Is it worth buying in Chicago? (lease, living, versus)

[BRU67]

Originally Posted by chet everett

The reason Kamms and others wisely suggest that condos are probably not the smartest thing for most buyers is that there record of price run-ups and collapses is much worse in Chicago than for single family detached homes. The reasons for this are varied but one big factor is that alderman have so much control over approval of development in their ward that it makes for "roller coaster" -- they hold off on approvals when it suits their campaign needs and then when they get a big fat pile of donations they approve too many projects. This is well documented and causes lots of "whip saw prices" as people rush into an area and then are stuck after overbuilding.

There are enough people that can say "it worked for me" that other dolts follow in their steps but like EVERY investment has to say "past performance is not a prediction of future returns" -- if Vlajos was lucky I am happy for him but the circumstances that probably included a relative shortage of condos when he sold is very different than the situation of today, with a large number of projects coming on line that could depress selling prices.

I would also caution that while Traveler1026 is correct that NYC and Boston are more costly to buy or rent than Chicago both of those cities have dramatically different geographic layout and very different mix of employment. Boston might have had some "industry" prior to the days of electricity but for the past couple of hundred years there has not been any real factory work in that city. Similarly while at one time NYC did have lots of people working to make dresses and other clothing that sort of "industry" has shrunk to almost nothing. In contrast Chicago until rather recently had LOTS of blue collar jobs and even today there are a large number of firms in some sectors like food processing that pay relatively modest wages to folks without the kind of skills to work in higher paying fields. That means that while there are certainly a decent number of good paying jobs in the core of the Loop that have expanded north and west, there are still miles and miles of Chicago that continue to see employers give up on the ridiculous taxes that are demanded of them. That trend is not likely to see office campuses spring up in parts of Chicago that are not convenient via commuter train and frankly Andersonville / Edgewater has EXACTLY the kind of profile that suggest it has too many units available for rental -- there is a decline of over 18% in the year-over-year sales data for 3 br and sharp decline in the rent for such units -- https://www.trulia.com/real_estate/E...market-trends/ Offsetting this is data that shows BUYERS in the 4br category does suggest that "family homes" are much hotter there... Folks who do have kids and are probably trying to remain in Chicago are certainly NOT going to get a better deal in NYC or Boston, but if they get fed up with Chicago's rising taxes and frustratingly uneven public school performance they may very well head into neighboring suburbs -- that is pattern that won't be undone unless CPS, state level elected officials and city politicians stop playing games with schools and get serious about real improvement...

I consider condominiums in a major city as akin to pop up tents. When demand shows its head, it's very easy for developers to rapidly convert many things into condos - apartment buildings, warehouse buildings, or even something brand new and shiny on vacant toxic industrial land. And there will often be public funds gladly tossed their way to assist such an endeavor, as you astutely observe.

This is why I very rarely recommend condos to someone looking to buy property. If you just need an apartment, I recommend that you buy a multi-unit and live in one unit and pay the mortgage with the income from the others. Or just rent. It's not like you're going to realize any profit after paying a full mortgage and all the assessments and selling it for what you bought it for, or even less.

Judging by limited inventory, single digit market times, and sale prices of multi-unit buildings in our wealthy and gentrifying 'hoods, the Chicago real estate market is scorching hot right now. Just try buying something in Pilsen. The stuff doesn't even get to the MLS unless it's a total train wreck. It gets snapped up by speculators before that. And even a total mutt that got passed up in the pocket listing stage will usually get multiple bids from amateurs immediately.

If real estate investors are afraid of Illinois dysfunction and increasing taxes in Chicago, they're sure not showing it.

[Kamms]

Originally Posted by BRU67

I consider condominiums in a major city as akin to pop up tents. When demand shows its head, it's very easy for developers to rapidly convert many things into condos - apartment buildings, warehouse buildings, or even something brand new and shiny on vacant toxic industrial land. And there will often be public funds gladly tossed their way to assist such an endeavor, as you astutely observe.

This is why I very rarely recommend condos to someone looking to buy property. If you just need an apartment, I recommend that you buy a multi-unit and live in one unit and pay the mortgage with the income from the others. Or just rent. It's not like you're going to realize any profit after paying a full mortgage and all the assessments and selling it for what you bought it for, or even less.

Judging by limited inventory, single digit market times, and sale prices of multi-unit buildings in our wealthy and gentrifying 'hoods, the Chicago real estate market is scorching hot right now. Just try buying something in Pilsen. The stuff doesn't even get to the MLS unless it's a total train wreck. It gets snapped up by speculators before that. And even a total mutt that got passed up in the pocket listing stage will usually get multiple bids from amateurs immediately.

If real estate investors are afraid of Illinois dysfunction and increasing taxes in Chicago, they're sure not showing it.

I read last week that a N Lake Shore Drive condo building was converting to rental. Do you know anything about this?

[Vlajos]

Market times are near record lows and sales prices are increasing in the City of Chicago. Sounds like a good real estate market to me.

[FAReastcoast]

Originally Posted by Vlajos

Market times are near record lows and sales prices are increasing in the City of Chicago. Sounds like a good real estate market to me.

If you are a seller that is a good market, maybe not so much as a buyer.

[BRU67]

Originally Posted by Kamms

I read last week that a N Lake Shore Drive condo building was converting to rental. Do you know anything about this?

I really don't no. Sorry. I'm more focused on the near south and west sides. If I had to guess, I would guess that the condo market is saturated there while there is a strong demand for rentals.

The market for multi-unit buildings is very, very strong in the good and emerging neighborhoods, which shows a strong rental market. I don't see why north Lake Shore Drive would be any different. So there is probably market pressure to convert slow selling condominiums into fast renting apartments.

[Kamms]

Originally Posted by BRU67

I really don't no. Sorry. I'm more focused on the near south and west sides. If I had to guess, I would guess that the condo market is saturated there while there is a strong demand for rentals.

The market for multi-unit buildings is very, very strong in the good and emerging neighborhoods, which shows a strong rental market. I don't see why north Lake Shore Drive would be any different. So there is probably market pressure to convert slow selling condominiums into fast renting apartments.

Right, that's what I thought as well. Thanks.

[Vlajos]

Originally Posted by FAReastcoast

If you are a seller that is a good market, maybe not so much as a buyer.

Great point.

[Traveler1026]

Originally Posted by Vlajos

Andersonville is a great neighborhood. Owned two condos there and made money off of both.

That's great to know! We fell in love with the neighborhood during our visit there in June. It really fits all our needs. Will be heading back next month to start condo shopping

[Traveler1026]

Originally Posted by Vlajos

Well if one wants to live in a large US city with a true urban feel there are only so many to choose from.

Yes this^^. What I meant from my post is that I consider Chicago a top tier city, right along with NYC and LA. The location, to me anyways, is irrelevant. I also don't consider Boston or San Francisco top tier cities but both are extremely more expensive than Chi-town. Like a previous poster said, Chicago's real estate prices are more in line with cities like Charlotte or yes even Hartford, which provide nowhere near the amenities and cultural activities that Chicago does.

[Vlajos]

Originally Posted by Traveler1026

That's great to know! We fell in love with the neighborhood during our visit there in June. It really fits all our needs. Will be heading back next month to start condo shopping

Yeah, we loved living there and still go back often. We wanted a single family home and Andersonville was out of our budget at the time so we bought in Lincoln Square. Love where we are too, but still over Andersonville.