High property taxes may be hurting the value and marketability of many homes in Chicago and the surrounding Cook County communities. On average, property taxes in the area have escalated more than four times the rate of inflation over the past 20 years. Even more alarming, taxes have risen more than two times as fast as wages for Chicagoland workers. Such a massive bite into the budgets of prospective homebuyers is placing a damper on the local real estate market.
Property Tax Hikes Are Taking Their Toll
A recent property tax study in Cook County revealed that, on average, residential property owners in the area have seen a 164% increase in property taxes over the past 20 years. This brings the average annual tax bite for a $300,000 home to over $6,300. That is equivalent to about $525 per month in property tax payments alone – twice the national average for similarly valued homes. For home buyers on a budget, such high property taxes can diminish their ability to purchase their dream home.
Skyrocketing Property Taxes: Bad News for Homeowners Looking to Sell
Residential property owners have borne the brunt of the tax increases in more ways than one. According to a recent article in the Journal of Finance and Accountancy, high property taxes suppress residential real estate values. The article states that home values appreciate much slower in states where property taxes are higher versus states with lower real estate taxes.
Additionally, sellers in high-tax areas like Cook County, Illinois must often compete with sellers in nearby areas with lower property taxes. Skyrocketing property taxes in Cook County can make a $300,000 home significantly less attractive to buyers than a similar $300,000 home in a neighboring state. Moving to Indiana, for instance, could save a prospective home buyer from Cook County approximately $3,089 per year in property taxes on a $217,000 home.
How Cook County Home Sellers Can Make a Move
While appealing real estate assessments won’t change the high tax rates in Cook County, doing so can correct discrepancies, help people take advantage of exemptions, and effectively lower a person’s tax bill. Homes with lower property tax bills will be more attractive to prospective buyers on a budget.