Category Archives: Real Estate

Fed Up Homeowner Sticks It To His HOA And Gets The Most Epic Revenge

Have you ever had a problem with a Homeowners Association? After having enough of his HOA, this homeowner took matters into his own hands.

It may come as no surprise, but Homeowners Associations have a bit of a bad reputation. While there are good HOAs out in the wild, you typically only read about the worst offenders, and it’s usually for a good reason.

Just ask Alec, whose friend, Hal, inherited his grandparents’ house in a neighborhood with a tenacious HOA helmed by a group of power hungry, greedy busy bodies who made it their mission in life to get the entire neighborhood under their control.

When Hal first moved into the house his late grandparents’ built and lived in for decades, the HOA assumed they could take advantage of a seemingly young and inexperienced first-time homeowner.

But the group would soon find out that not only did Hal not have any intention of joining their association, he also wasn’t going to go down without a fight.

So buckle up and prepare for one wild ride…

There Was The First Encounter

It didn’t take long for the HOA board members to show up and start pestering Hal with lists of demands, rules, and random searches.

Shortly after he moved in, Hal received a knock at the door, and when he opened it, he was greeted by a group of the HOA members shoving papers in his face, demanding he sign them right away.

If that wasn’t bad enough, one of the board members demanded that he be allowed entry into Hal’s garage to see “if everything there is in order.”

This essentially meant that the HOA had the “right to do this bi-weekly,” and denying any of the members access would result in a fine.

Hall was appalled by the “audacity” of the HOA for thinking that they had any right forcefully entering people’s homes to randomly dig through their property.

Having enough of the HOA, Hal promptly kicked them out of his garage and off his property, refusing to sign the membership papers in the process.

It seemed like the HOA was banking on the idea that since Hal was young and naive, he would probably back down.

Little did they know, Hal’s grandfather had written his grandson a letter detailing the years of abuse by the HOA, preparing him for the fight that would be coming his way.

“It turns out they were wrong on both accounts, since his grandpa left him a letter pointing out what his rights exactly were, what they would possibly try, what else they might try, how hard it is to fight what, when he needs to react and how, so he prepared him really well for this,” Alec wrote.

Then Came The List Of Demands

With the HOA gone, Hal looked through the HOAs list of guidelines, which sounded more like a list of demands from an occupying force than a neighborhood association.

“They had, for example, a right to visit your home bi-weekly to check things like that you do not use the garage for storage or don’t have gasoline in containers in your garage,” Alec wrote.

“You had to mow your lawn every week, snow had to be shoveled every two hours when it snowed (starting at 5 o’clock in the morning).

You could not park more than one car on your grounds (except inside the garage).”

Three days went by and Hal still hadn’t signed the contract, so the group came back by like some geriatric mafia trying to get him to comply with their rules.

When the group said they wanted to check Hal’s garage again, he said no and kicked them off his property.

“To them, that meant war,” Alec wrote.

Within a week of the confrontation, Hal received received fines upwards of $1,000 for simply not allowing them to enter his home.

Hal was neither impressed nor intimidated and used the “stupid letters to help fire his grill.”

But this only fanned the flames of discontent…

But Then It Went Too Far

Hal went on with his life, but would you be shocked to hear that the HOA board wasn’t so willing to forgive and forget?

Because they did neither.

One day, Hal came home to find one of the HOA members had broken into his his garage, writing down things on a notepad.

It didn’t take long for Hal to realize the zealous HOA board was willing to take any step necessary to keep tabs on him, even if that meant using bolt cutters to bust up a lock on the garage door.

Hal quickly called out the intruder, but he soon realized that the intrusion was just part of the HOA’s plan.

As he was trying to figure out what the man was doing breaking into his home and prying through his personal belongings, he heard what sounded like demolition of some sort coming from his front yard.

In front of his house stood two oak trees that his grandparent’s planted with seeds from their home country when they first built the home all those years ago, and now a tree removal company was in the process of tearing them down.

Those trees had stood there for decades, serving as a reminder of where they had come from, a reminder of their heritage, and a reminder of their love.

Hal stood there in disbelief as something that had meant so much to his family was being ripped away.

“They had called a professional crew for this,” Alec wrote.

“One was already so damaged (basically all twigs were already down, it was just a stump that was left).

The other one they had just started with.”

It only got worse when Hal was informed that the HOA told the crew that Alec had given them permission to cut down the trees because they were in violation of HOA rules.

But what kind of rule would give an HOA member the right to walk onto someone’s property and cut down decades-old trees?

It All Came Crashing Down

Hal would find out that there was a rule (which he didn’t sign off on) where if a garden produces more than a 40-liter sack of leaves within two weeks, the garden owner needs to take down the “offending trees” within two weeks of the violation.

Having had enough of the HOA, its members, and its rules, Hal decided it was time to get back at the people who had made his first weeks of being a homeowner a living nightmare.

He struck up a deal with the tree crew where he would overlook the trespassing if they would agree to be witnesses if he filed charges against the HOA.

Having the crew’s word that they would back him up, Hal did what he had to do.

“Then he called the cops on the board members for trespassing, breaking and entering (they actually had used a bolt cutter to get into the garage; he had it always closed with a big bike lock after they had tried to get in it twice before),” Alec wrote.

And believe it or not, this thing actually went to trial…

That’s When This Thing Went To Court And Got A Lot More Real

Alec didn’t provide details on the ins and outs of the criminal trial, but he said it must have been “glorious,” because not only did the HOA have to repay Hal for the broken lock and damage to the trees (which ended up being close to $50,000), they also fought the charges which cost them another $15,000 in legal fees.

“All in all, this trial must have cost them over $120,000,” Alec recalled.

But it didn’t end there. Not having enough of his revenge, Hal decided to take the HOA and its members to civil court where he sued them for “emotional damage.”

You might be asking, “but what’s this business about ’emotional damage?'”

Well, Hal laid it on as thick as he could when he was pleading his case.

“He told them how much these trees meant to him, since his grandparents had planted them, with seeds from the home country,” Alec wrote.

“Plus, he felt threatened by the HOA, and can hardly sleep because he always fears they try to get into his house.”

Neither of which were lies, and so the court bought Hal’s story and ordered the HOA to pay $500,000 plus the cost of a state of the art home alarm system so he could “feel safe again in his own home.”

But that wasn’t all…

What It Cost

The HOA’s actions ended up costing the board around $750,000 before everything was said and done, but it would only get worse for some of the board members.

“They had to file for bankruptcy and get a person to check the books so my friend would get his money,” Alec wrote.

“But the best for last… The mediator found out that these three pricks had been defrauding the HOA for well over 10 years and were giving out as many fines as they possibly could so they could use it to bolster their income.”

Through their research, the mediator discovered that the HOA methodically tried to get rid of the people that they did not want there, and then they would buy their houses on the cheap.

The HOA would use the fines from their ridiculous rules to create enough money for the down payment on these homes.

With that being said, everyone wanted a piece of these crooks.

And that’s not even the best part…

Now That They’re Gone…

Due to the astronomical settlement, the three board members who had been waging a private war on Hal were left with no choice but to sell their homes in order to pay Hal’s settlement.

And with the three leaders of the HOA out of the neighborhood, Hal became somewhat of a local hero after freeing his neighbors from the abuse and extortion of the HOA board members.

“You see, most people never wanted the HOA in the first place, but the board member practically forced them to sign the contract, claiming it would not be optional, and if they did not sign before moving in it would be a $500 fine,” Alec recalled.

“Only six of the 50 members actually wanted this HOA (and people think they did get part of the action, as reward for spying on their neighbors to find violations).”

With his newfound fame, Hal found himself constantly being invited over to his neighbors’ for parties and BBQ’s while the former HOA board became nothing but a distant memory.

A Lesson To Be Learned

And so that concludes our story about the young homeowner who had enough of a tyrannical HOA and its board members and decided to get his own form of revenge.

It wasn’t pretty and it wasn’t sweet, but Hal did what had to be done. He couldn’t stand on the sidelines and watch as the group of extortionists and petty crooks continued to reign over a neighborhood who wanted no part in being subjected to the rules of a neighborhood association.

Hal did what so many before him had failed to do…

he stood up, he made a stand, and he got his voice heard.

While the HOA’s former leaders are selling their homes, draining their bank accounts, and looking for any possible way to pay back one of their victims, Hal and the rest of his neighbors are enjoying the sweet taste of freedom and some of that BBQ his new friends keep offering him.

Source: by Philip Sledge | OOLA

Advertisements

Young Real Estate Flippers Get Their First Taste of Losing

After piling in when the market was hot, investors are facing losses from homes that take too long to sell.

https://i.pinimg.com/564x/e1/09/78/e109781bf3ec719a54c0beeb88c77a17.jpg

(Bloomberg / Businessweek) Sean Pan wanted to be rich, and his day job as an aeronautical engineer wasn’t cutting it. So at 27 he started a side gig flipping houses in the booming San Francisco Bay Area. He was hooked after making $300,000 on his first deal. That was two years ago. Now home sales are plunging. One property in Sunnyvale, near Apple Inc.s headquarters, left Pan and his partners with a $400,000 loss. “I ate it so hard,” he says.

Continue reading

Sliding Home Prices Turn Around In Parts Of Southern California

Single family home prices in Orange, Los Angeles and San Diego counties changed course, climbing up in April after falling year over year in March.

Sales volume was down statewide, but the median resale home price set a record high in California in April, hitting $602,920. (File photo by Marilyn Kalfus/SCNG)

Riverside County had the biggest price gain of five Southern California Counties, at 5.8%, with the median resale of a home up to $423,000 from $400,000 in April 2018. San Bernardino saw a 5.2% hike, with the price at $305,000 compared with $289,900 the prior year.

Orange County had the smallest uptick – 0.9% – but the heftiest price: It rose to $825,000 in April from $818,000 last year. Los Angeles, with a 3% increase, saw prices go to $544,170 from $528,550 last April. San Diego rose 2.2% to $649,000 from $635,000.

The analysis comes from the California Association of Realtors, which reports on the resale of houses around the state. Sales of existing houses account for just over two-thirds of all home sales in Southern California.

In March, CAR’s numbers reflected the first year-over-year price drop for Los Angeles and San Diego counties in seven years and the third in Orange County in the previous four months.

Statewide, demand weakened and sales were down, but the median home price set a record high in April, reaching $602,920 and passing the $602,760 high set in the summer of 2018. April’s price was up 3.2% from $584,460 in April 2018, CAR said.

“While we started off the spring homebuying season on a down note, home sales in the upcoming months may fare better than the top-level numbers suggest,” said Leslie Appleton-Young, CAR’s senior vice president and chief economist. “The year-over-year sales decrease was the smallest in nine months, and pending home sales increased for the second straight month after declining for more than two years.”

She said a sharp sales rebound is not expected, but neither is an acceleration of declines.

Sales volume dipped in Los Angeles (-0.1%), Riverside (-6.5%) and San Bernardino counties (-7.7%), but was up in Orange (0.5%) and San Diego counties (2.4%).

“Weak buyer demand, largely prompted by elevated home prices, is playing a role in the softening housing market,” said CAR president Jared Martin. “However, with low-interest rates, cooling competition and an increase in homes to choose from, buyers can take advantage of a more balanced housing market.”

Mortgage rates fell to 4.06%, in March, a 14-month low. The 30-year fixed-rate mortgage averaged 4.07% for the week ending May 16, down from last week’s rate of 4.10%, according to Freddie Mac.

Source: by Marilyn Kalfus | The Orange County Register

Tel Aviv Skyscraper: Remake of Tower of Babel or Preparation for Third Temple?

“See, a time is coming—declares Hashem—when the city shall be rebuilt for Hashem from the Tower of Hananel to the Corner Gate;” Jeremiah 31:37 (The Israel Bible™)

https://mk0breakingisralps2c.kinstacdn.com/wp-content/uploads/2019/01/Babel_Azrieli.jpg

Tower of Babel (left) and proposed Azrieli tower.

One of the largest real-estate developers in Israel revealed plans for the soon-to-be tallest building in Israel that looks surprisingly similar to images of what the Tower of Babel may have looked like. But a closer look reveals the new building may be much more, what one rabbi thinks could be a dry-run for building the Third Temple.

The Azrieli Group, an Israeli real estate and holding company, announced their plan to build Israel’s tallest building as an addition to their already impressive Azrieli Center Complex in Tel Aviv. Topping out at 91 stories and reaching 1,150 feet toward the heavens, it is estimated that the Spiral Tower will take six years to complete at an estimated cost of $666 million. The new tower will take its place next to the iconic circle, square and triangle towers that make up the Azrieli Complex. By building the Spiral Tower, the Azrieli Group will outdo itself as they built the current tallest building in Israel, The Azrieli Sarona Tower which stands 782 feet high with 53 floors, just two years ago.

The plans are ambitious, with around 150,000 square meters containing commercial space, offices, residences, and a hotel. Six underground parking levels, covering an area of 45,000 square meters, will be built at the base of the structure, in addition to a commercial floor connected directly to the light rail. The tower’s peak will include space for conferences and meetings, recreational space, and a 360-degree view of Tel Aviv and the surrounding area. it is predicted that approximately 100,000 people will pass through the center every day.

The unique design was produced by Kohn Pedersen Fox Associates (KPF), a New York-based architecture firm which is responsible for five of the 10 tallest skyscrapers in the world. According to the press release, the architects took their inspiration from nature as well as Jewish heritage.

“The tower was planned and developed in a unique geometric shape, never before seen in Israel, which captures the eye and the imagination. The main challenge for the initiators and architects was to create harmony between the three iconic towers that form Azrieli Center and the new tower, an impressive, one-of-a-kind structure which stands on its own. The tower’s design takes inspiration from the twists of a snail’s shell, attempting to imitate their natural form. The design also draws inspiration from ancient biblical scrolls and the way they unfurl upwards.”

More cynical critics of the design might draw a comparison between the elegant design presented by the developers and certain depictions of the Biblical Tower of Babel. Though the Biblical account contains no details other than it builders aspirations for it to reach great heights.

And they said, “Come, let us build us a city, and a tower with its top in the sky, to make a name for ourselves; else we shall be scattered all over the world.” Genesis 11:4

Traditional Jewish sources provide additional details. Midrash (homiletic teachings) described “an idol on the top holding a sword, so that it may appear as if it intended to war with God.” The Midrash also described a structure built on tall columns designed to protect the tower from another divine flood.

Some modern scholars have associated the Tower of Babel with known structures, notably the Etemenanki, a ziggurat dedicated to the Mesopotamian god Marduk built by Babylonian King Nabopolassar in 610 BCE. Indeed, the Spiral Tower Design closely resembles a ziggurat, an ancient structure from the Middle East built as a terraced compound of successively receding stories or levels. at the top of each ziggurat was a shrine. Also, similar to the Azrieli Towers,  each ziggurat was part of a larger complex that included a courtyard, storage rooms, bathrooms, and living quarters, around which a city was built.

Yisrael Rosenberg is an author who has a powerful connection to the spiritual implications of construction. His daytime job is as a tour guide for the Western Wall tunnels.

“The main sin connected to the Tower of Babel was not in their action but in their intention. The bottom line is that the intent of the builders and the architects of the Azrieli tower is l’shem shamayim (in the name of heaven). The fact that they envisioned a Torah scroll while designing the building is remarkable. Even if it was just for beauty, beauty can be to praise God’s creation.”

Rosenberg noted that the builders of the Tower of Babel came together to challenge heaven, hence their punishment was to be divided and scattered.

“Tel Aviv needs high towers since it is becoming densely populated,” he said. “This is a Tikkun (fixing) for what happened after the Tower of Babel. It allows people to be together in Israel.”

He also noted that for the 2,000 years of exile, Jews excelled in many fields but were less represented in architecture and land development.

“Everything we learn about construction in Israel is just one step away from the Beit Hamikdash,” Rosenberg said. “Just like Solomon’s Temple, the Third Temple will be with the agreement and blessings of every nation in the world and it will be the greatest construction project ever seen. We need to learn how to lead the world in this project.”

Source: by Adam Eliyahu Berkowitz |Breaking Israel News

Interest-Only Issuance Has Skyrocketed, But Is lt Time To Worry Yet?

A larger volume of CMBS loans are being issued with interest-only (IO) structures, but this rise may put the CMBS market in a dicey position when the economy reaches its next downturn. To put things in perspective, interest-only loan issuance reached $19.5 billion in Q3 2018, six times greater than fully amortizing loan issuance. In comparison, nearly 80% of all CMBS issued in the FY 2006 and FY 2007 was either interest-only or partially interest-only loans.

In theory, the popularity of interest-only loans makes sense, because they provide lower debt service payments and free up cash flow for borrowers. But these benefits are partially offset by some additional risks in the interest-only structure, with the borrower’s inability to deleverage during the loan’s life perhaps being the biggest concern. Additionally, borrowers who opt for a partial interest-only structure incur a built-in “payment shock” when the payments switch from interest-only to principal and interest.

Why are we seeing a spike in interest-only issuance if the loans are inherently riskier than fully amortizing loans? Commercial real estate values are at all-time highs; interest rates are still historically low; expectations for future economic and rent growth are fundamentally sound, and competition for loans on stabilized, income-producing properties is higher than ever. Furthermore, the refinancing pipeline is miniscule compared to the 2015-2017Wall of Maturities, so more capital is chasing fewer deals. This causes lenders to augment loan proceeds and loosen underwriting parameters, including offering more interest-only deals.

Then and Now: Why the Rise in 10 Debt Has Raised Concerns

Between Q1 2010 and Q1 2012, fully amortizing loans dominated new issuance, with its market share amass­ing as much as 80.4% (Q1 2012). Interest-only issuance was nearly equal to the fully amortizing tally by Q3 2012, as interest-only debt totaled $5.10 billion, only $510 million less than fully amortized loans. Interest-only issuance would soon overtake fully amortizing loan issuance by Q2 2017, as its volume skyrocketed from $5.3 billion in Q1 2017 to $19.5 billion in Q3 2018.

Prior to the 2008 recession, the CMBS market experienced a similar upward trend in interest-only issuance. By 02 2006, interest-only loans represented 57.6% of new issuance, out­pacing fully amortizing notes by 38.86%. The difference in issuance between interest-only and fully amortizing loans continued to widen as the market approached the recession, eventually reaching a point where interest-only debt repre­sented 78.8% of new issuance in 01 2007. Even though the prevalence of interest-only debt is mounting, why would this be a concern in today’s market?

https://www.zerohedge.com/s3/files/inline-images/trepp1_0.jpg?itok=4N-aALO3

IO Loans Are More Likely to Become Delinquent

Interest-only loans have historically been more suscep­tible to delinquency when the economy falters. Immedi­ately following the recession, delinquency rates across all CMBS loans moved upward. Once the economy began to show signs of recovery, the delinquency rate for fully am­ortized loans began to decline, while interest-only and par­tially interest-only delinquencies continued to rise. In July 2012, the delinquency rate for fully amortizing loans was sitting at 5.07% while the interest-only reading reached 14.15%. The outsized delinquency rate for interest-only loans during this time period is not surprising, since many of the five-year and seven-year loans originated in the years prior to the recession were maturing. Many of the borrowers were unable to meet their payments due to significant declines in property prices paired with loan bal­ances that had never amortized.

Over time, the stabilization of the CMBS market led to subsequent declines in the delinquency rates for both the interest-only and partial interest-only sectors. The delin­quency rate for interest-only loans clocked in at 3.17% in December 2018, which is down nearly 11 % from its peak. Delinquency rates across all amortization types have failed to return to pre-crisis levels.

Just because a large chunk of interest-only debt became delinquent during the previous recession does not mean the same is destined to happen in the next downturn.

https://www.zerohedge.com/s3/files/inline-images/Trepp2_0.jpg?itok=hieJDjUV

Measuring the likelihood of a loan turning delinquent is typically done by calculating its debt-service coverage ra­tio (DSCR). Between 2010 and 2015, the average DSCR across all interest-only loans was a relatively high 1.94x. Since 2016, the average DSCR for interest-only debt has fallen slightly. If the average DSCR for interest-only loans continues to decline, the inherent risk those loans pose to the CMBS market will become more concerning.

The average DSCR for newly issued interest-only loans in March 2019 registered at 1.61 x, which is about 0.35x higher than the minimum DSCR recommended by the Commercial Real Estate Finance Council (CREFC). In 2015, CREFC released a study analyzing the impact of prudential and securities regulation across the CRE finance sector. In the study, CREFC cited a 1.25x-DSCR as the cutoff point between relatively healthy and unhealthy loans. The value was chosen through loan-level analysis and anecdotal information from conversations with members.

The figure below maps the DSCR for both fully amortizing and interest-only loans issued between 2004 and 2008. Notice that toward the end of 2006, the average DSCR hugged the 1.25x cutoff level recommended by CREFC. Beyond 2006, the average DSCR for interest-only loans oscillated between healthy and concerning levels.

https://www.zerohedge.com/s3/files/inline-images/trepp3_0.jpg?itok=xgvNXKFE

The second figure focuses on CMBS 2.0 loans, where a sim­ilar trend can be spotted. After roughly converting interes-t­only loan DSCRs to amortizing DSCRs using underwritten NOI levels and assuming 30-year amortization, the average DSCR for interest-only loans issued between 2010 and mid- 2014 (2.04x) is much greater than that for fully amortizing issuance (1.78x). While part of this trend can be attributed to looser underwriting standards and/or growing competition, the other driver of the trend is due to selection bias. Lend­ers will typically give interest-only loans to stronger proper­ties and require amortization from weaker properties, so it makes sense that they would also require less P&I cover­age for those interest-only loans on lower-risk properties.

https://www.zerohedge.com/s3/files/inline-images/trepp4_0.jpg?itok=1F8l-CcE

What Lies Ahead for the IO Sector?

Rising interest-only loan issuance paired with a drop in av­erage DSCR may spell for a messy future for the CMBS industry if the US economy encounters another reces­sion. At this point, CMBS market participants can breath a little easier since interest-only performance has remained above the market standard. However, this trend is worth monitoring as the larger volume could portend a loosening in underwriting standards.

Source: by Trepp | ZeroHedge

NYC’s Chrysler Building Sold For Massive Discount

Signa Holding, Austria’s largest privately owned real estate company, has reached an agreement to purchase the iconic Chrysler Building in New York City in partnership with property firm RFR Holding for about $150 million, according to Reuters.

https://www.zerohedge.com/s3/files/inline-images/chysler%20building.jpg?itok=LA9qSufC

The price is at a steep discount compared to the $800 million the Abu Dhabi Investment Council paid for a 90% stake in the building right before the 2008 financial crisis. Shortly after the investment arm of the Government of Abu Dhabi bought the property, commercial real estate prices crashed.

https://www.zerohedge.com/s3/files/inline-images/chrysler-nyc%20view.jpg?itok=3T3jXqFz

Sources told Reuters that the deal includes both the office building and the pyramid-topped Trylons on the land between the tower and 666 Third Avenue.

https://www.zerohedge.com/s3/files/inline-images/TrylonTowers.jpg?itok=_JQAgsAF

The Art Deco–style skyscraper, was completed in 1930 on the East Side of Midtown Manhattan in New York City. It is a recognizable symbol of Manhattan’s skyline, was for a short time in the early 1930s the tallest building in the world, only to be surpassed by the Empire State Building.

https://www.zerohedge.com/s3/files/inline-images/1930s%20chysler%20building.jpg?itok=AjjVpOFt

The most significant factor weighing on the price is out of control expenses tied to the building’s ground lease. The land under the tower is owned by the Cooper Union school, which raised the rent to $32.5 million last year from $7.75 million in 2017.

“The ground lease is a glaringly obvious negative,” Adelaide Polsinelli, a broker at New York City-based Compass, told Bloomberg. “The other negatives are that the space is not new and it is landmarked, therefore it’s twice as hard to get anything done.”

Tishman Speyer Properties and the Travelers Insurance Group bought the Chrysler Building in 1998 for about $230 million. In 2001, a 75% stake in the building was sold, for $300 million to TMW, the German arm of an Atlanta-based investment fund. Abu Dhabi bought the German fund’s share as well as part of Tishman’s in June 2008. Reuters said Signa and RFR were extremely close to a deal to purchase the tower.

Signa has an extensive portfolio of landmark buildings in prime locations. Its holdings include KaDeWe and the Upper West Tower in Berlin, Goldenes Quarter with the Park Hyatt Hotel in Vienna, Alte Akademie in Munich, and Alsterhaus and Alsterarkaden in Hamburg.

RFR has also made a name for itself in commercial real estate by owning and managing some of Manhattan’s most prestigious commercial properties, including the Seagram Building and Lever House, which are located on Park Avenue.

Signa and RFR had completed several deals together in the past,  including in 2017, when Signa bought five landmark properties from RFR in Berlin, Hamburg, Frankfurt, and Munich for about 1.5 billion euros.

Source: ZeroHedge

Illinois’ Lethal Combination: Rising Property Taxes & Stagnant Incomes

A lethal combination of rising property taxes and stagnant incomes has forced many Illinoisans to rethink their relationship with their state. More than 1.5 million net residents have already fled the state since 2000 – and you can’t blame others for thinking about joining them.

Property taxes have become punitive in Illinois. We’ve written about how these taxes have destroyed the equity in people’s homes across the state. Many families have done the math, and whether they’re in the struggling south suburbs of Chicago or the affluent North Shore, they’ve decided to leave Illinois behind.

The traditional method for measuring the burden of property taxes is to look at a household’s property tax bill and compare it to a home’s value. Under this method, Illinoisans pay the highest property taxes in the nation. At 2.7 percent, Illinoisans pay far more than residents in neighboring states – twice more than those in Missouri and three times more than residents in Indiana.

https://www.zerohedge.com/s3/files/inline-images/Illinoisans-pay-the-highest-property-tax-rates-in-the-nation.png?itok=TySk9EJ4

That fact is outrageous on its own.

But to really understand the pain that these taxes inflict on Illinoisans, it’s important to compare property tax bills to household incomes. After all, those bills are paid straight from people’s earnings.

The unfortunate reality is that Illinois incomes have been stagnant for years – and falling when you consider the impact of inflation.

Between 2000 and 2017, Illinois median household incomes increased just 34 percent, far short of inflation. In contrast, household property tax bills are up 105 percent, according to Illinois Department of Revenue data.

https://www.zerohedge.com/s3/files/inline-images/Illinois-property-taxes-have-grown-three-times-faster-than-incomes.png?itok=pxu4sFvb

The net result: Property tax bills per household have grown three times faster than household incomes since 2000.

That means more of Illinoisans’ hard-earned incomes are going toward property taxes and less towards groceries, college tuition, and retirement savings. In 2017, 6.73 percent of household incomes went toward property taxes, up from 4.3 percent in 2000.

https://www.zerohedge.com/s3/files/inline-images/Illinois-property-taxes-consumed-6.7-percent-of-household-incomes-in-2017.png?itok=wNlz9IY8

That’s a 55 percent increase in the effective tax rate.

The detailed data is below:

https://www.zerohedge.com/s3/files/inline-images/Illinois-property-taxes-consume-more-of-household-incomes-when-compared-to-2000.png?itok=ncfCS74C

Property taxes, county by county

https://www.zerohedge.com/s3/files/inline-images/Top-10-Illinois-counties-with-the-highest-property-tax-rates.png?itok=DdaYf29G

Residents of Lake County pay the highest property taxes in Illinois when measured as a percentage of household incomes. In 2000, Lake County residents paid 6.5 percent of their household incomes toward property taxes. Today, residents pay 9.1 percent. That’s a 40 percent increase. The average Lake County property tax bill is now over $7,500 per household.

Meanwhile the residents of the other collar counties and Cook pay more than 7 percent of their incomes to property taxes, with average bills ranging from $4,500 to $6,200 a year.

Overall, the collar counties pay the highest taxes as a percent of income in the state. But it’s not just the Chicago suburbs that are taking a hit. Taxpayers statewide have seen their taxes rise.

https://www.zerohedge.com/s3/files/inline-images/Top-10-Illinois-counties-with-the-highest-growth-in-property-tax-rates.png?itok=ZF6tO_IT

In fact, most of the counties that have had the biggest tax growth, in percentage terms, are found downstate. Hardin County residents, though they pay low rates, have seen them jump 97 percent since 2000. Residents in Pulaski County, have seen their rates go up by 78 percent.

Cook County comes next at 75 percent, but after that it’s all deep downstate again: Calhoun (70 percent), Greene (66 percent), Jersey (65 percent), and Pope County (62 percent).

Taxes too high

Any way you cut it, Illinoisans are being punished by property taxes.

That’s prompted some, including new Gov. J.B. Pritzker, to propose a reduction in property taxes by increasing income taxes.

But that would do Illinoisans no good. Illinoisans already pay the nation’s 6th-highest rates when you lump all state and local taxes together.

https://www.zerohedge.com/s3/files/inline-images/Illinoisans-pay-the-6th-highest-state-local-tax-rate-in-the-nation.png?itok=DtJreRql

Shifting them around won’t help when the total tax bill is too high to begin with. What Illinoisans need is tax cut, not a tax shift.

Source: ZeroHedge
By Ted Dabrowski and John Klingner via WirePoints.com