Find Real Estate Agents and Homes for Sale

Real Estate News --> Illinois News

When Illinois home values fall, but property taxes don’t

In Illinois, even when a new assessment reveals a decline in home values, rates continue to increase. When families lose money on their biggest investment, lawmakers still bill them according to the price of their homes before the downswing. Similarly ...

Archived Story

When Illinois home values fall, but property taxes don’t | Illinois Policy (function(i,s,o,g,r,a,m){i['GoogleAnalyticsObject']=r;i[r]=i[r]||function(){(i[r].q=i[r].q||[]).push(arguments)},i[r].l=1*new Date();a=s.createElement(o),m=s.getElementsByTagName(o)[0];a.async=1;a.src=g;m.parentNode.insertBefore(a,m)})(window,document,'script','//','ga'); ga('create', 'UA-254288-15', 'auto'); ga('require', 'displayfeatures'); ga('require', 'GTM-T58CQXP'); ga('set', 'dimension1', "Orphe Divounguy,Bryce Hill,Joe Tabor");ga('set', 'dimension2', "Budget + Tax"); ga('send', 'pageview'); Our Story Your Story Policy Center Take Action .\33 cb12b85-0f11-4761-8570-84b1ad5331bc { fill: #f1f1f1; } .d17ff50f-ec98-4875-9591-fc7ffe58de25 { fill: #f1f1f1; } Donate Illinois’ comeback story starts here. Home Our Story Leadership Staff Senior Fellows Jobs Annual Reports Your story Take action Lawmakers Contact Your Rep Policy center Budget + Tax Criminal Justice Good Government Jobs + Growth Labor Pensions Reports Cartoons Podcast Press Room Events FAQs Contact Newsletter signup Search Donate Illinois Policy Institute Illinois Policy Budget + Tax When Illinois home values fall, but property taxes don’t By Orphe Divounguy, Bryce Hill, Joe Tabor Budget + Tax When Illinois home values fall, but property taxes don’t By Orphe Divounguy, Bryce Hill, Joe Tabor (function(){ var style = 'full'; if (window.matchMedia !== undefined && (window.matchMedia('(max-width: 500px) and (orientation: portrait)').matches || window.matchMedia('(max-width: 800px) and (orientation: landscape)').matches)){ document.getElementsByTagName("html")[0].className = 'report-parallax parallax-header parallax-short-header'; document.getElementById('parallaxArticle').className += ' parallax-short-header'; document.getElementById('fullHeader').style.display = 'none'; document.getElementById('fullSpan').style.display = 'none'; } else { if (style === 'full'){ document.getElementById('shortHeader').style.display = 'none'; } else { document.getElementById('fullHeader').style.display = 'none'; document.getElementById('fullSpan').style.display = 'none'; } } })(); TwitterFacebookRedditLinkedInEmail Chapters 1: Property tax rates increase even when home values are decreasing 2: Illinois needs property tax reform Downloads Appendix If an Illinois worker takes a pay cut during a recession, she knows the state isn’t going to take an even bigger chunk out of her paycheckThat’s because the state income tax rate stays the same. But if her home loses value, too, she could still see her property tax bill go up. Government data show that despite falling home prices during the Great Recession, local governments across the state failed to adequately reduce property tax levies on a shrinking tax base, leading to higher – not lower – property tax burdens. From 2007-2009, the worst years of the Great Recession, home values fell by 10.2 percent in IllinoisThat means residents would expect property tax bills to decline by the same amount from 2011-2013, due to the four-year lag in the assessment processInstead, property tax bills only fell by 2.4 percent during that time. That means property tax rates – the property tax bill as a percent of a home’s value – increased by 7.8 percent.   In many areas, homeowners saw their property tax bills go up despite falling home prices. For example, in DuPage County, home values fell 12.4 percent from 2007-2009But local governments more than offset the expected decline in property tax revenues that would have resulted from declining home valuesHow? By jacking up the property tax burden. Property tax revenues in DuPage County increased by 1.4 percent from 2011-2013That means property tax rates saw a 13.9 percent increase over the same time. This rapid increase in the tax rate meant the median homeowner in DuPage County was fleeced for an additional $812 on his property tax bill in 2013 compared to 2011, even though the home he had invested in had lost value. It wasn’t just DuPageCounties across Illinois faced higher property tax rates despite a decline in housing prices. Although families throughout the state were finding it harder and harder to make ends meet, local governments refused to provide them with any reprieve from their property tax burdenIn fact, most places saw an increase in their property tax rates. Property tax rates increase even when home values are decreasing Due to the relatively infrequent nature of housing assessments, changes in property tax revenues should lag changes in home pricesIn Illinois, home values are assessed every four years – with the exception of Cook County, where home values are assessed every three yearsThat means that if home values fall by 1 percent, tax revenues should also fall by 1 percent in the years that follow the decline in home values. Because of the assessment process that doesn’t correct for fluctuations in market conditions, economic research finds that changes to property tax rates lag changes in the price of homes by three to five yearsThat means when home values decrease, homeowners get no immediate tax reliefIn Illinois, even when a new assessment reveals a decline in home values, rates continue to increase. When families lose money on their biggest investment, lawmakers still bill them according to the price of their homes before the downswingSimilarly, during the recovery, while homes are still assessed at their recession level, lawmakers continue to raise tax levies to generate their desired tax revenue. Property taxes are supposed to align the interests of homeowners with those of local governmentsIf property values go up, so too should tax revenuesAnd if property values go down, local governments have to tighten their beltsBut that’s not what happens in Illinois. Illinois needs property tax reform Illinoisans pay some of the highest property taxes in the nation. Further, the current system is indifferent to the suffering that families experience during an economic crisisThese families are rapidly losing wealth while still being crushed by an enormous property tax burden. In recessions, while incomes fall and home prices fall, property tax levies do not do so in tandemIn fact, the levies often increaseOne possible way to fix the current system would be to increase the frequency of property tax assessments and to require a freeze on property tax levies. Even with more frequent assessments, it’s not clear that local governments would get their spending in orderToo often, even local leaders who want to cut property taxes are handcuffed by decisions at the state level that drive up the cost of local governmentAt the state level, a property tax freeze, coupled with aggressive government consolidation efforts and reforms to pensions, collective bargaining and workers’ compensation costs could effectively rein in the growth in property tax bills, and eventually provide property tax relief. Those changes would also empower local leaders to better bring property taxes into line with what homeowners can afford during economic downturns. Illinoisans are desperate for property tax reliefLawmakers should be desperate for reform. See All Reports   Chicago Office | Illinois Policy 190 South LaSalle Street | 1500 | Chicago, IL 60603 t 312.346.5700  f 312.346.5755 Springfield Office | Illinois Policy 802 South 2nd Street | Springfield, IL 62704 t 217.528.8800  f 217.528.8808  e

Trending Illinois News:

  • Illinois fire marshal: Check smoke alarms when change clocks
  • Trump Tax Bill Could Destroy Manhattan's Falling Real Estate Sales
  • Shiloh man charged with murder following weekend shooting
  • Illinois developer plans 66-home community in Maple Grove
  • Palos Park, IL Homes For Sale & Real Estate
  • Principle Construction breaks ground
  • Rush University -- Transfers To A Cook Island Trust Held Per Se Fraudulent By Illinois Supreme Court
  • Congressman Among Activists Handcuffed at Sit-In at ICE Office
  • Caterpillar reaffirms outlook; still critical of Illinois' business climate
  • Portico Property Management teams up with Crossbeam Capital
  • Dow gains 100 points amid deluge of corporate news; real estate leads
  • Carlyle to Buy Illinois Tool’s Packaging Unit for $3.2 Billion
  • New drug spikes heroin cases in southern Illinois
  • Granite City, IL Homes For Sale & Real Estate
  • Dear Downstate Illinois: Please soak Chicago
  • North Aurora, IL Homes For Sale & Real Estate
  • Rockford millennials vital to local real estate recovery, some experts say
  • Reduced Sales Activity, Rising Home Values Dominated First-Quarter Trends in Metro Chicago Housing Market, RE/MAX Reports
  • Illinois Solar Tour to feature over 130 homes, businesses Oct. 7
  • Flossmoor, IL Homes For Sale & Real Estate