This question is particularly relevant for first time condo buyers in Chicago. If you are a first time buyer, it’s important to consider the benefits of renting before buying. This will help you understand the expenses involved and you can save as much money as possible before you decide to purchase your first condo. Renting can be a smart way to live in Chicago given the volatile housing market in recent years.
Your decision should be based on many factors, particularly how quickly rental prices in Chicago rise compared to average condo sales. The New York Times has a helpful tool that can help you with this calculation. You can also use the mortgage rate calculator on this website to help with your decision by providing basic information, such as monthly rent, condo price, down payment percentage, mortgage rate percentage and annual property tax percentage.
Now that you have calculated the price-to-rent ratio, comparing Chicago’s median condo price with the median annual rent, it’s time to decide whether buying a Chicago condo is a sound investment for you right now. For arguments sake, assume you will sell your property in three years. Will you be able to break even or earn a profit if you were to sell, based on the price-rent ratio? If not, you may want to continue renting until the numbers make sense.
While buying a condominium is likely to be the largest investment you’ll ever make in your life, there are more factors to consider than the financials. First and perhaps most importantly, you want to find a neighborhood you like and could envision living in for many years. Secondly, it’s important to check the recent sales prices of other condos in that neighborhood and look for trends. If you notice declining home values in the area, you may want to consider looking elsewhere, or continue renting for now. Lastly, don’t overlook the great tax-breaks that come with condo ownership.
@Properties, Tricia Fox Group
Jean Ward, Broker
212 E Ohio St, 2nd Floor
Chicago, IL 60611