (hello, $2500/year property tax on a 2500 sq ft home) and lower cost of living (bye bye 3.5% state income tax, which will probably go back to 5% because of that pension time bomb Illinois residents will have to pay for).

The people that are staying are the ones that don't want to move because of an established career, family proximity, and those that can't imagine another area having the charm Chicago has.

Good lord, not this argument again. I already referred you to a general forum thread that discusses this ad nauseam.

[My Kind Of Town]

Originally Posted by chet everett

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®

This was my exact approach to home buying 7 years ago and will be the same approach I take when we look to "move up" a few years from now.

[IrishIllini]

Originally Posted by My Kind Of Town

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.

This cannot be overstated. Living somewhere for several years and selling (even if you just break even) is better than renting for the same time frame. You may as well set fire to the cash because there's no chance you'll ever see it again. At least with ownership comes the prospect of appreciation.

[numberfive]

Originally Posted by 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.

What's your preferred way of comparing schools between metro areas?

If I look at GreatSchools, what's the difference between a suburb of Chicago that gets ratings of 9's and 10's s a suburb of Atlanta with the same ratings, or a suburb of Dallas? The tax bills are cut in half, same ratings though.

And if you don't like GreatSchools, what do you use to compare schools objectively?

[chet everett]

I recommend using some kind of calculator to at least play around with costs / expenses -- NYTimes has a couple of excellent ways of "using the sliders":

Is It Better to Buy or Rent? - Interactive Graphic - NYTimes.com

http://www.nytimes.com/interactive/2...alculator.html

The only way that they could make these even more "realistic" is by allowing not just a "slider" that allows for depreciating real estate but a way to factor in the sorts of things seen in the last melt down -- a sudden correction of perhaps 20% or more and then a lever that adjust the time to "full price recovery" though that might also call for another parametric set of sliders to factor in temporarily accelerated rent hikes...

The bottomline is that folks who use their smarts to shop for the MOST AFFORDABLE home in the MOST DESIRABLE neighborhood are all but certain to largely insulate themselves from all the most remote of "Black Swan" events.

[My Kind Of Town]

Originally Posted by chet everett

I recommend using some kind of calculator to at least play around with costs / expenses -- NYTimes has a couple of excellent ways of "using the sliders":

Is It Better to Buy or Rent? - Interactive Graphic - NYTimes.com

http://www.nytimes.com/interactive/2...alculator.html

The only way that they could make these even more "realistic" is by allowing not just a "slider" that allows for depreciating real estate but a way to factor in the sorts of things seen in the last melt down -- a sudden correction of perhaps 20% or more and then a lever that adjust the time to "full price recovery" though that might also call for another parametric set of sliders to factor in temporarily accelerated rent hikes...

The bottomline is that folks who use their smarts to shop for the MOST AFFORDABLE home in the MOST DESIRABLE neighborhood are all but certain to largely insulate themselves from all the most remote of "Black Swan" events.

Great advice. This reminds me of all the people that sold their stocks in 2009 or refused to invest in stocks after 2009. There were plenty of reasons to be fearful given the shock of the Great Recession and "I could lose it all mentality" but if you invested in quality stocks you made some serious $. Limit your risk by investing in an affordable home in a desirable area.

[RJA29]

Originally Posted by numberfive

What's your preferred way of comparing schools between metro areas?

If I look at GreatSchools, what's the difference between a suburb of Chicago that gets ratings of 9's and 10's s a suburb of Atlanta with the same ratings, or a suburb of Dallas? The tax bills are cut in half, same ratings though.

And if you don't like GreatSchools, what do you use to compare schools objectively?

That is a very good question -- I prefer to find the test scores for those very schools, and see how they compare.

For example, the school I went to in suburban Utah "ranks" about the same as the one my daughter is zoned for. In US News, and Great Schools, they score similar. School Digger gives a bit more info. The areas are similar in demographic comparatives.

However, my alma mater has AP testing scores that are about 30% lower than my daughter's school; the graduation rate is lower; the SAT/ACT entrance scores are lower. It's not wholly objective, but it is the criteria that colleges will look at when making these 'objective' comparisons.

For IL, I use this site to see test data: Illinois Report Card, but also look at the US News rankings that include average ACT scores and the like. Other states might have other sites.

Now, with the specific suburb of say, Atlanta, or Dallas, there are indeed other things to consider. The travel time to the city center via mass transit (which matters to some) in suburban IL might be much, much less than those related Altlanta or Dallas suburbs you remark about. Also, what is the cost of a house in those districts? (I honestly don't know).

I concede some places will have lower taxes and better schools; but this is, by and large, not the trend in most affluent US suburbs.

[numberfive]

Originally Posted by RJA29

That is a very good question -- I prefer to find the test scores for those very schools, and see how they compare.

For example, the school I went to in suburban Utah "ranks" about the same as the one my daughter is zoned for. In US News, and Great Schools, they score similar. School Digger gives a bit more info. The areas are similar in demographic comparatives.

However, my alma mater has AP testing scores that are about 30% lower than my daughter's school; the graduation rate is lower; the SAT/ACT entrance scores are lower. It's not wholly objective, but it is the criteria that colleges will look at when making these 'objective' comparisons.

For IL, I use this site to see test data: Illinois Report Card, but also look at the US News rankings that include average ACT scores and the like. Other states might have other sites.

Now, with the specific suburb of say, Atlanta, or Dallas, there are indeed other things to consider. The travel time to the city center via mass transit (which matters to some) in suburban IL might be much, much less than those related Altlanta or Dallas suburbs you remark about. Also, what is the cost of a house in those districts? (I honestly don't know).

I concede some places will have lower taxes and better schools; but this is, by and large, not the trend in most affluent US suburbs.

Nice post! Your findings about the Utah schools vs where your daughter is attending is enlightening.

We haven't landed on where to move yet, but we do know we're moving to escape the higher taxes in the Chicago area. In cases like these, it literally pays to do your research on the subject.

And your anecdote above is why I'm a bit dubious when I hear people using school quality to justify high property taxes. It seems more like Stockholm Syndrome to me! However, doing the checks you suggested above rounds that out nicely.

[numberfive]

Originally Posted by IrishIllini

This cannot be overstated. Living somewhere for several years and selling (even if you just break even) is better than renting for the same time frame. You may as well set fire to the cash because there's no chance you'll ever see it again. At least with ownership comes the prospect of appreciation.

It's also worth mentioning that "breaking even" has to account for ALL costs associated with the home ownership, not just the purchase price vs selling price subtracting selling costs.

For example, a house bought at $200k and sold at $220k with $20k in selling fees isn't "breaking even", since the PITI payment includes taxes, insurance, interest rates, etc. Maybe there were home repairs too (new roof, mechanicals, etc).

So in this example, maybe there's yearly costs of $6000 in property taxes, $1000 in home repairs, $500 in insurance, $500 in remodeling, $500 in lawncare. That means the money "set on fire" each month of living there was ~$700. These are real dollars.

If you want to take it further, you can look at the opportunity cost of not investing that down payment instead (say you threw the $50k down payment in a Vanguard index fund that would now be worth $80k, that's a $30k opportunity lost).

[BRU67]

Originally Posted by numberfive

It's also worth mentioning that "breaking even" has to account for ALL costs associated with the home ownership, not just the purchase price vs selling price subtracting selling costs.

For example, a house bought at $200k and sold at $220k with $20k in selling fees isn't "breaking even", since the PITI payment includes taxes, insurance, interest rates, etc. Maybe there were home repairs too (new roof, mechanicals, etc).

So in this example, maybe there's yearly costs of $6000 in property taxes, $1000 in home repairs, $500 in insurance, $500 in remodeling, $500 in lawncare. That means the money "set on fire" each month of living there was ~$700. These are real dollars.

If you want to take it further, you can look at the opportunity cost of not investing that down payment instead (say you threw the $50k down payment in a Vanguard index fund that would now be worth $80k, that's a $30k opportunity lost).

Irish has a point but what you say also makes sense. To take this a step further, I've seen some condos with $600 plus dollars assessments. That's half of monthly rent on a decent apartment before you even get into principal, interest and taxes.

You avoid the assessments with a stand-alone home but then you have to upgrade and maintain it. Anyone who's owned a home knows that sure isn't cheap. And it costs anywhere from $10 to $20,000 to actually sell the house when you factor in commissions and closing costs.

Generally, if you intend to stay in an area for more than 5 years I would consider buying. If you're uncertain or you're going to stay less than that, I think buying becomes a lot more difficult to justify.