Pekin Residents Are Calling it Quits When it Comes to Staying in Illinois Due to Extremely High Property Taxes
As the home value drops, the Local Records Office notes that people are also losing value in their homes, and Illinois is said to be in a death spiral.
Pekin, Illinois ranks 50 out of 51 for the second highest property taxes in the nation. With Illinois property taxes averaging at 2.3% and Chicago at 2.0%, as a courtesy of WalletHub, and now with the new tax plans minimizing deductions, there is no wonder why people are picking up to move.
Some of those leaving are furious with the tax burden and the state’s financial situation. Illinois went two years without a budget, and meanwhile, Illinois lawmakers passed a spending plan that involved a 32% income tax hike for residents. And the state is still digging itself out of a whole.
With a low job market, Pekin, Illinois struggles to encompass homeowners and this is a good indication as to why people are leaving. The income per capita in Pekin, Illinois is 13% lower than the national average and the median household income in Pekin, Illinois is 9% lower than the national average.
Raising property taxes in Pekin, Illinois is a legal vehicle for the government to run Americans into debt and lose their properties
Property taxes are an extremely important factor when it comes to buying a home. And though it may not appear as an issue for the 37% renters, the reality is, that is far from the truth. We all pay property taxes whether it is indirectly or directly, as these taxes impact the rent that we pay and the finances of both local and state governments.
And with tremendously high property taxes affecting the housing market by cutting into the amount of money residents have to spend, Lance Ramella, the president of Housing Trends, a Chicago-based market consultant explains that weak growth in the Chicago economy, unresolved government fiscal issues and high taxes are all tied together, resulting in a “stagnant” housing market.
And ultimately, causing home shoppers to buy lower-priced residences or skipping buying a home altogether, because there aren’t enough affordable houses on the market, causing deterioration in housing prices, Ramella said.
Even though it is difficult to radiate how much the tax concerns have an impact on real estate, the local housing market is clear, says Geoff Smith, the executive director of the Institute for Housing Studies at DePaul University. While home prices in many major metropolitan areas have recovered and hit new highs since the 2008 housing crash, in the Chicago area only a few suburbs and select city neighborhoods have rebounded, Local Records Office said.
According to the CoreLogic, the Chicago area is one of the U.S metropolitan areas with the highest percentage of homeowners who are underwater with their mortgages. 10.8% of residences in the Chicago metro area were underwater, compared to 13.5% during the second quarter of 2016.
As a Chicago certified public accountant, Debbie Lessin explains the reason people consider a move for tax reasons in retirement, they may miss the crucial element of Illinois’ tax system
BMO Private Bank Chief Investment Officer Jack Ablin is among many of the residences that own in both Chicago and Florida and says the seriousness of Illinois’ budget and tax issues had become clear when he tried to sell his house in Chicago a couple years back, and it was on the market for a year and priced right. The potential buyers kept raising concerns about property taxes.
Ablin explains “taxes are rising so much it’s crowding out the value of homes,” and “in many respects, a person could argue that housing is cheap in Chicago, and in respects it is cheap. But it is cheap for a reason.”
Park Forest is one great example of how absurdly high these property taxes are. A home valued at $100,930 with a property tax rate of around 7.5% has a tax bill of $7,257. In theory, you see what the home sold for, the property taxes go up to $10,174, a little less than twice during the 30-year mortgage payment with 20% down on a $141,500 home.
With other examples, such as a 6700 sq ft short sale that has been unable to sell, with their listed price at $341,000 and the annual property taxes are just over $37,000 per year. And most likely the reason the home has not sold! The huge part of the problem is that the country has tremendously high tax rates by a national standard.
And the more the property is worth, the higher the property taxes, but when the tax rate is high enough then the higher taxes will actually end up depressing the valuation of the property, in other words, a high value will result in a low value.
“The burden has fallen onto residential homeowner to fund government basically,” said the Peoria County Treasurer, Edward O’Connor.
And while businesses are leaving the state, it is also leaving a big hole in the economy
And with a lot more subdivisions taking place and more housing, it still does not replace a plant, O’Connor explained.
A lot of buyers are looking into downsizing, and selling and this could impact the housing market for the more expensive and exclusive neighborhoods. Though, some believe the neighborhoods on the lower spectrum will not be affected as much.
Realtor Lisa Fink says that these high property taxes are forcing some people out of the city and into rural areas.
As Fink said, “it definitely affects the home purchaser and where they can buy.”
Though a lot of homebuyers do not have the option to just pick up and move, higher mortgage rates could also be another reason, people are planning to stay and live within their means.
O’Connor says that Peoria and the surrounding counties are picking up the bill for the budget stalemate and other issues happening near Chicago.
As Illinois home prices have increased compared to the previous year during the same periods, according to the Illinois REALTORS® homes sold including single-family homes and condominiums in January 2018, totaled 8,156 homes sold, and are down 6.1% from 8,683 in January 2017.
“January homebuyers faced a daunting combination of dwindling inventories and severe winter weather,” said Matt Difanis, ABR, CIPS, GRI, president of Illinois REALTORS® and the broker-owner of RE/MAX Realty Associates in Champaign. “Those buyers who were successful in finding a home had to move quickly to make an offer and were definitely willing to pay more.”
And the time it took to sell a home in January had averaged at 65 days, which is down from 69 days a year ago. Available housing inventory totaled 45,726 homes for sale, a 12% decline from January 2017 when there were 51,978 homes on the market.
Local Records Office says, the monthly average commitment rate for a 30-year, fixed-rate mortgage was 4.03% in January 2018, an increase from 3.95% the previous month, according to the Federal Home Loan Mortgage Corp. In January 2017, it averaged 4.15%.