To buy a condo, or to buy a house? That is the question.
Perhaps you never considered buying a condo–until your best friend did. Or maybe you’ve noticed all the condo construction in Chicago recently and their increased popularity and are wondering if it’s the right fit for you.
So is it the right fit for you? Here are some factors to consider making the decision for yourself:
Many people have heard that condo lovers boast of not needing to mow the lawn or pick up a snow shovel–and that may have been the extent of the condo lifestyle 20 years ago–but now it is more than that.
Many condos have amenities like a community pool or hot tub, gym, rec room, movie theater room, private internet server, rooftop lounges, basketball courts, tennis courts, shuffleboard courts, and common areas for socializing.
Some of these spaces have services and programs, like pilates classes or onsite daycare.
If you will use amenities and services regularly (and you are currently paying for them separately), this could potentially save a lot of money in your monthly budget.
You can also look at moving to a condo as gaining back valuable time. If you tally up the time you spend on yard work and other routine homeowner tasks, you may realize it is worthwhile to pay the condo fees and let someone else take care of these chores so you can have time to do things you actually want to do.
Do you prefer resort hotels to stand alone rental properties?
Do you prefer coworking spaces over a private office?
Do you prefer public transportation instead of driving your own car?
These questions will help you determine if the condo life is for you because condos offer that social interaction the way many shared spaces do. Houses offer more privacy.
The final facet of the decision to consider is financial.
As a purely long-term financial investment, the conventional wisdom had always favored single family homes over condos–until recently. The historical trend of houses appreciating faster than condos has been put into question as recent data makes it unclear whether houses have continued to outpace condos during this decade.
Appreciation can be a very tricky matter though. The average single family home in 2008 (according to zillow.com) was 179k while this July, it was 217k. Houses bottomed out during the last ten years in early 2012 at 148k. The same calculator for condos values them at 205k in 2008, 229k in July 2018, and bottoming out at 150k in early 2012. Based on this data (very limited data), single-family homes have increased about 20 percent in value over the last ten years while condos have only increased about half of that. Yet, if we just go back to 2012, condos have appreciated by over 50% since then while houses have appreciated under 50%. In short, it is difficult to measure appreciation because it depends on the time period, inflation, geography, and other factors.
Further complications arise from arguments about property values–not everyone agrees what a property is worth. Valuations of condos can be especially tricky. There are a number of factors to consider, including percentage of ownership.
Typically, most people don’t buy homes purely as an investment vehicle but it is part of considering any large purchase.
Additionally complicating condos in financial planning are the association fees, which vary. Also, there is usually no way to ensure your fees won’t increase. As of late, association fee increases are outpacing appreciation and inflation. At the same time, one might incur large, unexpected expenses in maintaining a home and be forced to absorb the expenses completely on their own rather than being able to share the burden with other members of the home owners association as a condo owner would. Regardless of whether you are purchasing a home or a condo, building some kind of savings/maintenance money into your budget is necessary.
The Good News
The good news is both condos and houses are generally doing quite well across the board in Chicago. Zillow estimates that, on average, homes in Chicago will increase in value of a thousand dollars a month through July 2019! Furthermore, houses in Chicago are selling faster and faster these days, usually on the market less than 50 days. Condos are not staying on the market long either, with demand outweighing supply as many Chicagoans are buying condos as second units to rent out.
Whether buying a condo or a house, Chicago is ranked the best metro area to save for a down payment. So there is a bunch of good news regarding both houses and condos in the Chicago market. The question simply is: are you saving that down payment for a house or a condo?
Robert Frost famously wrote, “good fences make good neighbors”– but he didn’t live in a condo. If he had, he might have said, “good amenities make good neighbors.” The question of buying a condo comes down to where you are in life: what you need, what you want, and what kind of financial return you seek from your home (if any). A condo isn’t right for everyone, but it’s the right choice for many people and worth investigating for yourself.
To learn more, come in and talk with us and learn more about our condo loans: https://www.oakbank.com/business-banking/business-lending/#condo-association-loans