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I don't know what your mortgage terms are or what your price point is.
Let's just assume we are talking about a sales contract of $500k on a house in a good public school district. The buyer is putting down 20% ($100k) and locking in on a 30-year mortgage at 4% APR (that's a little low for what's available today, but let's just go with it for simplicity). That's a $400k loan and the monthly principal and interest payment is $1910. If the dwelling is in average condition for the area, which of the suburbs in the metro would stand out as having relatively high effective property tax rates?
I agree with some of the other posters that high taxes are not necessarily a bad thing, but people need to budget for it.
Let's just assume we are talking about a sales contract of $500k on a house in a good public school district. The buyer is putting down 20% ($100k) and locking in on a 30-year mortgage at 4% APR (that's a little low for what's available today, but let's just go with it for simplicity). That's a $400k loan and the monthly principal and interest payment is $1910. If the dwelling is in average condition for the area, which of the suburbs in the metro would stand out as having relatively high effective property tax rates?
I agree with some of the other posters that high taxes are not necessarily a bad thing, but people need to budget for it.
I'll start. Lake County side of Buffalo Grove. House sold 3 weeks ago a few blocks from me for just over $500K. Built in the early 1990s. Top schools (Stevenson HS). 2017 RE taxes $17K. That's an effective rate of 3.4%. So taxes plus insurance would be about $1,550/month -about 80% of principal and interest using your fact pattern. Another data point. One of my kids bought a smaller house at a lower price point a few blocks from me. Early 1970s build. Same schools, 80% down. Taxes plus insurance are 93% of the principal and interest payment.
It's no surprise that RE taxes are depressing prices, even in a very top school district. People tend to look at their total monthly payment. If the interest rate, RE taxes, and insurance are fixed and out of your hands, the only way to lower monthly payments is to push down the purchase price or increase the down payment above 20% - something that is out of the question for most people. Or look elsewhere.
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Originally Posted by wjj
I'll start. Lake County side of Buffalo Grove. House sold 3 weeks ago a few blocks from me for just over $500K. Built in the early 1990s. Top schools (Stevenson HS). 2017 RE taxes $17K. That's an effective rate of 3.4%. So taxes plus insurance would be about $1,550/month -about 80% of principal and interest using your fact pattern. Another data point. One of my kids bought a smaller house at a lower price point a few blocks from me. Early 1970s build. Same schools, 80% down. Taxes plus insurance are 93% of the principal and interest payment.
It's no surprise that RE taxes are depressing prices, even in a very top school district. People tend to look at their total monthly payment. If the interest rate, RE taxes, and insurance are fixed and out of your hands, the only way to lower monthly payments is to push down the purchase price or increase the down payment above 20% - something that is out of the question for most people. Or look elsewhere.
Pittance compared to any area in this country with similar amenities. Boston, NYC, LA, SF Bay area, to get comparable amenities/infrastructure (if they even exist) cost $1M plus. I've lived in three out of four of the places I've named. Boston, and SF Bay area in particular are the most overpriced compared to what you get for your money.
Those are pretty absurd. I think CC Hills and Oak Park arrived at those annual property tax bills for similar priced properties in different ways. The CC Hills house appears to have been built in 2010 and it is what it is, they got stuck with a huge tax bill. Although likely a safe subdivision, the schools are subpar and the people that haven't left that area are picking up a greater proportion of property taxes. For Oak Park houses in that price range the tax bill reflects the services provided in that town. In both instances though, I'm sure the tax bill depresses the price a bit. However, those are both really high and not representative of the Chicago area IMO, at least for suburbs in which $400k homes are more normal. I highly doubt that CC Hills house sells for close to that price. The highest sale there in the past 6 months was for $325k for a slightly less decorated version of that house.
I think it's really specific by town.
A $400k home in Downers Grove or Naperville may have property taxes between $6k and $8.5k.
A $400k home in Wheaton, Glen Ellyn, LaGrange, and Elmhurst may have property taxes between $7k and $10k.
More affluent towns like River Forest and Riverside may have property tax bills more in line with Oak Park.
In my hometown suburb, $400k homes are uncommon, but I saw a couple newer homes (built after 2005 or so, most houses are ranches built in the 50s), and some of these newer homes started out listed for well over $400k, but the taxes on those homes were way out of wack with the rest of the town, so the houses didn't sell until the price dropped to about $350k.
The effective rates published in the Chicago Tribune are pretty spot on. You really don't need to go through all of this. The question was about whether or not Oak Park had high taxes relative to the rest of the area. The answer is: not really.
The effective rates published in the Chicago Tribune are pretty spot on. You really don't need to go through all of this. The question was about whether or not Oak Park had high taxes relative to the rest of the area. The answer is: not really.
Fair enough. I didn't see the Chicago Tribune information published in this thread, so I thought I'd provide information via example per the questions that were asked. In addition, the tax amounts mentioned earlier on the $400k houses in Oak Park and CC Hills are much higher than than in other towns I mentioned in this thread, even compared to the examples I listed for homes that sold for $500k.
Perhaps the average or median effective rate evens out.
More examples from Oak Park below show that Oak Park on average is higher than other suburbs. These are some OP houses that sold between $470k and $520k.
Fair enough. I didn't see the Chicago Tribune information published in this thread, so I thought I'd provide information via example per the questions that were asked. In addition, the tax amounts mentioned earlier on the $400k houses in Oak Park and CC Hills are much higher than than in other towns I mentioned in this thread, even compared to the examples I listed for homes that sold for $500k.
Perhaps the average or median effective rate evens out.
More examples from Oak Park below show that Oak Park on average is higher than other suburbs. These are some OP houses that sold between $470k and $520k.
Okay. If it is true that Oak Park taxes are not exorbitant (which apparently they aren't if you live on the east side of Buffalo Grove, or elsewhere on the North Shore in Lake County), and that paying $1200-$1500 per month taxes for a home whose nominal value is $500k is what one should expect for a typical home in the Chicago suburbs, then I would submit that the OP has a legitimate concern.
I still believe Chicago will prevail, although it will annoy me if Chicago becomes "out of reach" for most people who are not relocating from Boston, SF, NYC and LA. Guess I might add Denver and Seattle to that list, and a few others as well.
The question of whether Oak Park is an outlier (high) in its tax rates appears to have been settled here (they are not). I never thought of O.P. having particularly high taxes, but I never saw the advantages to living in O.P. that others have to begin with, I see that suburb as crowded and on the receiving end of crime from its Chicago neighbor to the east. I have read that the schools are good, but that would not undo the negatives.
But to me, the argument is false on its face; why would you want to move into ANY area that has real estate taxes in the range of 2.5 - 5% annually? The claim that Chicago, even with its high real estate taxes, is a "bargain" among other "first class" cities in the U.S. (due to the fact that residential prices are suppressed due to the high RE tax rate), is only valid for two classes of people, IMHO; those with enough disposable income such that the onerous taxes are manageable; and those who can obtain a high enough income in the area such that the tax penalty is offset vs. living elsewhere (and that would have to be a six-figure job, in my opinion). What remains to be seen, is whether the area will continue to create relatively high paying jobs in the future to maintain the draw of the latter group, especially as more people move out than move in.
With respect to the former of the two groups, I simply don't understand the draw. What exactly does Chicago offer that much lower cost second or third tier city does not, that you could not enjoy by traveling to the city for short jaunts, vs. living here? Professional sports teams? Indianapolis and Denver have those. World-class medical facilities? Madison, WI, Rochester, MN, Sioux Falls, SD, and Overland Park, KS likely equal anything you can find in Chicago. World-class restaurants? Las Vegas. Museums and Arts? How much of that occupies one's day-to-day existence? Shopping? Most people I know have never purchased anything from the Mag Mile. Great weather? Well, that would be just about anywhere else, LOL. The only thing I can think of, is simply "bragging rights". I guess I just don't live in a rich person's world, and don't understand their motivations.
But what about the rest (90%) of the population? Do they stay because they are so rooted in by family, friends, and career that the though of moving outweighs the continual buggering from Illinois and Cook Count government? Or, as the poll from approximately 2013 claimed, that "50 percent of the population would move if given the choice?" still holds true? I'd love to see a re-run of that poll, my guess is that the numbers have gone up, and will continue to increase, in the future, especially as the taxes and crime increase, and the quality of services, infrastructure, and employment opportunities decrease. To me, the question is not, "Is Chicagoland a Bargain?", it's "What's going to save Chicagoland in the long term?"
The question of whether Oak Park is an outlier (high) in its tax rates appears to have been settled here (they are not).
It seems like there are other suburbs with high taxes such as Buffalo Grove, but there's northern burbs with similar prices/ lower taxes as well, including Arlington Heights, Glenview and Northbrook.
But what about the rest (90%) of the population? Do they stay because they are so rooted in by family, friends, and career that the though of moving outweighs the continual buggering from Illinois and Cook Count government? Or, as the poll from approximately 2013 claimed, that "50 percent of the population would move if given the choice?" still holds true? I'd love to see a re-run of that poll, my guess is that the numbers have gone up, and will continue to increase, in the future, especially as the taxes and crime increase, and the quality of services, infrastructure, and employment opportunities decrease. To me, the question is not, "Is Chicagoland a Bargain?", it's "What's going to save Chicagoland in the long term?"
We fall in the tied by family and career camp.
I have NEVER seen people as mad as they were in 2017 after the tax increase on top of the property tax increase in 2016. I can't imagine what it will be like as the new property tax assessment notices start trickling in in a couple of weeks along with a state tax increase from 4.95 to just under 8%.
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