The Perfect Storm: Rising property values, inflation, and policy decisions compound affordability crisis in Lake County

Lake County finds itself in an affordability crisis that seems to be intensifying by the month.

From soaring property values to inflation and policy decisions on gas taxes and building codes, lower-income residents are facing a multi-pronged attack on their wallets. The financial implications are far-reaching, especially as we observe the widening disparity in property tax burden between affluent and lower-income neighborhoods.

Data sourced by Midwest Real Estate Data shows a significant divergence in home value appreciation rates. While affluent townships like Cuba, Libertyville and Shields have seen average home sales prices increase by 31.8%, 32% and 33% since January 2020, respectively, lower-income townships have seen even more dramatic spikes. Lake Villa is up by 40%, Grant by 41%, Wauconda by 41.8%, Waukegan by 45.1% and Zion by 46.5%.

This unequal increase in property values means the townships with the lower valued, yet quickly appreciating, homes will be paying an increasing proportion of the overall property tax burden in Lake County.

Amid high inflation, many taxing districts in Lake County have been maximizing the increases they are allowed under Illinois' Property Tax Extension Limitation Law (PTELL). In essence, this makes an already inequitable system worse, as lower-income areas bear a higher percentage of the property tax burden amid their aggressive market value increases.

On top of these challenges, Lake County instituted a 4-cents-per-gallon gas tax in 2020 and recently passed new building codes that require sprinkler systems in all new construction in unincorporated areas. These policies add regressive increases in the cost of living while also adding tens of thousands of dollars to the cost of new housing, ongoing maintenance and testing expenses for residents who are already financially stretched.

According to current rates, a home in Zion pays about 5% of its fair market value in property taxes, whereas a home in Lake Forest is taxed at just 1.3% of its value. The numbers illuminate a glaring problem: those who can least afford it are shouldering an increasing proportion of the overall property tax burden. This effect will be felt in this year's quadrennial tax reassessment process and continue to get worse in future years as the assessments follow a three-year trailing average and the highest appreciations have yet to be factored in.

Lake County residents find themselves paying into a complex and overlapping set of taxing bodies that often provide duplicative services. Additionally, there are 51 separate school districts in the county, creating further administrative costs. Across the country, many counties rely on countywide schools, park districts, libraries, etc., to provide services to residents, whereas Lake County has a patchwork of overlapping districts serving multiple broken-up municipalities and townships.

A single neighborhood in Round Lake Beach, Country Walk, for example, is wholly encompassed by one municipality yet is dissected by two different townships, three different elementary schools and four high school districts. In fact, there are duplex homes where one half of the home attends one school district, while the other half attends a completely different school district.

Streamlining could create efficiencies, potentially reducing the overall tax burden.

Examining the benefits of merging some of the 51 separate school districts could help distribute educational costs more equitably.

Open detailed government budgets for public scrutiny and solicited resident input on key decisions through a series of town halls with public discussion and discourse can help facilitate good ideas not beholden to political interests.

A comprehensive analysis could gauge the cumulative effects of new taxes and regulations on affordability both today and moving forward into the future.

Lake County is experiencing a perfect storm of rising property values, inflation and policy decisions that disproportionately affect its lower-income residents. As we look toward the future, proactive and equitable solutions must be put in place to ensure that Lake County remains a viable home for all its residents well into retirement.

• Dick Barr is a certified residential specialist and managing broker at The Dick Barr Group @ Village Realty in Lindenhurst.