Last Thursday I posted on the new Cook County property tax rates for the suburbs and Chicago for 2016 which are rising about 10%. But there is a more sinister issue underlying property taxes in the county that I've often wondered about in past blog posts. For instance, I've often highlighted on some of the multi-million dollar properties that I've featured how grossly undervalued their assessed value was for property tax purposes.
Unfortunately, I've never had access to the kind of data that would be required to find out if this was a pattern. The closest I've ever come to doing that analysis was 3 years ago in this blog post: Chicago Property Taxes Hit Poorest Disproportionately. As the title of that post indicates I was able to demonstrate that homes below $100K in value were paying a really high effective tax rate. I could not prove that people at the upper end were getting a break.
However, the Chicago Tribune just conducted a thorough investigation of the matter and they were able to uncover all sorts of gross bugs crawling around under the rocks at the Cook County Assessor's office. Their conclusion is that the "property tax system [has] harmed the poor and helped the rich".
This is an extremely interesting piece of journalism and is well worth reading. It provides all kinds of insights into how the assessment process works and how to measure the effectiveness of it. (Spoiler alert! It's not very effective.) They also shine a spotlight on the assessment models being used, or not used, by the assessor's office and conflicts of interest affecting Joseph Berrios. And it shouldn't give anyone a warm and fuzzy that the assessor's office not only refused to cooperate with the Tribune investigation but also threw up roadblocks at every intersection. The system described in the article sounds like a total mess.
They also produced this heat map to show where in the county homes are overvalued and where they are undervalued. Clearly the higher income areas are undervalued while the lower income areas are overvalued.
Elsewhere in their article they produced a compelling scatter diagram (my favorite kind of graph) that displays individual home valuations relative to sales prices as a function of home value and it looks pretty bad. Unfortunately, the data is from 2009 and I have no idea why they didn't do this same analysis for 2015, the most recent year when valuations were adjusted.
The assessor's office seems to have at least partly dismissed the Tribune's findings by pointing to the appeals process as an escape valve. But there's a flaw with that whole line of thinking. I know from personal experience that you are better off using a property tax attorney (even better if they've donated to Joseph Berrios' campaign) than trying to appeal your property taxes yourself. However, these attorneys, who work on a contingency basis where they get a cut of the savings, are not going to be interested in a $100K home whereas they would be very interested in a $1 MM home. So the most effective appeals will be filed on the more expensive homes.
Anyway, if you really want to get ticked off about how Cook County manages the whole assessment process this Tribune article is a must read. And I've only discussed the first of three parts here. The other two parts, which I have not read, focus more on the appeals process and the errors resulting from this government quagmire.
#ChicagoPropertyTaxes #CookCountyPropertyTaxes #PropertyTaxes
Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.