Pretty soon now, Chicagoans are going to see just how much the post-COVID real estate value gyrations have affected what they will begin paying in property taxes.
For most households, the evidence we have so far suggests, bills will rise significantly. As we wrote in May, the pain many commercial property owners experienced with companies shedding office space as more employees worked remotely and consumers learned to rely even more on online purchases rather than bricks-and-mortar stores will, in and of itself, hike bills for Chicago households.
Now, we’re getting an idea of where the property tax sticker shock will be most acute as bills reflect the triennial property reassessment completed earlier this year for Chicago. And it likely won’t be in many of the well-to-do neighborhoods you might expect.
Of course, as we’ve also noted, property owners already ought to know the damage. But Cook County is weeks late — and likely will end up being months late — delivering tax bills because of some world-class snafus with the problematic vendor hired a decade ago to update the county’s computer systems. But eventually the bills will arrive, and when they do, don’t be surprised if the areas that face the steepest increases surprise you.
Residential property values increased most over the three-year period between reassessments in lower- and lower-middle-income neighborhoods. While the assessment increases that inevitably followed won’t necessarily correlate precisely with how much tax bills will rise, there surely will be some correlation.
Between 2020 (the year the Cook County assessor’s office previously used for Chicago assessments) and 2023 (the year used for the current assessments), median single-family home prices rose the most in West Englewood, which saw median single-family home values soar nearly 74% to $113,000 in 2023 from $65,000 in 2020, according to information the assessor’s office supplied. This is a mainly Black neighborhood with a median household income of just $34,376, according to data from the Chicago Metropolitan Agency for Planning.
We’re not in the prediction business, but West Englewood homeowners perhaps are going to need to sit down and brace themselves before opening their tax bills, when they finally arrive.
Among Chicago’s 76 other neighborhoods, the next four steepest median-price increases were in Hegewisch (40%), the East Side (31%), Greater Grand Crossing (30%) and Brighton Park (28%). Hegewisch and the East Side are on the Far Southeast Side, and both are majority Hispanic with median household incomes above $50,000. Brighton Park on the Southwest Side has similar demographic characteristics.
Greater Grand Crossing on the South Side is mainly Black, and the median household income is just $40,338, a little over half of the median household income for Chicago as a whole.
Meanwhile, Chicago’s most well-to-do neighborhoods experienced healthy home-price appreciation in that period but at levels roughly half that seen in these poorer and middle-class areas. Lakeview median home values rose 14% in that period; Lincoln Park’s 17%; Lincoln Square’s just 12%.
In the zero-sum world of property taxes, municipal taxing bodies get the levies they approve regardless of who pays what and the bills are apportioned based on assessment valuations. So levies can stay relatively flat, and yet residential bills will rise substantially if they rise faster than commercial values do.
That’s precisely what’s happened in the latest round of assessments. After the Cook County Board of Review, which makes final rulings on the assessor’s work based on appeals made by individual property owners, got done with its work this year, residential owners are assuming 54% of the overall share of Chicago property taxes, up from 51%. As we wrote a few months ago, that shift alone could easily mean average residential property tax increases in the high single digits or low to mid-double digits.
But those are just averages. In neighborhoods where values have risen most sharply, those bills could rise much more.
Of course, the silver lining for homeowners in these lower-income neighborhoods is that many of them have seen their wealth increase along with their home values. But that’s on paper. For those who have no interest in cashing in — at least right now — on that higher home equity and haven’t seen their incomes go up much, the relentless pressure from property taxes will be a major stressor along with other rising costs of basic living like electricity bills and insurance premiums.
Small wonder Mayor Brandon Johnson has taken hiking property taxes off the table as an option for balancing a city budget with a deficit exceeding $1 billion. We’ll see if that pledge holds as we move into budget season.
The difficult reality for the mayor and aldermen who must tackle Chicago’s toughest budget in decades is that voters are going to feel overtaxed no matter how they balance the city’s books. And municipal elections are less than 18 months away.
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