CHICAGO | General Discussions

[twister244]

Originally Posted by OrdoSeclorum

From 2010 to 2019 Chicago proper gained 50,000 people and metro Nashville about 65,000.

I believe the sprawl outside of Chicago lost residents over that period and the sprawl outside Nashville is responsible for most of the area's growth. It certainly tracks that people whose main priority is to avoid paying taxes and fees would move someplace without sidewalks.

I'm going to repeat what I said earlier.... Don't just assume the grass is greener on the other side. I feel like a lot of people in Chicago are still stuck in this 2010 attitude that it's way more expensive compared to these "hot" cities, even after taxes. What's happened over the last five years is for many of these cities (Denver, Austin, etc), their real estate has gone through the roof. Yes, taxes are much lower, but at some point, you have to look at what you get for $400/$500/$600k and say - Nope. When I was still in Denver, I had thought about maybe getting a second place there, but prices just blew past my range I could afford for what I wanted.

If the city/state can offer some stability on the tax front (as TUP stated), I could see the tide turning back towards gains here in the next decade. These cities just can't keep going up forever without some sort of tipping point for folks.

[marothisu]

Originally Posted by twister244

I'm going to repeat what I said earlier.... Don't just assume the grass is greener on the other side. I feel like a lot of people in Chicago are still stuck in this 2010 attitude that it's way more expensive compared to these "hot" cities, even after taxes. What's happened over the last five years is for many of these cities (Denver, Austin, etc), their real estate has gone through the roof. Yes, taxes are much lower, but at some point, you have to look at what you get for $400/$500/$600k and say - Nope. When I was still in Denver, I had thought about maybe getting a second place there, but prices just blew past my range I could afford for what I wanted.

If the city/state can offer some stability on the tax front (as TUP stated), I could see the tide turning back towards gains here in the next decade. These cities just can't keep going up forever without some sort of tipping point for folks.

I agree with everything here and (I think) your previous message. In my original response on this topic I talked about housing prices, what your standards are, etc. We moved from NYC back to Chicago because we wanted to live somewhere nice and not have to go above $1M (or barely above it) for that nice 3+ bedroom and nor have to go to the suburbs (my wife doesn't drive). Pretty much impossible in NYC nowadays and an awesome opportunity opened up in my org in Chicago that would allow me to possibly get promoted faster than staying in my role in NYC. So in our case, the reduction in income tax and housing prices vastly outweighed the property tax reality for our particular situation. I could have maybe had an opportunity in Dallas, but it doesn't align with the lifestyle that we want (more urban, walkable, public transit, etc).


I do agree about the mentality. Interestingly in NYC, when they were telling people that the city was losing people now, all the online comments seemed to shift literally overnight from positive to negative about the city. People seemed to be really swayed by this stuff even though the situation was way more complex than that. It reminded me of Chicago in 2010 or 2011 and going forward. Then last summer we found out Chicago actually gained population and some people started to shift their opinions magically while others kind of doubled down or just disregarded the news entirely. These cities have so much to offer and a lot of people fail to see almost any positives.

There's no such thing as a perfect city and really the more people you have the more issues there's going to be. Some cities like Chicago have some serious issues (crime, property tax issues, etc) but it's still beneficial for many to move here.

With that being said, each situation is different. I don't think that every situation warrants a blanket statement. It may be good or beneficial for.some people to move to/live here while it may not be for others. You can apply this to any place. Just as an example, maybe someone who is car free lives here but moving to Texas may require them to purchase a car or 2. Perhaps the increase in that cost alone offsets the income tax difference and perhaps the price of housing they're looking at is similar to here (yes, that is more than possible believe it or not in some areas). But maybe some other household in a similar situation has those cars already and maybe owns them outright. Perhaps they can get a cheaper home there and thus maybe for them it doesn't really offset anything like the other household's situation and it makes sense to move. It's just an example but there's so many factors into how much money you spend per month/year and in many years cases it even goes beyond taxes (like the example above).

What's happening in some other cities isn't necessarily healthy. Especially the small ones like Boise. It's just pricing out the residents faster from getting into the market or people who were almost ready to buy. It reminds me a little of what my wife described in China like 15 years ago in the big cities. Her parents had bought 2 condos for maybe $200K cash there total - one was way on the outskirts of Shanghai (that's super far away) and one was 10 minutes away from the end of a city train line. Neither were the BEST locations but feasible. Their parents' friends though didn't want to pull the trigger and kept saying they were saving so they could afford something in an even better area location wise. Well, the prices went up there so fast that they were priced out in the matter of just a few months. Some of them took a decade to even be able to save money to afford that. Some of them have not even been able to purchase it to this day because that's how drastically fast things increased.

[jtown,man]

Originally Posted by twister244

I'm going to repeat what I said earlier.... Don't just assume the grass is greener on the other side. I feel like a lot of people in Chicago are still stuck in this 2010 attitude that it's way more expensive compared to these "hot" cities, even after taxes. What's happened over the last five years is for many of these cities (Denver, Austin, etc), their real estate has gone through the roof. Yes, taxes are much lower, but at some point, you have to look at what you get for $400/$500/$600k and say - Nope. When I was still in Denver, I had thought about maybe getting a second place there, but prices just blew past my range I could afford for what I wanted.

If the city/state can offer some stability on the tax front (as TUP stated), I could see the tide turning back towards gains here in the next decade. These cities just can't keep going up forever without some sort of tipping point for folks.

Great point. "Urban" Nashville will cost me more than actual urban Chicago. No way around that. However, buying a typical suburban home in the Nashville metro vs Chicago's probably isn't too different. And while you might pay slightly more for homes in Nashville, your RE taxes will be drastically lower and you have no income taxes.


I will note that buying a home that is more expensive will also sell for a higher price. A high property tax will never be made up in a sale. It simply is throwing money away. A more expensive home makes up for the added monthly cost by selling for more when you put it on the market, a homeowner with high property taxes isn't rewarded for their monthly contributions come selling time.


Anyways, the cost of housing (certainly "urban") may be more in Nashville. But there is no income tax, lower property taxes, lower gas taxes, car registration/taxes, and lower sales tax, all which add up to savings at the end of the day.


Example:

A family makes 100,000 and lives in a median-priced home for their respective city:

Nashville Home: 404,000
Chicago Home : 324,000

So roughly 80,000 dollars cheaper in Chicago.


According to Zillow, a mortgage with taxes (not insurance and I kept the standard downpayment settings etc.) would be:

324,000 Chicago home: 1,778 a month
404,000 Nashville home: 1,798


So you can buy 80,000 dollars more home for essentially the same price in Nashville vs. Chicago. But then we have income taxes:


Chicago family: 4,900
Nashville family: 0

I found a number of 13,500 for the average miles driven per car in the US. With that number in mind (average of 25 mpg):

A year of driving in Chicago would cost you 210 dollars in gas taxes
A year of driving in Nashville would cost you 145 dollars in gas taxes


So between a home, gas, and income, we end up with 4,500 more dollars for a family making 100,000 dollars, living in the median-priced home, and driving the US average.


Renewing your car tag is 29 dollars in Tennessee, its something like 150 in Illinois.


These things add up.

[Handro]

Yea, it's crazy that some places are more expensive than others. Did you know that you can buy a mansion in Bedford, Indiana for the price of a small apartment in Manhattan? Totally wild stuff and clearly a sign of.... something?

[jtown,man]

Originally Posted by Handro

Yea, it's crazy that some places are more expensive than others. Did you know that you can buy a mansion in Bedford, Indiana for the price of a small apartment in Manhattan? Totally wild stuff and clearly a sign of.... something?

Why are you always such an ass?

The point was brought up that Nashville is more expensive in some ways, I was responding to that.

[glowrock]

Originally Posted by jtown,man

Why are you always such an ass?

The point was brought up that Nashville is more expensive in some ways, I was responding to that.

Handro isn't going to be the only one you'll accuse of being an ass. You mentioned $4900 in income taxes in Chicago (so the same as Illinois standard flat rate). So you're assuming well north of $200k/year income? In that case, why the hell are you worrying about relatively small differences in taxes anyhow, all things considered?

I swear, it's amazing what so many SSPers consider "typical" income figures nowadays.

Aaron (Glowrock)

[marothisu]

Originally Posted by glowrock

Handro isn't going to be the only one you'll accuse of being an ass. You mentioned $4900 in income taxes in Chicago (so the same as Illinois standard flat rate). So you're assuming well north of $200k/year income? In that case, why the hell are you worrying about relatively small differences in taxes anyhow, all things considered?

I swear, it's amazing what so many SSPers consider "typical" income figures nowadays.

Aaron (Glowrock)

Income taxes are 4.95% - not sure how you came up with $200K/yr. Just under $100K/yr in income is when you'd pay $4900/mo in income taxes in Illinois. Income taxes really aren't bad in Illinois anyway - there's really only a handful of states like Tennessee, Texas, Florida, etc with 0% that are lower. Especially at most low 6 figure incomes even South Carolina, Arkansas, etc are higher than Illinois.

[SIGSEGV]

Originally Posted by marothisu

Income taxes are 4.95% - not sure how you came up with $200K/yr. Just under $100K/yr in income is when you'd pay $4900/mo in income taxes in Illinois. Income taxes really aren't bad in Illinois anyway - there's really only a handful of states like Tennessee, Texas, Florida, etc with 0% that are lower. Especially at most low 6 figure incomes even South Carolina, Arkansas, etc are higher than Illinois.

well gross income for tax purposes is a bit lower (tax deferred things, since I assume people are saving for retirement, and pre-tax things like transit passes, not to mention exemptions), so it would probably have to be like 110k-120k to get to 4900/year. Not that it matters really.

But comparing salaries at UChicago to Vanderbilt suggests that a Nashville salary is ~80% of a Chicago salary.

[VKChaz]

Originally Posted by marothisu

Income taxes are 4.95% - not sure how you came up with $200K/yr. Just under $100K/yr in income is when you'd pay $4900/mo in income taxes in Illinois. Income taxes really aren't bad in Illinois anyway - there's really only a handful of states like Tennessee, Texas, Florida, etc with 0% that are lower. Especially at most low 6 figure incomes even South Carolina, Arkansas, etc are higher than Illinois.

Am not familiar with all the tax change discussions in IL but I believe I had seen the idea of exchanging some property tax for income tax bandied about in the media some years ago (which I believe someone suggested upthread). But I would think a graduated income tax would have offered more room for those kinds of creative changes.

[Steely Dan]

Originally Posted by jtown,man

I found a number of 13,500 for the average miles driven per car in the US. With that number in mind (average of 25 mpg):

A year of driving in Chicago would cost you 210 dollars in gas taxes
A year of driving in Nashville would cost you 145 dollars in gas taxes

we do about half that mileage per year.

and we only have one car for a family of 4.

real cities don't force their citizens to drive everywhere.

but if you wanna move to nashville..... be my guest.

[jtown,man]

Originally Posted by Steely Dan

we do about half that mileage per year.

and we only have one car for a family of 4.

real cities don't force their citizens to drive everywhere.

but if you wanna move to nashville..... be my guest.

I agree with you. I am just talking about averages that normal people drive. Here in Chicago I also do half that milage in a year.

[marothisu]

Originally Posted by jtown,man

These things add up.

They do, but so too do other things outside of taxes remember. For example, if you didn't need a car here and took public transit/biked, walked and took a few ubers a month then you have to weigh the cost of getting a car+insurance+gas in a separate location you move to that requires it. Someone buying even a $26K Honda Accord and financing through a lease or loan for 72 months could easily be spending the same as the difference in income taxes in your example for a car payment+gas+insurance. These things always have to be considered. But again, if they already have a car and don't have to add a new one because of the move, then perhaps it's not even a factor in their move.

Taxes are always one part of the equation, but not 100% of the equation entirely. Each situation is different too. Some people it makes sense to live in Chicago or other parts of Illinois while others it doesn't. For example, career progression and prospects differ per location. There are some industries that frankly will lead to better career progression for people for various locations vs. others. From my industry, it doesn't even make sense to live in a lot of locations (even remotely) these days.

But that's just me - again... every situation is different and I am of the opinion based on my own anecdotes of my friends moving all over the place (no, not from Chicago - just in general from one place to another) that people are really terrible at calculating the entire costs/opportunity costs of these things (i.e. the transportation example above). Somehow people only consider what they'll pay in taxes, most likely because it's fairly simple to calculate. I don't know why but a lot of people don't go beyond that into the actual costs of everything from gas to food and if they have to make a lifestyle change after the move which could lead to other costs (i.e. getting a car if you didn't already have one).

[moorhosj1]

Originally Posted by jtown,man

324,000 Chicago home: 1,778 a month
404,000 Nashville home: 1,798


So you can buy 80,000 dollars more home for essentially the same price in Nashville vs. Chicago. But then we have income taxes:

These things add up.

The same price? did you forget the $16k more you need for the down payment.

This also highlights the potential damaging impact of interest rate hikes in our near future.

[marothisu]

Originally Posted by moorhosj1

The same price? did you forget the $16k more you need for the down payment.

This also highlights the potential damaging impact of interest rate hikes in our near future.

Good point. And even then there's more factors:

1) Yes, it's predicated on 20% down for financial institutions but each lender does allow you to put down less than 20% down in various circumstances. And the terms of that are always different per lender. For example, at the institution my wife has some money in, they didn't even require PMI if you put down more than 15% based on her account status and our credit scores. For where our joint money is (elsewhere) though, they wouldn't allow anything under 20% unless we showed that we have other liquid (or could become liquid) assets outside of our source able funds (even 401ks) that amounted to 18 months of our monthly mortgage+insurance+property taxes. And that limit was 15% so they wouldn't allow it under 15% - we would have gotten denied for our mortgage if we tried to go below 15% down.

For properties under a certain value various programs may allow pretty low down payments like 1.7%, 3%, 5%, etc. But then you'd have to pay monthly PMI which increases your costs for awhile anyway. And if you have a jumbo loan then a lot of lenders won't even allow anything below 20% and the ones who do maybe the minimum is still 15%. And most likely you'll be bidding against people with actual money which brings me to this next point...

2) In a hot market with multiple bidders on a property, a seller may actually pick a bid which puts even more money down. So you might have saved the ~$81K for a down payment but someone else may have committed to putting down $120K and the seller may go with them instead of you only because that buyer is putting more money down and you'll lose anyway despite having that money. Other factors obviously but it is something that sellers do factor in. Oh and don't forget about earnest money down. Being able to pay some $$ right away instead of waiting until closing is attractive to sellers/agents too.

I don't know, anyone who just thinks they're going to walk into a hot market even with the ability to pay 20% down and automatically win a bid has probably never purchased property before let alone in a hot market where they might be up against multiple other bidders for the same property. There's a reason why property values increase in various areas. It's supply and demand - and you get a few people bidding on a property, and an area has enough of that going on then voila - prices are going up.

The fact that people don't even see the current issues in some places right now as a supply/demand type of issue and are still blocking new housing development blows my mind.

[OrdoSeclorum]

Originally Posted by jtown,man

Great point. "Urban" Nashville will cost me more than actual urban Chicago. No way around that. However, buying a typical suburban home in the Nashville metro vs Chicago's probably isn't too different. And while you might pay slightly more for homes in Nashville, your RE taxes will be drastically lower and you have no income taxes.


I will note that buying a home that is more expensive will also sell for a higher price. A high property tax will never be made up in a sale. It simply is throwing money away. A more expensive home makes up for the added monthly cost by selling for more when you put it on the market, a homeowner with high property taxes isn't rewarded for their monthly contributions come selling time.


Anyways, the cost of housing (certainly "urban") may be more in Nashville. But there is no income tax, lower property taxes, lower gas taxes, car registration/taxes, and lower sales tax, all which add up to savings at the end of the day.


Example:

A family makes 100,000 and lives in a median-priced home for their respective city:

Nashville Home: 404,000
Chicago Home : 324,000

So roughly 80,000 dollars cheaper in Chicago.


According to Zillow, a mortgage with taxes (not insurance and I kept the standard downpayment settings etc.) would be:

324,000 Chicago home: 1,778 a month
404,000 Nashville home: 1,798


So you can buy 80,000 dollars more home for essentially the same price in Nashville vs. Chicago. But then we have income taxes:


Chicago family: 4,900
Nashville family: 0

I found a number of 13,500 for the average miles driven per car in the US. With that number in mind (average of 25 mpg):

A year of driving in Chicago would cost you 210 dollars in gas taxes
A year of driving in Nashville would cost you 145 dollars in gas taxes


So between a home, gas, and income, we end up with 4,500 more dollars for a family making 100,000 dollars, living in the median-priced home, and driving the US average.


Renewing your car tag is 29 dollars in Tennessee, its something like 150 in Illinois.


These things add up.

The numbers you've list show the Chicago family spending about $860 a month more than the Nashville family, assuming they went ahead and sprung for the $400,000 house and paid more taxes.

That's not nothing! Two working adults would each need to earn about $5,160 more per year in Chicago to make up for it. If you cared about nothing else than dollars and cents, there would need to be more or better job opportunities in Chicago to justify living here versus Nashville.

...unless that family owned one car in Chicago and needed two in Nashville. That single metric flips the cost benefit in Chicago's favor. Cars are extremely expensive!

Personally, I like visiting Nashville. And I really like the Smokey Mountains as a place for recreation. But it would take a LOT more than a few thousand dollars a year for me to give Chicago's airport connectivity and abundance of cultural activity (completely ignoring career prospects.) And in Chicago I say "hi" to my mailman when I'm walking my dog around 5:00. I walk to buy coffee in the morning or a bottle of wine for dinner, as needed, and don't need to get into a 6000 pound machine to do it. I walk to my dentist. In the summer, kids fill the sidewalk to buy stuff at the corner store when school gets out.

Even if I would save some money in Nashville or Northwest Indiana, there's a tremendous cost to replacing a walkable lifestyle with one that largely consists of trips from parking lot to parking lot. I have a couple friends who moved to the Detroit burbs for specifically this kind of financial calculation and are looking to move back to Chicago. They thought they would save some money, but both have ended up earning substantially less in Detroit than they expected and they hate that their life has been reduced to endless trips to Walmart or Target.

[jtown,man]

Originally Posted by OrdoSeclorum

The numbers you've list show the Chicago family spending about $860 a month more than the Nashville family, assuming they went ahead and sprung for the $400,000 house and paid more taxes.

That's not nothing! Two working adults would each need to earn about $5,160 more per year in Chicago to make up for it. If you cared about nothing else than dollars and cents, there would need to be more or better job opportunities in Chicago to justify living here versus Nashville.

...unless that family owned one car in Chicago and needed two in Nashville. That single metric flips the cost benefit in Chicago's favor. Cars are extremely expensive!

Personally, I like visiting Nashville. And I really like the Smokey Mountains as a place for recreation. But it would take a LOT more than a few thousand dollars a year for me to give Chicago's airport connectivity and abundance of cultural activity (completely ignoring career prospects.) And in Chicago I say "hi" to my mailman when I'm walking my dog around 5:00. I walk to buy coffee in the morning or a bottle of wine for dinner, as needed, and don't need to get into a 6000 pound machine to do it. I walk to my dentist. In the summer, kids fill the sidewalk to buy stuff at the corner store when school gets out.

Even if I would save some money in Nashville or Northwest Indiana, there's a tremendous cost to replacing a walkable lifestyle with one that largely consists of trips from parking lot to parking lot. I have a couple friends who moved to the Detroit burbs for specifically this kind of financial calculation and are looking to move back to Chicago. They thought they would save some money, but both have ended up earning substantially less in Detroit than they expected and they hate that their life has been reduced to endless trips to Walmart or Target.

Absolutely. As Marothisu mentioned, everyone's situation is different. Incomes change over time, people have kids, cars are needed (or not), cars a paid off, homes are paid off, kids are off to college...etc. etc.


Hell, my situation is quite different today than it was when I first moved to Chicago. My wants and needs have changed over time also.