Chicago potential tax hike situation - avoidable in the suburb cities? (St. Charles: real estate, rent)

[citirez]

Are the neighboring suburban cities subject to the same potential tax hikes related to under funded pension? If not would that not make the suburbs a better option for real estate ownership vs Chicago city proper given the developing situation?

[flamadiddle]

Yep, suburbs have insane taxes too. Not uncommon for a $500K home in St. Charles (or similar) to carry a $20K per year property tax bill. That's friggin nuts!

[IrishIllini]

Originally Posted by flamadiddle

Yep, suburbs have insane taxes too. Not uncommon for a $500K home in St. Charles (or similar) to carry a $20K per year property tax bill. That's friggin nuts!

St. Charles also has a fairly low population density and few corporations. Public utilities, infrastructure, and schools are not free. If you buy a house in a municipality with lower population densities and few businesses, the tax burden is going to be higher on existing properties and businesses. The revenue (read: tax dollars) has to come from somewhere. Places with higher population densities don't need to charge 20k a year in property taxes on a 500k house.

People want great schools, new roads and public infrastructure, properties near an acre in size, and all the services associated with suburban living, but don't want to pay for it. There are plenty of municipalities in Chicagoland that do not require homeowners to pay 20k a year in property taxes. Clearly St. Charles is not one of them.

[IrishIllini]

Originally Posted by citirez

Are the neighboring suburban cities subject to the same potential tax hikes related to under funded pension? If not would that not make the suburbs a better option for real estate ownership vs Chicago city proper given the developing situation?

Chicago's property taxes are high and they're going up. There is no sugar coating it. With the said, Chicago's RE values have been climbing and continue to climb (faster than most, if not all suburbs). If you have children, the suburbs make sense. If kids aren't in the life plan, I would not recommend moving to most suburbs - unless the commute requires it.

[jvr789]

Originally Posted by citirez

Are the neighboring suburban cities subject to the same potential tax hikes related to under funded pension? If not would that not make the suburbs a better option for real estate ownership vs Chicago city proper given the developing situation?

This is why I moved to a Northwest Indiana Suburb (Munster) b/c there did not seem to be good clarity on how much IL taxes would need to go up or what services would be cut to get the ship straight again. I wish someone could actually quantify these amounts say on a per household basis on an annual basis so that residents could make smart decisions in terms of how much to spend on a house and where to buy. It's been over a year in IL without a state budget.


If I were staying in IL, I would pick a suburban community that is well funded and has been seeing strong home values rise under the guise that these communities will stay relatively strong. Even if school funding gets cut, the affluent booster crowd will likely help make up the difference. Just don't over-extend.


Cook County is interesting in that residential taxes are assessed significantly lower than commercial taxes (in relation to actual property value) but then there is this crazy equalization rate which basically more than doubles your assessment b/c somebody else is getting subsidized. In the other suburbs, residential and commercial are treated similar. Maybe you will see some other counties adopting more of a Cook County method if residential taxes start going up too much and voters get angry....who knows?

[chicagoRE]

I would say it makes sense if you have kids and would use private vs public schools. I am in Lake County (Lake Zurich) and for our $500k house we pay $12k per year in taxes. A much better deal considering had we stayed in the city we would pay triple that to send our 3 kids to private school.

[coldwine]

Owning urban real estate is always, always, always going to be expensive. And hike the price all you want; your property taxes will still be lower than the rent most people are paying in San Francisco or Manhattan.

Owning real estate in general is expensive. The costs are simply much more obvious in urban settings; we have to subsidize the suburbs.

[ashpelham]

Just how much higher are the incomes in Chicagoland to allow for people to have a 500k home, on a 30 year note presumably, and a 1000 per month re tax escrow? Good Lord.

You folks sure make a lot of green compared to your neighbors far away in Birmingham, Alabama.

[coldwine]

Originally Posted by ashpelham

Just how much higher are the incomes in Chicagoland to allow for people to have a 500k home, on a 30 year note presumably, and a 1000 per month re tax escrow? Good Lord.

You folks sure make a lot of green compared to your neighbors far away in Birmingham, Alabama.

A $500,000 mortgage isn't really all that much. There is a tremendous amount of occupied real estate substantially more expensive than $500k. When I purchased my home years ago, it was less than that; now it is worth significantly more than that. Short of claiming that it's haunted and blood runs down the walls, it has long since passed a value I doubt I'll ever be able to sell it for. Even with the mortgage paid off, urban development can have dramatic effects on property values.

Chicago has more of the nation's wealthy than does Birmingham; just as New York does compared to Chicago.

[flamadiddle]

Originally Posted by chicagoRE

I would say it makes sense if you have kids and would use private vs public schools. I am in Lake County (Lake Zurich) and for our $500k house we pay $12k per year in taxes. A much better deal considering had we stayed in the city we would pay triple that to send our 3 kids to private school.

While that's one way to look at it, no other Midwest state has the outrageous taxes that Illinois does. I've been looking at comparable homes in surrounding states and all of their taxes are roughly 1% of the home value. So a $500K home in the suburbs of NWI, Minneapolis, Milwaukee/Madison, Indianapolis, Columbus/Cincinnati, Nashville, Atlanta, etc. are all around $5,000 per year for property taxes. Why does Illinois need triple to quadruple that amount for the same services?

Here's a good example, a relatively modest home listed for $499K with an $18,000 per year tax bill! That's $1,500 per month just for taxes!?!?!

https://www.redfin.com/IL/St-Charles.../home/16937951