TCW - Jobs, Money & Opinion

Rental Rates in Chicago Rise as Condo Sales Stall: Time to Buy?

TCW-1350 image.jpgRenting a luxury apartment in Chicago is getting more expensive as rents are starting to climb as demand increases. It seems that the increase of renters over home buyers has jacked up the rental rates in most areas of Chicago in the luxury rental market prompting renters to reconsider buying instead of renting an apartment.

 

With the first home buyer tax credit of $8,000 expiring earlier this year there has been a drop in sales for condo's which is contributing to the increase of rents especially in luxury high-rise apartments in hot areas like River North and the Gold Coast.  The first time buyer market seems to have taken a breather with the uncertainty of our economy and a concern over what home equity will be in the future, causing to potential buyers pause. The demand for luxury apartments has increased which is driving rental rates higher.

 

I've owned my condo since 2002 and a recent appraisal showed the value of my home has dropped to 30% less than when I purchased it and this is with $75,000 in improvements! It certainly is a buyer market that's not a surprise. Yet, buyers seem to be waiting for housing prices to drop even further which doesn't help our economy grow.



The owners of rental buildings are taking advantage of the increased demand for rental units by raising rental rates. The trend has been to rent rather than buy.  The uncertainty of our economy, lack of jobs and the reality that real estate may not be the best choice for an investment is the reason that more buyers aren't taking advantage of historically low mortgage rates and depressed housing prices.

 

Real estate developer Steve Fifield developed a series of apartment buildings in the Fulton River District, just west of the East Bank Club, adjacent to River North.  This is a hot area to live now with easy access to downtown and the proximity to the River North's abundance of retail shops and restaurants. These K- Station properties in a campus setting sport all the amenities for a luxury lifestyle yet the rental rates are expensive range from $1295- $1685 for a studio apartment and as high as $5133 for a three bedroom apartment! That's a whole lot of money for something that you don't own!

 

Another popular luxury rental building is at 1350-1360 building in the Gold Coast. Situated on Banks and Lakeshore drive it is three blocks from the entrance to Oak Street beach and walking distance to Michigan Avenue.  Sporting stunning views of sunsets over Lake Michigan it has a roof top pool and sun deck with all the amenities found in a luxury high-rise. Rents here are also expensive with studios starting at $1350 and two bedrooms as high as $2500. Less money than in some buildings, but does it make sense to rent when you have the money to buy?


 If I had $10,000 saved and didn't already own a condo, I would be out looking for a condo with security, amenities and parking and skip the rentals.  This really is the best time to buy a condo.  There will never be a better opportunity to purchase with interest rates at historic lows and housing prices deflated to prices seen a decade ago.  My advice is if you have limited debt, cash for a down payment and a job is to buy a condo before it's too late and inflation and interest rates start climbing.

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