Planning on buying a condo in the city (Chicago, Brooklyn: section 8, 2014)

[logiclife]

Originally Posted by jdiddy

What is strange about it? That's basically what the South Loop is?

isnt it like cannibalizing, for a lack of a better word?

[logiclife]

Originally Posted by ToriaT

It makes little sense to buy and rent out a condo anywhere in Chicagoland unless you own it already for another reason and can't sell it. There are probably thousands of people doing this already. When you figure in the HOA fees it does not really make a whole lot of sense plus when you add on the fact that many condo boards prohibit rental units or severely restrict them, only allowing rentals for hardships, and then they watch over them like a hawk, its a bad idea. Condos that allow rentals to come and go freely won't be as desirable anyway.

Agreed. I wont buy a condo unless they let me rent it. I will move in after my kids school is done. I cant afford any condo in the Loop/River North/West loop anyways. :-(

[jdiddy]

Originally Posted by logiclife

isnt it like cannibalizing, for a lack of a better word?

Development isn't zero sum. This new building isn't "cannibalizing" any more than your prospective building was. Please don't buy a place then become the obnoxious NIMBY who thinks the neighborhood should freeze in place the second you buy into it.

[logiclife]

Funny, nope Iam not a NIMBY by any means. I am just thinking in all angles,thats all. But thanks for your insight.

[Genxmom]

For your needs you may want to consider River West, Ukranian Village, Logan Square, or Bucktown areas. Condos are cheaper and tend to be in smaller buildings with less stringent rules regarding rentals and ample supply of stable quality renters.

[JL1585]

Originally Posted by logiclife

Funny, nope Iam not a NIMBY by any means. I am just thinking in all angles,thats all. But thanks for your insight.

I own in the building you are talking about. I've been a bit worried by the new apartment building coming in, but not really. They will be a huge apartment complex and priced higher than you will likely be looking to get. Im currently renting to my tenants and doing okay. I am at a bit of a loss, but got in the building early so I'm mostly counting on the equity Im gaining from owning to be the sweet spot. If you have questions you can send me a private message. Also the developers of both building are the same. They planned all of this, for the apartments to be better than the condos, and for the apartments (since they are the stakeholders) to steal the nice views and provide amenities. Kind of a scam. But whatever. If you see this as a good long term play like I did when I bought then do it. The location is unbeatable.

[logiclife]

Originally Posted by JL1585

I own in the building you are talking about. I've been a bit worried by the new apartment building coming in, but not really. They will be a huge apartment complex and priced higher than you will likely be looking to get. Im currently renting to my tenants and doing okay. I am at a bit of a loss, but got in the building early so I'm mostly counting on the equity Im gaining from owning to be the sweet spot. If you have questions you can send me a private message. Also the developers of both building are the same. They planned all of this, for the apartments to be better than the condos, and for the apartments (since they are the stakeholders) to steal the nice views and provide amenities. Kind of a scam. But whatever. If you see this as a good long term play like I did when I bought then do it. The location is unbeatable.

Thanks so much for your note. Yes, I felt the same that they were disingenuous in NOT starting to build the apartment building until they have probably sold more than half of the condos before they started building the apartments. Also, they have been selling parking spots for around $40K. whoa!!. I sincerely hope that you would build equity and it works out for you.

Either way we decided not to buy a condo in the city at this point. I want to thank EVERYONE who took time to give an advice to a stranger in need, it meant a lot to me. I do appreciate it. Go Chicagoans.!! :-)

[Chompy Omega]

New condos sort of do cannibalize the market in a way. They make the older condos nearby worth less.

I do think the OP has a valid concern. I have friends who bought into the condozilla boom of the late 1990s and their condo values have remained flat, and in one case even lost money.

OTOH, the value of SFHs in the same neighborhoods have gone through the roof.

[chet everett]

Originally Posted by Chompy Omega

New condos sort of do cannibalize the market in a way. They make the older condos nearby worth less.

I do think the OP has a valid concern. I have friends who bought into the condozilla boom of the late 1990s and their condo values have remained flat, and in one case even lost money.

OTOH, the value of SFHs in the same neighborhoods have gone through the roof.

There is very strong preference among buyers in the region for single family detached homes over townhomes, and townhomes over condos, and newer, more amenity loaded condos over older units. Unless really has a VERY unique unit with fantastic views there is every reason to worry about flat / declining values as more desirable units come on-line...

[Chicago60614]

Originally Posted by chet everett

... light it on fire. It is faster and more fun.

If you haven't heard there several THOUSAND units on the drawing boards for the South Loop, a massive increase in property taxes, and combined with the stagnation in the overall economic picture -- should result in massive downward pressure on rents.

Maybe you're gonna use AirBnB to try to find adventurous tourists? Well there are few new hotels projects scheduled to come online soon as well...

There are ways to make money with rental properties in the region, but with inflated prices, high taxes, unpredictable HOA fees and changes in supply a condo is NOT the right way to go now...

Just to point out as someone who has worked in the commercial and residential real estate market downtown for 15 years now, the reason most of this supply is here is because there IS the demand for it. It certainly will take a pause and there will be a leveling off of rents and construction of apartments (at which time condos will probably come back), but I don't see a crashing of rents.

The regional economy is stagnant, but downtown Chicago's isn't. There have been over 80,000 jobs created downtown in the past 5 years, including around 16,000 last year alone. Look at the dozens of corporations and headquarters who have been moving downtown from the suburbs or elsewhere over the past 5 years. More keep jumping on the bandwagon, with McDonalds now rumbling about opening an office downtown.

Housing Units Built Downtown:
1991-1999: 4,000
2000-2008: 49,000
2009-2015: 18,000

Something changed around the year 2000 and housing really started to take off in the downtown area. This hasn't stopped. It's been in flux and dynamics and growth rates have changed, but there's very little evidence that the downtown area will see a dramatic and long-term dropoff in rents or construction.

Even with tens of thousands of condos and apartments coming online over the past 10-15 years, residential vacancy in downtown Chicago is around 4%, historically quite low. Retail vacancy is the lowest in 14 years. Office vacancy is right around historical averages.

I'm not saying it's a good idea to buy to rent at the moment, but the regions obvious ills and issues aren't exactly downtown Chicago's ills...