With residential resale prices in Chicago rising at a double-digit clip, experts say it won’t be long before the Millennial generation will be lured into trading that rental apartment for a condominium or home.
“Demand is so high right now that buyers are willing to pay the prices that result from the decreased number of homes and condos on the market this spring,” noted Jim Kinney, president of the Illinois Association of Realtors (IAR) and vice president for luxury sales at Baird & Warner in Chicago.
Chicago home sales rose 5.8 percent to 2,386 units in April at a median price of $275,000, up 10 percent over the same month a year ago when median price was $250,000, reported the IAR.
However, condos in the city did even better. Median resale prices increased 11.3 percent to $326,000 in April compared with the same month a year ago. A total of 1,524 condo units sold in Chicago during April, 4.2 percent better than April of 2014.
Some 9,155 single-family home and condo sales were posted in the nine-county Chicago area in April, an increase of 7.4 percent from April a year ago. The median price of homes and condos rose 10.5 percent to $210,000 from $190,000 last April.
Price appreciation is a major attraction for purchasers, but before Millennials dive head first into condo ownership, here are some first-timer buying tips from the pages of “Escaping Condo Jail,” a new book co-authored by Chicago Realtor Sara E. Benson and this writer.
• Buying a condominium is a “life event.” It’s a lot like getting married. You and your abode are likely going to be together for several years. You are making a 30-year commitment.
And a condo—just like a big wedding—costs a lot of money. Instead of paying for a wedding dress, a tuxedo, photographers, the reception dinner and the honeymoon, you’ll be paying a mortgage for years to cover those skyline views, roof-top swimming pool, granite kitchen, stainless-steel appliances, spa bathrooms, hardwood floors.
• You may be smitten by your future wife or husband’s physical attributes. But when shopping for your dream condo, never fall in love with an air cube—the spacious floor plan, a developer’s fancy furnished model, or a lavishly staged and decorated resale condo. Buying is all about the financial health of the overall condo association.
• You wouldn’t get married without some idea of your future spouse’s job, earning potential and financial stability. So, always verify the association’s bank balances.
• Obtain and review all the condo documents before you sign on the dotted line. The documents include the condo declaration, or covenants, bylaws, rules and regulations. What if you are a dog lover, and pets are not allowed?
• Ask for the current and previous year’s budget, the most recent 12 months of board minutes and the reserve study outlining maintenance and repair of the common elements. This could alert you to future special assessments.
• It is always advisable that a newly married couple obtain budgeting and investment advice from their financial advisor and accountant.
However, condo buyers need a “power team” to help consummate the deal. First is hiring an experienced exclusive buyer broker—who will represent your interests alone—and not the seller’s or the builder’s interests.
• Your team also should include a veteran real estate attorney to review the documents, check occupancy ratios and research possible lawsuits, a sharp-eyed home inspector to spot defects and environmental issues, an established mortgage provider to lend you money, an experienced real estate appraiser to review resale values in the neighborhood and a qualified tax accountant to make sure you obtain all possible deductions.
• The “No Dirty Laundry Rule.” Never agree to pay the seller’s special assessment because this money will come directly out of your down payment nest egg. Most lenders will not include a special assessment in a mortgage. Would you be willing to pay your ex-spouse’s alimony?
Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. For more information, visit www.escapingcondojail.com.