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* Chicago Tribune editorial…
Homebuilder Jerry James, president of Glenview-based Edward R. James Partners, doesn’t need to study statistics to grasp the sluggishness of the local housing market. He lives it. “This is the toughest I’ve seen it, and I’ve been in the business since 1985,” James says.
Catering to empty nesters, James sees the investment losses homeowners are experiencing when they downsize. Why is it happening? “Increasing taxes on property as a result of the pension situation is it in a nutshell. People’s homes aren’t appreciating, and tax bills are going up. It’s a bad combination that doesn’t feel good to anybody.”
Stagnant and depreciating home values throughout Illinois have become an offshoot of what we’ve been calling the “Illinois Exodus.” Last year’s estimated net reduction of residents hit 45,116, the worst of five straight years of population decline.
* Chicago Civic Federation…
The full market value of real estate in Cook County was approximately $585.8 billion in tax assessment year 2017. Tax year 2017 is the most recent year for which data are available. The 2017 total value estimate represents an increase of $26.1 billion, or 4.7%, from the 2016 estimated full value. … The 2017 estimates represent the fifth year in a row in which real estate values in Cook County increased after six straight years of decline. […]
Readers should note that the trends identified in this report do not necessarily apply to individual properties. This is because: 1) they are estimates; and 2) they reflect medians, which by their nature do not represent the individual experience of every property.
posted by Rich Miller
Tuesday, Oct 1, 19 @ 12:00 pm
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Previous Post: Flash Index rises partly on annualized 10 percent growth in state income tax receipts
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Huh… property taxes are being increased in Glenview to cover the state pension gap? Who’d a thunk.
Could just be that people don’t want to pay a million dollars to live in Glenview anymore. All those young people who grew up there went out of state for college because the state started ignoring its public universities in the early 2000s. And they either haven’t come back, or if they do, they want to live in the city.
Meanwhile, Glenview becomes more affordable for the middle class it always served (except for a 15-year blip of inflation).
Comment by Ok Tuesday, Oct 1, 19 @ 12:14 pm
“I don’t think this house is worth what you paid for it because of public pensions” said no one ever.
Comment by Skeptic Tuesday, Oct 1, 19 @ 12:15 pm
Five years of home value gains after six years of declines.
Wow, I wonder what could have happened from 2007 to 2013 to bring down real estate prices in Illinois?
The Tribune is forever a conclusion in search of supporting evidence. All day, every day.
Comment by Thomas Paine Tuesday, Oct 1, 19 @ 12:16 pm
The homes on James’ website are luxurious. They are new, custom made, and go for $739,900 to $994,900. I’m guessing the property taxes are quite high.
The demographics of empty nesters that can afford these prices is probably quite small. There is a larger demographic that wants affordable starter homes, however.
Comment by Da Big Bad Wolf Tuesday, Oct 1, 19 @ 12:18 pm
==“Increasing taxes on property as a result of the pension situation is it in a nutshell.==
Suburban school district aren’t paying teacher pensions, and State pensions aren’t funded by property taxes. Is he talking about municipal pensions?
Comment by anon2 Tuesday, Oct 1, 19 @ 12:19 pm
SALT elimination is probably more of a cause than property taxes (about $2-5,000 paid in additional fed taxes). My neighborhood’s home values decreased dramatically after the SALT elimination.
Comment by the Edge Tuesday, Oct 1, 19 @ 12:21 pm
Saddle young people with crippling student debt, amidst stagnant wages/disappearing benefits, in order to keep your taxes artificially low… then blame taxes when said young people cant/wont pay for your inefficient, gauche McMansions and the infrastructure required to get you to them.
The greatest generation spawned the worst generation. Boomers bum me out.
Comment by Anon Tuesday, Oct 1, 19 @ 12:22 pm
===Boomers bum me out===
Same
Comment by Rich Miller Tuesday, Oct 1, 19 @ 12:25 pm
The school levy is 70% of the property taxes in this area.
Home values, and the nest eggs behind, are not a friend of the trend for more demands on this pool of money.
Comment by 70% Tuesday, Oct 1, 19 @ 12:25 pm
Homeowners should have a tax system in which the state and wealthiest pay a higher share toward education costs. Per these stats, Illinois has the worst state-local taxes funding ratio in the country.
https://tinyurl.com/y2efdp4s
The fair tax seeks to put us on a different path, but the property tax savings may be more if the top state income tax rates would be higher than what was enacted as a companion to the graduated income tax CA.
Comment by Grandson of Man Tuesday, Oct 1, 19 @ 12:26 pm
The cap on the SALT deduction is clearly having a huge impact on higher-end homes.
Comment by Soccermom Tuesday, Oct 1, 19 @ 12:33 pm
- Grandson of Man -
Hard to see Prop. 13 coming to Illinois.
Comment by Steve Tuesday, Oct 1, 19 @ 12:39 pm
By the way, I’m still getting over the story they did about the poor, pitiful owner of Calumet Fisheries who can’t afford to pay his employees $15 an hour. We haven’t gone there since the story ran. It’s garbage — and by the way, does the IRS know that they only accept cash?
Comment by Soccermom Tuesday, Oct 1, 19 @ 12:44 pm
It’s really tough for Illinois homeowners. Housing prices have yet recover from the recession in most of the state. I believe Chicago has barely recovered and that doesn’t take into account inflation.
Comment by Rudiforte Tuesday, Oct 1, 19 @ 12:46 pm
Many retiring Baby Boomers who built opulent houses (think McMansions) aren’t able to sell them for the profit they anticipated because younger generations want less-fancy houses in better locations: https://knowledge.wharton.upenn.edu/article/mcmansions-millennials/
This is a national issue and has little to nothing to do with the state or municipality’s finances.
Comment by Benjamin Tuesday, Oct 1, 19 @ 12:50 pm
As I said, even looking at the report, residential real estate is below 2008 nominal levels except in the City of Chicago. The rest of the state is doing worse which is frightening considering we are likely to have a recession in a year or two.
Comment by Rudiforte Tuesday, Oct 1, 19 @ 12:55 pm
===residential real estate is below 2008 nominal levels===
Yep. And a big reason is that prices got way, way too high.
Comment by Rich Miller Tuesday, Oct 1, 19 @ 12:57 pm
Housing prices were bubble prices. Why do we want to be at that level again if we thought prices were bubble prices?
Comment by NoGifts Tuesday, Oct 1, 19 @ 1:01 pm
Prices in most downstate areas were never high. My home never recovered to the pre 2008 value, currently worth about 150K for 1800 square feet. Property taxes are pushing 6,000, I have to believe that taxes are impacting value.
Comment by Rob Tuesday, Oct 1, 19 @ 1:05 pm
It’s no one thing, it’s all these things.
SALT cap, high property taxes, demographics, personal choice and a flat to lower population. It’s a complex issue. Even with incredibly low rates and a good economy.
Comment by SSL Tuesday, Oct 1, 19 @ 1:21 pm
There are a lot of factors, but it seems like the SALT cap is having a serious impact on fancy suburban home prices. When I drive through River Forest, it seems like there’s a for sale sign on every block.
Comment by Soccermom Tuesday, Oct 1, 19 @ 1:25 pm
I would say the Tribune editorial is a problem looking for a boogeyman and it has been awhile since they railed against pensions. On average 30-35% of your property tax bill is made up of a government entity that pays into pensions (Towns, Counties, Townships). Unless your local school is picking up the teacher’s portion of the pensions, increasing pension costs are not the primary issue of rising property taxes for schools. Chicago is a whole different discussion on pensions as they took a pension holiday and now state law mandates they catch up. Overall property taxes are rising and if the Tribune stuck to that they would be partially correct in what is suppressing home values. As for these McMansions part of their problem is one, they have gone out of style and functionality and two, Millennials are having an effect on all home values but especially big houses. And yes the SALT deduction cap is hurting the Suburbs.
Comment by Nagidam Tuesday, Oct 1, 19 @ 1:26 pm
Chicago is a world-class city that sports a small-town editorial board in the Tribune.
The Trib ed board is a net negative in terms of constructive public discourse. Its recklessness tarnishes the good work many of its reporters - like Michael Hawthorne - do.
Comment by Moe Berg Tuesday, Oct 1, 19 @ 1:42 pm
“It’s no one thing, it’s all these things.” +1 for SSL. I said it a few days ago, I’ll say it again: If your answer starts with the words “The real reason…” then you’re wrong by oversimplification.
Comment by Skeptic Tuesday, Oct 1, 19 @ 1:44 pm
So construction material costs and lack of tradespeople have nothing to do with lower construction numbers? I am working on a mid-size commercial project that started in October of last year and before ground was broken in December already jumped 20% due to material costs. Personally - I had to rebuild a garage which went up 30% from early 2018 to late 2018. Sure taxes are high, but go to the very start of housing - the construction - to see the issues.
Comment by Anon but Social Knows me Tuesday, Oct 1, 19 @ 1:48 pm
Most of the country’s home values are well past recovering from the great recession. It tells us something is wrong with Illinois that our home prices haven’t recovered from over 10 years ago Eve on a non inflation adjusted basis. I can’t believe some people here think that is a good thing.
Comment by Rudiforte Tuesday, Oct 1, 19 @ 1:48 pm
The SALT cap was done to punish blue states—done by the people who have brought us a trillion-dollar federal deficit and growing national debt. Where oh where is the Tea Party now, to scream about debt and irresponsibility when the black guy is no longer president?
Comment by Grandson of Man Tuesday, Oct 1, 19 @ 1:49 pm
Existing home prices haven’t recovered. We are not talking about new construction costs.
Comment by Rudiforte Tuesday, Oct 1, 19 @ 1:51 pm
The Tribbies gleeful reporting on the “Illinois Exodus” never really made sense since they never point to solutions that are constitutional. What is a relief is that Tribbie influence is next to nil and dropping.
Comment by Annonin' Tuesday, Oct 1, 19 @ 2:49 pm
Note that the problem discussed in the editorial affects the whole metropolitan area, not just Chicago. The housing bubble was nationwide. The 25-percentage-point gap suggests something other than a burst bubbble is chronically depressing home values in northeast Illinois.
Dennis Rodkin, Crain’s, September 25:
Thirteen years after their boom-years peak in September 2006, Chicago-area home values still aren’t fully recovered, while in several big cities and the nation in general home values long ago climbed past their old peak.
That’s according to data released by the S&P CoreLogic Case-Shiller Indices on Tuesday, which showed that home values in the Chicago metropolitan area in July were still more than 12 percent below where they were at the peak.
The gap between Chicago’s and the nation’s recovery, about 25 percentage points, “is certainly not great news for Chicago homeowners,” said Craig Lazzara, managing director and global head of index investment strategy for S&P Dow Jones Indices.
Comment by Moody's Blues Tuesday, Oct 1, 19 @ 2:51 pm
Duh. the trends in the housing market have been for a while, downsize, downsize, downsize. away from dining rooms moved to away from great rooms. smaller, more sparse. younger than 40 people don’t need more room because they don’t want their parents stuff, heck, they don’t want to buy new clothes.
Comment by Amalia Tuesday, Oct 1, 19 @ 2:54 pm
Rich- “The prices got too high” perhaps true but Chicago is one of very few areas where the housing prices are still below the 2007 peak. Your explanation runs counter to the fact that virtually every other market is seeing home values exceed the 2007 peak. Chicago and Illinois hosing is 25 percent lower then National ACA rages - the reasons are never ending RE Tax increases and population declines. Once a week the NYT runs an article showing the type of house you can by for varying amounts along with costs per square feet and RE taxes. It is startling how much more we pay for RE taxes then folks pay in other states. You used to be able to say we at least had lower income taxes so there was a trade off. You can’t say that any longer. Housing values in Illinois will continue to decline and lag the rest of the country as the fiscal situation here continues to deter people from both staying here and or moving in
Comment by Sue Tuesday, Oct 1, 19 @ 4:35 pm
Anon @ 12:22 - Saddle young people with crippling student debt, amidst stagnant wages/disappearing benefits, in order to keep your taxes artificially low… then blame taxes when said young people cant/wont pay for your inefficient, gauche McMansions and the infrastructure required to get you to them.- well said. Add relentless opposition to health care.
Many 30 and 40 somethings won’t pay off student debt until they’re in their 50’s. They are foregoing children and often marriage. They aren’t in the market for McMansions and probably never will be.
Comment by Froganon Tuesday, Oct 1, 19 @ 4:48 pm
Frogman- so why are housing prices increasing everywhere else
Comment by Sue Tuesday, Oct 1, 19 @ 4:53 pm
Sue, the answer is Illinois is losing population so there is less demand for housing and property taxes take a huge amount of peoples housing money further depressing prices.
Comment by Rudiforte Tuesday, Oct 1, 19 @ 5:14 pm
Rudiforte- that’s exactly my point. People can bury their heads in the sand but the FACTS are the facts. The pension crisis is single handed OT drowning the State. And PS it’s got ZERO to do with Rauner’s budget issues. Illinois has no answer to the fiscal crisis other then to reduce spending on all non- pension expenses. Rauner attempted yo do this and we know how that played out. Unfortunately- Pritzker is increasing spending when he should be slashing all non pension expenses
Comment by Sue Tuesday, Oct 1, 19 @ 6:05 pm
===got ZERO to do with Rauner’s budget issues.===
… and yet the huge deficits Rauner ran up, purposely, to force closure of social services (a business decision) and causing vendors crushing pain, you think those deficits and those losing their jobs and businesses because they chose to work with the state had ZERO to do with it?
Yikes.
We’re crawling out of the budget hole deficits Rauner gave this state to pre-Rauner levels.
===Rauner attempted yo do this and we know how that played out.===
Got a whole GA, there was no budget, increased crippling debt, lower bond ratings, according to Crain’s by nearly every measure Illinois was worse off with Rauner as governor, and that effects housing too.
Comment by Oswego Willy Tuesday, Oct 1, 19 @ 6:12 pm
OW- with all due respect- the current pension crisis impacting the State and virtually every municipality has nothing to do with our former Governor. The State’s in a hole created over 40 years caused by incompetence and corruption along with public sector union influence at every level of elected offices throughout the State. Nothing you can BS about that it’s Rauners fault
Comment by Sue Tuesday, Oct 1, 19 @ 6:16 pm
No one who performed as badly as Rauner or who supported him has any room to criticize anyone. You can’t slam people and then turn out to be worse than them. The state would have been hard-pressed to survive another four years of Rauner, if not for brave and fed-up GOP legislators who put an end to Rauner’s destructive gamble that was lost before it even started, and the voters who resoundingly rejected him.
Comment by Grandson of Man Tuesday, Oct 1, 19 @ 6:24 pm
===with all due respect- the current pension crisis impacting the State and virtually every municipality has nothing to do with our former Governor.===
Governors own. They own their terms. They always do.
No governor in the history of Illinois went a whole General Assembly without a budget.
Sorry. Giving a pass to Rauner destruction to then jump to Pritzker. Nope. Sorry. No.
By nearly every measure, Illinois was worse under Bruce Rauner. Crain’s.
===Nothing you can BS about that it’s Rauners fault===
Hmm.
===Pritzker is increasing spending when he should be slashing all non pension expenses===
… and yet you blame Pritzker here.
LOL
Good try. Nope.
Comment by Oswego Willy Tuesday, Oct 1, 19 @ 6:24 pm
==Housing values in Illinois will continue to decline==
The Chicago Civic Federation says housing values are not declining, they are increasing and have been increasing five years in a row.
Comment by Da Big Bad Wolf Tuesday, Oct 1, 19 @ 6:28 pm
==The State’s in a hole created over 40 years==
The State of Illinois established its state pensions after the Great Depression. That is eighty years ago or so. What event happened 40 years ago? You mean the state stopped paying?
Comment by Da Big Bad Wolf Tuesday, Oct 1, 19 @ 6:33 pm
- Da Big Bad Wolf -
I’d go a step further, meaning the new constitution in 1970, and how the state reacted (or in-acted) and all the actors to that.
McKinney, Rich Miller, and Vock cataloged it well.
Comment by Oswego Willy Tuesday, Oct 1, 19 @ 6:37 pm
Illinois house prices haven’t recovered from 2008 while most of the country has far surpassed that milestone. Illinois is unlit to recover from the last recession before the next one occurs.
Comment by Rudiforte Tuesday, Oct 1, 19 @ 7:09 pm
- Rudiforte -
Has your house kept its value? Just asking.
Comment by Oswego Willy Tuesday, Oct 1, 19 @ 7:27 pm
The Civic Federation’s numbers are based on assessed value. My own experience is that my home is assessed 20% higher than the realtor says it will sell for (if I paint and make repairs first). The appeal board said it is valued accurately, twice. So, forgive me for not accepting their numbers as gospel.
Comment by Stuntman Bob's Brother Tuesday, Oct 1, 19 @ 7:51 pm
Stuntman, in addition, residential values according to the assesor have not even recovered from the great recession, while most of the country is at record highs.
Comment by Rudiforte Tuesday, Oct 1, 19 @ 10:23 pm
- Rudiforte -
Are you renting? Did your house go down in value?
Comment by Oswego Willy Tuesday, Oct 1, 19 @ 10:25 pm
Oswego Willie, sorry, but I’m not giving you personal anecdotes. This is about facts. And the fact is that residential real estate in Illinois has not recovered from the 2008 recession while most of the nation has far surpassed that milestone. The blame is lack of demand as Illinois loses population and onerous property taxes that eat away at household housing budgets for further downward pressure on home prices. People have only so much money to spend on a home. The more that goes to real estate taxes the less that can go to purchase price.
Comment by Rudiforte Wednesday, Oct 2, 19 @ 8:31 am
===This is about facts.===
Oh, I’m aware. It’s in the title if the Post.
Your repeated responses…
I’m interested.
===The blame is lack of demand as Illinois loses population===
That’s speculative. Instances out in Kendall, Will, and DuPage, the McMansion costs to the demands of homeowners aren’t matching. Downsizing or renting has been a choice for folks now without the worry of property taxes and upkeep, for example.
===The more that goes to real estate taxes the less that can go to purchase price.===
That’s how mortgages work when you escrow.
So, I was wondering as you repeat your mantra, and make that case that the exodus is the reason, without looking at the inventory in 2019 not matching demand in both price and property, how you are handling it?
Comment by Oswego Willy Wednesday, Oct 2, 19 @ 8:45 am
Oh, and I’m also coming at it from this…
===The 2017 estimates represent the fifth year in a row in which real estate values in Cook County increased after six straight years of decline. […]
Readers should note that the trends identified in this report do not necessarily apply to individual properties. This is because: 1) they are estimates; and 2) they reflect medians, which by their nature do not represent the individual experience of every property.===
- Rudiforte -
The value is increasing, for example, according to those measures, the market of what folks are going to pay for houses “seemingly” don’t match the taxed value?
Fair market?
Comment by Oswego Willy Wednesday, Oct 2, 19 @ 9:03 am
Oswego Willie, those trends you mention are national not local, yet most of the country has fully recovered from the great recession. Illinois has two very unique traits that affect demand for housing, declining population and the highest (or second highest depending on the source) property taxes in the country. This is why our residential real estate prices have not recovered and almost certainly won’t before the coming recession.
Comment by Rudiforte Wednesday, Oct 2, 19 @ 10:12 am
===Illinois has two very unique traits that affect demand for housing, declining population and the highest (or second highest depending on the source) property taxes in the country===
… and yet…
=== The 2017 estimates represent the fifth year in a row in which real estate values in Cook County increased after six straight years of decline. […]
Readers should note that the trends identified in this report do not necessarily apply to individual properties. This is because: 1) they are estimates; and 2) they reflect medians, which by their nature do not represent the individual experience of every property===
Fact is… the value has increased, the market doesn’t reflect it.
===real estate prices===
To that…
Anecdotal sales versus the value *is* what this Post is about.
Aren’t you for the free market?
Are you saying the measured facts the Illinois Civic Federation are wrong and the anecdotal Chicago Tribune editorial is right?
Comment by Oswego Willy Wednesday, Oct 2, 19 @ 10:19 am
Oswego Willie, I don’t know what you are talking about. Even the Civic Federation numbers show that nominal value of all residential real estate has not recovered from 2008. The rest of the country is well ahead. I’ve already gone over the reasons why.
Comment by Rudiforte Wednesday, Oct 2, 19 @ 11:23 am
- Rudiforte -
I can’t expect someone who can’t spell “Willy” correct to understand data, lol
===Even the Civic Federation numbers show that nominal value of all residential real estate has not recovered from 2008===
… and yet… it’s trending upward. Five years. Upward.
===The 2017 estimates represent the fifth year in a row in which real estate values in Cook County increased after six straight years of decline. […]
Readers should note that the trends identified in this report do not necessarily apply to individual properties. This is because: 1) they are estimates; and 2) they reflect medians, which by their nature do not represent the individual experience of every property.===
Are you ignoring it or worried about your own property?
“Readers should note that the trends identified in this report do not necessarily apply to individual properties. This is because: 1) they are estimates; and 2) they reflect medians, which by their nature do not represent the individual experience of every property.”
Hmm.
Comment by Oswego Willy Wednesday, Oct 2, 19 @ 11:27 am
Sun Times’ Mark Brown wrote “Why is Cook County Assessor Fritz Kaegi belatedly lowering property taxes for some New Trier homes?” on 9/29. What about all those homes in Des Plaines and other areas?
Comment by ICU Friday, Oct 4, 19 @ 10:14 am