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Renting vs. Buying in Chicago

Renting? Here’s why you should consider buying in today’s hot real estate market.

It’s no shock that the rental market in major metropolitan areas across the U.S. have been on the rise the last several years as the bullish economy remains strong.

Chicago Real Estate is on fire, once again

Recently in Chicago, the West Loop overtook River North as having the highest density of renters in the Midwest, with a median rent of $2,700 in July 2018 https://www.rentcafe.com/blog/apartment-search-2/expensive-zip-code-2018/. While this may still be a relative bargain compared to cities like New York and San Francisco, it’s a tough pill to swallow long-term for the majority millennial tenants.  In fact, the most expensive eight rental zip codes in the Midwest are all in Chicago, with downtown Minneapolis filing in at ninth place.

Time for millennials to stake their claim

Millennials are constantly getting a bad wrap in the media. Too lazy, non-committal, entitled, without appreciation, deluded dreamers with no work ethic. While this might seem harsh, the truth is unless millennials invest more in the economy (think real estate) a shift in perspective may be slow to come. Speaking of millennials, Chicago’s West Loop boasts the highest concentration of millennial residents in the nation, with nearly 75% of consumers being born between 1983 and 2000.  Yes, the term “consumer” is applicable even in Real Estate.

Millennials have statistically been long term renters in urban areas. Chicago has about 50 high-rises in various stages of construction and new buildings are ready for delivery every few weeks. Even with this influx of new and sparkling rental inventory for consumers, it’s important to revisit the benefits of home ownership, in lieu of renting. Here’s a refresher on the many advantages of owning your own abode, in case your parents haven’t reminded you lately.

Low interest rates and property prices

Despite being a little higher than last year, interest rates are still historically very low, and at a great rate to lock in a long term loan payment at.

Owning a home is a forced savings account

Every month your mortgage payment isn’t JUST paying off the interest (duh). You’re paying down your loan principle, which is equivalent to “saving” money every month by building equity in your home.

Price appreciation benefits

Historically, property prices have remained above inflation although they are subject to the whim and fluctuations of the economy. However, both stocks and real estate typically display gradual appreciation over time. The big difference between the two is the increase in home value is compounded by your mortgage, as homebuyers present just a fraction of their total purchase price as a down payment. The remainder of the balance is a bank loan and any price appreciation is multiplied by this nifty leverage.

Homeowners can take tax deductions

One permissible tax benefit of homeownership is the ability to deduct mortgage interest payments, but the perks don’t stop there. Homeowners can also deduct eligible expenses (certain energy-efficient improvements, for example) and most importantly roll the profits of a long-term real estate sale into another property purchase via a 1031 exchange, without paying any tax on the profit.

When you own you can truly individualize your space

Whether you need to tear down a wall, add barn doors to your bedroom, or re-do the bathroom to satisfy your French Country style, owning the space you live in means you have the ability to truly customize your space to your own style and preferences, without worrying about losing your security deposit to a cranky landlord.

Looking to buy or sell or have a real estate question? Drop us a line here.

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SUMMER MARKET

The Chicago summer housing market is in full swing; listings are selling quickly and there remains fairly low inventory for any buyers searching for a new home. The statewide median price in May was $215,000, up 3.4% from 12 months ago.  Median prices showed a healthy, sustainable uptick in May, while the time it took to sell a home in averaged 49 days, down from 52 days a year ago. Available housing inventory totaled 55,126 homes for sale, a 7.6% decline from 12 months ago. 
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MULTI-UNITS AS A SMART INVESTMENT TOOL

Every investment instrument needs to be examined by the old trading adage that I first learned in the Chicago Trading Pits – “Risk versus Reward”.  On this metric, owning multi-unit buildings as an investment tool, stacks up against anything.  This article will explore the pros (reward) versus the cons (risk) of multi-units on a larger macro level; before delving further into the micro, where I’ll explain some of the reasons for my excitement towards a specific area of Chicago.
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SPRING MARKET

 

Although some parts of the country are still getting snow, in the land of real estate, things are thawing fast, according to a preliminary analysis of syndicated website data for Q1 2018.

Coming out of their winter doldrums, listing prices have begun their traditional spring climb and quickly reclaimed historical highs, hitting a median which is hovering around last summer’s National peak (275K)
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CHICAGO IS #1

New York might be the City most Americans envision when conjuring up images of a lovely skyscrapers and urban architecture, but Chicago is where the foundation for the modern American skyline came from and we love it for this reason.
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