Where is His Cut?

Cook County Board President Todd Stroger might have the politician gene, but he lacks other ones.

Toddler and Property Taxes

Breaking with his father's avoidance of property tax increases and his own campaign promise not to impose them, Cook County Board President Todd Stroger made it clear over the weekend that he thinks a property tax hike is one way to balance the 2008 county budget. Stroger made the comment in an interview that aired on "Fox Chicago Sunday." In response to a question by hosts Dane Placko and Jack Conaty about how he planned to balance the budget, Stroger replied, "For years, we haven't taken any of the natural growth [in property values]. We should go to the next level that we can."

Foreclosures still raging

Chicago-area foreclosures, which set a record last year, are projected to reach full-blown crisis levels in 2007.

Cook County is on pace to record at least 30,000 and as many as 36,000 foreclosure filings this year, according to Cook County Circuit Court Judge Dorothy Kinnaird, who presides over the Chancery Division, which handles foreclosures. That would mean a 35% to 62% increase from 2006, when 22,248 filings were easily the highest in county history after having risen 36% from the previous year. (The court combines both commercial and home foreclosures, but residential mortgages comprise the vast majority of its cases.)

The driving force behind the foreclosures: adjustable-rate mortgages, which proliferated during the housing boom, according to a new report by the National Training and Information Center, a Chicago affordable-housing advocacy group. The mortgages offered low interest rates for a limited period and often let buyers skip down payments and get approval without showing proof of income, or both. Many buyers landed in trouble when their interest rates — and their monthly payments — adjusted upward, the NTIC said.

Chicago and Cook County is not the only place that is suffering problems. A wise political leader would look out side the walls of his fiefdom to gain some fore-sight to the problems he might occur one day. Just like Chicago is oblivious to the housing crash all around her, Toddler is oblivious to his own problems.

Property Tax Dilemma

Kevin Depew in Tuesday's Five Things wrote about the Property Tax Dilemma.

The Florida legislature plans to convene a special session in mid-June that could result in more than $30 billion in property-tax relief over the next five years, the Wall Street Journal reported.

*Thanks to the housing boom, the average annual property-tax bill in the U.S. was $1,132 per person in 2005, up 13% from 2000 in inflation-adjusted terms, according to data from the Commerce Department.
*The boom was so strong that in many areas housing prices rose too fast for local tax assessors to keep up, the WSJ said.
*Now, tax assessments are catching up just as market prices are declining, a double whammy for homeowners facing increasing mortgage payments due to resets, or homeowners now trapped in residents with property tax bills edging them out of their comfort zone.
*But that's the homeowners problem.
*Here is the dilemma for states: Reducing property-tax revenues threatens budgets of cities and counties. However, a property-tax cut could stimulate the economy by leaving homeowners with a bit more money in their pockets.
*Florida doesn't have a personal income tax, and its cities and counties depend heavily on property taxes to pay for services such as police and firefighters, the Journal noted.

I have read that the County's plan is to line up existing home tax assessments to new construction. Existing home have already been assessed. The taxes are based on those older numbers. There was a cap on how much they can go up: 7%. New construction is different. The County assigns taxes based on the SALES PRICE of the unit. Look in my right side Links for the CC Assessors and CC Treasurers web sites. You can find yours and everyone taxes.

The County's logic is that if you bought that N.W. Side bungalow for $500,000 then they will tax you at $500,000. Sounds fair right? Not to the Jones' that are pushing the edge of foreclosure with that 1/2 Million dollar note, just to "live the American Dream". With a steep hike in takes, the Jones' might go over the edge. Florida is learning that higher taxes can lead to more foreclosures, and more foreclosures mean less taxes coming in.

When will Toddler learn?

That's What I Thought

Average salaries lower than past generation's

The Associated Press

WASHINGTON - The part of the American dream that says children will be better off than their parents were has become a dream, not reality, according to an analysis of Census data released Friday.
A generation ago, American men in their thirties had median annual incomes of about $40,000, compared with men of the same age who now make about $35,000 a year, when adjusted for inflation.

That's a 12.5 percent drop between 1974 and 2004, according to data from the Pew Charitable Trusts' Economic Mobility Project.

Household incomes rose during the same period, though the main reason is that there are more full-time working women, a new report on the project said.

We get paid less, but you are supposed to dump more of our income on a mortgage.

This is what some authors call the Revolution of Lowered Expectations. Do more, get less; pay more, receive less. It starts with a, "HEY! Wait a minute." And shortly becomes a, "Eh, what do you expect?"

Not in the Top 100

Chicago was not in the MONEY Magazine Top 100 cities. This is not a surprise if you consider the numbers:

Chicago, IL Population: 2,873,790

Median family income
(per year) $46,748

Median home price $254,500

Sales tax 9.00%

Job growth %
(2000-2005) 0.70%

Test scores reading
(% +/- state average) -24.8%
Test scores math
(% +/- state average) -35.6%

Personal crime risk
(100 is nat'l average; lower is better) 351

It does not look good.

How does the median income family afford a median priced house?? The banks would have to loan out 5.4x the income for those people to qualify such a house!

Fun with math time: Per month, the principle and interest on a $254,500 home loan at 6.25% for 30 years = $1,567.00. A $46,478 year income / 12 (I'm being so nice, I'm not even taking out taxes!) = $3,895.66 a month. The Chicago median incomer in 2006 is spending 40.22% on his median priced home loan! If I add $300 a month for median taxes and insurance, the percentage would equal 47.92%!! Just short of one half of a median incomer's not yet taxed income is going to keeping him in his house!

I am suspicious of the Median home price. I believe that number is too low. Considering a 1 bed condo at Lincoln / Foster starts at $263,000!

Here is 115 homes for sale in Chicago for the $250,000 median price. As you will see, either it's a tiny condo, which taxes and condo assessments will chip further into your income, or it's in the ghetto.

Have fun!

Books to Read

I have read these books, and found them very informative.

America's Bubble Economy, Weidemer

Empire of Debt, Bonner

The Comming Economic Collapse, Leeb

The Two-Income Trap, Warren

When Corruption Was King, Cooley

Home Town Words

Chicago RE reporting is very propagandized.

In the height of the bubble, there were many many stories about how great it is here. The Trib and Suntimes RE sections were exploding with get rich stories and hot neighborhoods. Now the sections are thinned out. On the cover is an expose on the newest energy efficient light bulb that will save you 3 cents a month. Like that will save you from your lair-loan ARM explosion! But inside are still allot of the same over-priced houses and condos that have not sold in a year.

NO IS TALKING ABOUT THE BUST THAT IS OCCURRING ALL AROUND US!

No one but this guy. But I have to read about it in a New York publication.

For shame.

Spending May Take a Hit as U.S. Home Prices Decline (Update2)

By Bob Willis

April 27 (Bloomberg) -- Carol Francis says her customers are less likely to make big furniture purchases these days than they were at the height of the housing boom two years ago.

``The housing market right now is affecting everybody's spending,'' said Francis, a design consultant at Thomasville Home Furnishings in Woodbridge, Virginia, 25 miles south of Washington. Before, ``I had people who would buy two and three bedrooms of furniture. Now many come in and just buy one piece at a time.''

With home prices in danger of falling this year for the first time in at least four decades, Americans are turning wary about borrowing against their houses to pay for vacations, education or remodeling projects. In a reversal of the ``wealth effect,'' people who once viewed soaring home values as a rationalization for higher spending appear to be pulling back.

``We're in a housing recession; it's not over and it's going to spread to other parts of the economy, mainly consumer spending,'' said Paul Kasriel, director of economic research at Northern Trust Securities in Chicago. ``House prices are going to continue to fall, and that's going to play havoc with consumers because it means the home ATM is now draining, it's no longer filling.''

VERY interesting.....

It seems that Illinois Senator and Democratic Presidential candidate Barak Obama has a problem. Like many other Chicago area Democrats he is buddy-buddy with Antoin 'Tony' Rezko. Rezko's slumlord status may hinder Obama's rep as a Man of The People.

But there is more.

Here, is a detailed map of Rezko's properties. I find it VERY coincidental that Rezko has all these properties around the area of Washington Park! As any astute Chicago resident would know, Washington Park is planned to be one of the corner stones of Chicago's 2016 Olympic bid!

Oh what a tangled web we weave....

Don't rely on the City

City inspects for safety only, not quality

This really should not surprise you. But, in case you did not know.

Beware home buyers: Illinois does not require developers to be licensed, and city inspectors are not assessing the construction quality of the residence. The inspectors are responsible only for citing public-safety hazards such as an insufficient number of fire escapes.

"In Illinois, you have 'Wall Street' developers who drive cars and talk on phones and hire subcontractors. They don't build anything," said Nick Gromicko, founder of the National Association of Certified Home Inspectors, based in Boulder, Colo.

"Most states have very minimal or no licensing of developers and contractors," he said.

...

City inspectors, or any other government inspector, will check only for safety issues on new construction.

"A leaking window is something [government inspectors] wouldn't even catch," Gromicko said.<

Scales said city building inspectors review basic life-safety issues such as proper ventilation and lighting, and properly installed electrical and plumbing systems.

"They're not able to measure the quality of construction," Scales said.

The developer is responsible for correcting any problems.

It's best to watch the construction in person throughout its many phases.