Karp Real Estate

Property Taxes and the Value of Your Home

Real estate taxes have been a sore subject for many people in our community lately.  I find that there are several common misunderstandings about our property taxes among the general public.  The biggest confusion lately is about the relationship between the tax bill and the value of our homes.  People are frustrated that their tax burden seems to be increasing while their home values continue to decline.

So in my first article about property taxes I am going to answer this question:

“Why have my real estate taxes gone up while the value of my house has gone down?” 

First of all, it is important to understand that our real estate taxes are used to cover the budgets of several different government entities that provide services to the community.  Some of the specific items will vary by community.  For an example, here are the taxing bodies listed on my tax bill for Highland Park, which is in Lake County:

• Lake County
• City of Highland Park
• Park District of Highland Park
• Moraine Township
• Highland Park library
• Mosquito abatement
• School districts (we have two districts, one for K – 12 and another for the high school)
• College of Lake County
• North Shore Sanitary District
• Forest Preserve
• East Skokie Drainage
• Pension programs for Lake County, Highland Park, the Park District of Highland Park, the school districts, and the Forest Preserve

Now just because we are all in a situation where our home values are declining, does not mean that all of the above taxing bodies can operate with less money.  Our housing values have declined dramatically over the past 5 – 6 years.  Although there is pressure on all of these government organizations to tighten their belts and lower costs, at the end of the day, their budget cuts are not at the same rate as our declining home values – nor is there any reason for this to occur.  There is no relationship between home values and these budgets.  Similarly, when our home values were rising, the taxes didn’t necessarily increase at the same rates as our value.

The only reason that the tax assessor looks at our property values at all is so that they can determine each homeowner’s fair share of the total tax burden.  The actual value of the property, up or down, has no relation to the budgets for these taxing districts.  It is just a method that township assessors use, as specified by Illinois statute, to figure out each homeowner’s portion of the property tax “pie.”

Hope this is helpful. 

Thank you for reading!

Nancy S. Karp

 

To find any property for sale in the Chicago area, click here.

For up-to-the minute market information, including recent sales, on any North Shore community, click here.

Scorecard: market update for the North Shore Communities

After reading my recent series of posts providing an update on the North Shore real estate market, you may still be wondering how the various communities compare to one another.  So, here it is, the executive summary…

This is my personal ranking of the North Shore communities based on these factors within each suburb:

• Number of distressed properties that sold in the past 12 months (foreclosures and short sales)
• Number of properties currently in pre-foreclosure situation now versus 6 months ago.
• Number of bank-owned properties either on the market, or going on the market soon versus 6 months ago.

The communities at the top will see price recovery before the ones lower on the list….Skokie and Evanston at not looking good with an high and increasing levels of distressed properties.

1.Kenilworth

2.Winnetka

3. Glencoe

4. Lake Forest

5.  (4-way tie) Glenview, Northbrook, Northfield, and Riverwoods

9.  (3-way tie) Highland Park, Deerfield, and Wilmette

12. Evanston

13. Skokie

FYI, if you are ever interested in seeing information on recent sales in any suburb on the North Shore, you can find it by clicking here.  Then just click on the community of interest.

Thank you for reading!!  New topic next time, I promise.

Nancy S. Karp

 

To find any property for sale in the Chicago area, click here.

Market Update: Skokie, Winnetka and Wilmette

This is the 7th and FINAL article in a series I have written about the real estate market on Chicago's North Shore.  I have been using the concept of "shadow inventory" to understand how much longer home prices will be declining in each community on the North Shore.  Shadow inventory refers to homes that are in pre-foreclosure (the owners are 3 months or more behind on their payments) and homes that have already gone through the foreclosure process and are bank-owned.  Some of these homes may already be available for sale, but most of them are not.  When they do hit the market, it will be at discounted prices (as short sales or bank-owned properties) because of their distressed status.  When these types of properties are for sale, this causes prices of other properties in the area to decline.  So the fact that these properties are potentially going to hit the market in the coming months is NOT A GOOD THING.

Skokie

Shadow inventory increased by almost 20% over the past 6 months to 589 properties in Skokie.  Almost 27% of these are bank-owned properties. There are 430 households that are behind in their mortgage payments in Skokie – that represents 30% of the pre-foreclosures on the whole North Shore!  Skokie seems to be hit hardest of all the communities on the North Shore with distressed properties.

Skokie - 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	126	74	200
% single family homes	59%	61%	60%
% condos/townhomes	41%	39%	40%

 

 

Skokie leads all of the other North Shore communities with 200 distressed property sales during the past 12 months.  These sales are just under 34% of the size of the current shadow inventory.  If these trends continue in Skokie it will definitely be the last suburb on the North Shore to see an end to falling prices.

Wilmette

Wilmette saw shadow inventory increase by 24% to 92 properties.  About 76% of these are in pre-foreclosure, and the rest are bank-owned.

Wilmette - 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	12	10	22
% single family homes	75%	80%	77%
% condos/townhomes	25%	20%	23%

 

 

On top of the increase in the shadow inventory, only 22 distressed properties were sold in the past 12 months.   This is only 24% of the size of the shadow inventory.  This means that it will take some time for Wilmette to recover from falling prices because the number of distressed properties in the “pipeline” is increasing and sales of distressed properties is relatively low in comparison. 

Winnetka

Winnetka had a total of 6 bank owner properties and 14 homes in pre-foreclosure as of July 26, 2011, for a total shadow inventory of 20 homes.  This is a decrease from 39 homes in January 2011, a good sign of recovery.

Winnetka - 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	6	8	14
% single family homes	100%	88%	93%
% condos/townhomes	0%	12%	7%

 

 

There were 14 distressed properties sold during the past 12 months in Winnetka, which is 70% of the size of the current shadow inventory.  The declining shadow inventory AND the relatively strong sales of distressed properties indicate that this community is close to turning the corner on pricing!!

 

Thank you for reading!!!

To find any property for sale in the Chicago area click here.

To look at recent sales and other sales statistics for your community click here and then click on the map to specify the community you want to see.

nsk

Nancy S. Karp

 
 
nancy@nancykarp.com

@properties | Consultant, MBA, ePro, SFR, CREN |   

love where you LIVE 

 

Market Update: Northbrook, Northfield and Riverwoods

This is the 6th article in a series I am writing about the real estate market on Chicago's North Shore.  I have been talking about "shadow inventory" and how this affects home prices.  There are homes that are in pre-foreclosure (the owners are 3 months or more behind on their payments) and homes that have already gone through the foreclosure process and are bank-owned.  Some of these homes may already be available for sale, but most of them are not.  They are called "shadow inventory" because most of them will be for sale in the coming months at discounted prices (as short sales or bank-owned properties) because of their distressed status.  When these types of properties are for sale, this causes prices to decline.  So the fact that these properties are potentially going to hit the market in the coming months is NOT A GOOD THING.  There are many other factors that affect home prices, such as interest rates and unemployment rates - in these articles I have not been discussing these factors directly.  To a large extent these factors are already reflected in the shadow inventory numbers.

Northbrook

Northbrook showed a dramatic decline in shadow inventory, which is a positive indicator for this community.  There were 286 distressed properties (bank-owned and pre-foreclosures) in January, and now it is down to 218.  Over 70% of these are pre-foreclosures.

Northbrook - 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	56	49	105
% single family homes	68%	73%	70%
% condos/townhomes	32%	27%	30%

 

 

Another positive sign for Northbrook is that the number of distressed properties that sold in the past 12 months (see chart above) is about 48% of the size of the current shadow inventory (105 divided by 218).  This is better than the North Shore average of 38%.  Things are headed in the right direction for Northbrook.  We’re not at the bottom yet with regard to pricing, but hopefully that is just around the corner. 

 

 

Please bear in mind that once prices do hit bottom, they aren't going to just pop right back up to where they were before the bubble burst.  Experts are saying that we will see small increases in real estate prices over the next several years. 

Northfield

This is a small community in the New Trier school district nestled between Winnetka, Wilmette, Glenview, and Northbrook.  During the past 12 months there were a total of 5 distressed properties sold, as shown in the chart below:

Northfield - 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	4	1	5
% single family homes	75%	100%	80%
% condos/townhomes	25%	0%	20%

 

 

The shadow inventory in Northfield dropped from 32 to 24 over the past 6 months (8 are bank-owned properties).  Distressed properties sold in the past 12 months as percentage of shadow inventory is under 21%.

This is well below the 38% average for the North Shore, but like Kenilworth, when the numbers are this small it is difficult to gauge whether or not this is significant.  I believe that there will continue to be downward pressure on prices in Northfield until the 8 bank-owned properties are sold and the remaining pre-foreclosure properties are resolved one way or another. 

Riverwoods

Part of the Deerfield zip code, Riverwoods is another small community on the North Shore, known for its homes on large wooded lots.  Shadow inventory in July was 25, about the same as it was in January (26).  On the positive side, Riverwoods had 11 distressed properties sold during the past 12 months.  The distressed sales as a percentage of shadow inventory is 44% - this is above the North Shore average. 

Riverwoods - 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	5	6	11
% single family homes	100%	100%	100%
% condos/townhomes	0%	0%	0%

 

 

This means that even though there were 11 distressed sales, there are still households experiencing financial difficulty because the number of distressed properties in the pipeline stayed the same.  Translation – in this wooded community, we’re not yet out of the woods on declining prices. 

Thank you so much for reading!  The next and last installment in this series will cover Skokie, Winnetka and Wilmette.  If you would like the entire analysis all in a single report, please contact me directly and I can send it to you in PFD or WORD format.

To find any property for sale in the Chicago area click here.

To look at recent sales and other sales statistics for your community click here and then click on the map to specify the community you want to see.

nsk

Nancy S. Karp

 
 
nancy@nancykarp.com

@properties | Consultant, MBA, ePro, SFR, CREN |   

love where you LIVE 

 

Market Update: Highland Park, Kenilworth, and Lake Forest

This is the 5th article in a series I am writing about the real estate market on Chicago's North Shore.  In these blog posts I talk about "shadow inventory."  These are homes that are in pre-foreclosure (the owners are 3 months or more behind on their payments) or homes that have already gone through the foreclosure process and are bank-owned.  Some of these homes may already be available for sale, but most of them are not.  They are called "shadow inventory" because although they are not for sale at this point in time, and many of them will be for sale in the coming months at discounted prices (as short sales or bank-owned properties) because of their distressed status.  When these types of properties are for sale, this causes prices decline.  So the fact that these properties are potentially going to hit the market in the coming months is NOT A GOOD THING.

Highland Park

 Shadow inventory in Highland Park increased to 121 properties from 113 during the past 6 months; 23 % of these are bank owned and 77% are in pre-foreclosure.  This isn't a huge increase, but it still isn't a good sign for this market.  

A total of 54 distressed properties were sold during the past 12 months – less than half were bank owned and the rest were short sales.  The good news for Highland Park is that the number of distressed properties sold over the past 12 months as a percentage of the current shadow inventory is 44%, which is above the North Shore average of 38%.   

Highland Park - 12 months ending 7.26.2011	Bank-owned Properties Sold	Short Sales	Total distressed property sales
Total	26	28	54
% single family homes	100%	89%	94%
% condos/townhomes	0%	11%	6%

 

 

Overall, I think that pricing recovery for Highland Park is going to be a little bit slower than for its neighboring communities to the North and South.

Kenilworth

This is a very small and exclusive area.  The shadow inventory in Kenilworth increased by 28% since January.  I know that sounds like a lot, but in reality it only “jumped” from 7 properties to 9.  (This is why you have to be careful when you hear people quoting statistics – they can be very misleading!).  There is one bank owned property and 8 pre-foreclosure properties.  Yes, believe it or not, there are 8 households living in Kenilworth that have not been paying their mortgage!

During the past 12 months there were 3 distressed properties that sold in Kenilworth – 1 bank owned property and 2 short sales.  The distressed sales are 33% of shadow inventory, which is below the North Shore average.  But again, we are talking about very small numbers in a very small community.

Kenilworth - 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	1	2	3
% single family homes	100%	100%	100%

 

 

Prices will probably stabilize in Kenilworth before anywhere else on the North Shore.  However, just like the other communities, the presence of bank owned properties will continue to put some downward pressure on prices. With only one bank owned property right now, things aren’t too bad.

 

Lake Forest

Lake Forest had a dramatic decrease in shadow inventory since January.  It went from 107 properties to 69.  This is a very good sign for the real estate market in Lake Forest.  Interestingly, only 26 distressed properties sold in the past 12 months in Lake Forest.  Almost 70% of these were short sales.

 

Lake Forest - 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	8	18	26
% single family homes	87%	94%	92%
% condos/townhomes	13%	6%	8%

 

 

The number of distressed sales relative to the shadow inventory is about 38%.  This is equal to the North Shore average.  I think that this benchmark is outweighed by the dramatic decline in overall shadow inventory during the past 6 months.  This community may see prices stabilize in the near future if the number of distressed properties continues to decline at this rate.

If you are interested in seeing the complete report, just contact me and I will send you document that includes all the info for the North Shore in one article.

Next post will cover Northbrook and Northfield...

Thank you for reading!!

Nancy S. Karp

 

To find any property for sale in the Chicago area, click here.

 

Market Update: Glencoe and Glenview

Before getting to the Glencoe and Glenview updates, I first want to share a little info about the North Shore for comparison.

For the entire North Shore, here are some important numbers to note with regard to distressed property sales during the past 12 months. 

Chicago’s North Shore 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	408	338	746
% single family homes	59%	65%	62%
% condos/townhomes	41%	35%	38%

 

 

 

Meanwhile, as of July 26, 2011, there were 1,465 properties on the North Shore in pre-foreclosure.  These are households that are behind on their mortgage payments by at least three months.  All of these properties that may end up on the market as short sales or they may end up in foreclosure and sold as bank-owned properties.  Some homeowners may recover from and catch up on their payments, but the majority will not. 

Additionally, on the same date, I found 503 bank-owned properties in the tax records on the North Shore.  Some of these are already listed for sale, and the rest will be hitting the market in the coming months. 

So, to summarize, there were 746 distressed properties sold in the past 12 months, and there are potentially 1,968 distressed properties in the wings on the North Shore.

Interestingly, even though there were 746 distressed properties sold during the past 12 months, the total number of distressed properties in the wings (also known as “shadow inventory”) is about the same today as it was in January when I last reported on this.  This means that there are additional households having financial difficulties and falling behind on their mortgages.  A useful benchmark I am using to analyze the local markets is the number of distressed properties sold during the past 12 months as a percentage of the shadow inventory.  For the entire North Shore this is 746 divided by 1,968 or 38%. 

Glencoe

Shadow inventory in Glencoe declined from 33 properties to 27 properties from January to July.  This is a good sign for this community.  And, there were 17 distressed sales (short sales or bank-owned properties) during the past 12 months.  The number of distressed sales over the past 12 months was about 63% of size of the shadow inventory – another good sign for this market as this is significantly higher than the North Shore benchmark average of 38%. 

Glencoe 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	6	11	17
% single family homes	100%	100%	100%

 

 

Glencoe may be at, or close to, the bottom of the market and should see stabilization in home prices as the remaining distressed properties are sold. 

Glenview

The number of distressed properties in Glenview as of July 26^th (265) is about the same as it was on January 26^th (262).  About ¼ of these are bank owned properties – the rest are in pre-foreclosure.

A total of 136 distressed properties sold in Glenview during the past 12 months.  This is about 51% of the shadow inventory, and is better than the 38% average for the North Shore.

Glenview 12 months ending 7.26.2011	Bank-owned properties Sold	Short Sales	Total distressed property sales
Total	84	52	136
% single family homes	62%	35%	51%
% condos/townhomes	38%	65%	49%

 

 

 

I believe that Glenview will continue to see some downward pressure on prices in the coming months because even though 136 distressed properties were sold, they have almost the same number in shadow inventory as they did 6 months ago.

Watch for Highland Park, Kenilworth and Lake Forest tomorrow...(or contact me directly for the complete report all in a single document.)

Thanks for reading!!

To find any property for sale in the Chicago area click here.

Market Update: Evanston, Illinois

The number of properties that are bank-owned or in pre-foreclosure in Evanston increased during the past 12 months by almost 6% to 405.  Seventy-five percent of these are pre-foreclosures, that is, people that are not current on their mortgage payments. 

There were 109 sales of distressed properties in the past 12 months in Evanston.  But unlike Deerfield, over 70% of these were condos and townhomes (“attached” properties), and about half of the sales were foreclosures and half were short sales.  The problem in Evanston is that demand for attached properties is very low relative to the number of units available for sale.  This is in addition to the fact that many of these are distressed properties, so it is like a double whammy on values for attached properties.  As of August 1, 2011 there were over 440 attached properties listed for sale on the MLS in Evanston!  These have been selling at a rate of about 33 a month – so that means the current inventory could take 14 – 15 months to sell.  When you add to that the fact that there will be more of these properties coming onto the market in distressed situations...the downward pressure on prices will continue for a while.

The bright spot for Evanston is that the inventory level of single family homes is much better, at 5-6 months.  There will be more short sales and bank-owned properties on the market in the coming months, but with the lower inventory levels hopefully these will be absorbed by the market quickly.

Thank you for reading!!!

NOTE:  This is third article in series with local market info on the North Shore.

nsk

To find any property for sale in the Chicago area click here.

 

 

Market Update for Deerfield (Illinois)

Deerfield

Shadow inventory is down slightly from 6 month ago with 104 properties bank-owned or in pre-foreclosure (vs. 116 in January).  About 80% of these are pre-foreclosure properties (people that haven’t been paying their mortgages and are at risk of eventual foreclosure or possible short sale).    During the past 12 months, a total of 44 distressed properties were sold in Deerfield.  Almost 60% of these were short sales, and about 66% were single family homes.

Hopefully some of the homeowners in pre-foreclosure right now will be able to remedy their situation.  Unfortunately, many of them will not.  And until most of these properties are resold to new homeowners there will continue to be downward pressure on home prices in Deerfield.

Note:  A short sale is when a property is sold for less than what is owed on the mortgage AND the lender agress to forgive all or part of the shortfall.   For more info on short sales, see my blog archive.     

This is the second article in a series about the residential real estate market on Chicago's North Shore.  The first article (August 1,2011) provided an overview of Shadow Inventory for all of the North Shore suburbs. 

Thank you for reading!

nsk

To find any property for sale in the Chicago area click here.

North Shore Market Watch - update from January 2011

On January 26, 2011 I wrote an article about the “shadow inventory” on Chicago’s North Shore.  Shadow Inventory, in the world of residential real estate, is an estimate of the distressed properties (foreclosures and short sales) expected to come on the market in the coming months.  There are plenty of market gurus talking about Shadow Inventory on a national or state level, but I thought it would be most helpful to see what these numbers look like in our individual communities on the North Shore.  I also looked at recent sales of distressed properties in these same communities.

Now, 6 months later, I can compare the numbers we saw in January, to the inventory levels today.  This information is critical to understanding the local markets.  The presence of distressed properties in a market causes downward pressure on prices for all properties.  I can’t stress this enough.  And this is definitely a local phenomenon.  So while you may hear some sound bite on the news about prices starting to rebound in Florida or Las Vegas, you can’t assume that the same thing is going on here.  In many parts of Florida and Las Vegas these properties have already made their way through the market and are not a factor anymore.

I will be posting about each suburb over the next few days.  Taking a bit of time to go through all of the data I pulled.

So, for starters, I will share my first chart: Download Shadow inventory chart 7.26.2011  This chart shows the number of bank-owned and pre-foreclosure properties as of 7.26.2011 versus 1.26.2011. 

Stay tuned for market info for each suburb over the next few days.

Thank you for reading.

nsk

To find any property for sale in the Chicago area click here.