Lakeview condos (before the snow melted)
One condo is a 2 bedroom 2 bath with high end finishes on a nice block, but with limited storage. It also has a private staircase to a roof deck.
The other condo is a 3 bedroom 2 1/2 bath with family room by Wrigley Field. It’s a duplex with bedrooms on the lower level. The asking price is $60K more than the 2 bedroom.
My guess at the state of the Lakeview real estate market 5 years from now probably isn’t much better than anyone else’s, but here are my thoughts:
Dave, if your timeline were 3 years or less, I would advise you to rent. I do expect Lakeview home values to be higher 5 years from now. A chat with your accountant will give you an idea of the tax benefits of homeownership you could see over the next 5 years.
There will always be more people who can afford the 2 bedroom than the 3 bedroom. So there will be a bigger pool of buyers for the 2 bedroom. However, since the 2 bedroom sounds like it’s near the top of the 2 bedroom market in Lakeview and I expect the turnaround for Chicago’s real estate market to go slow, many of those buyers 5 years from now may not be willing/able to pay a premium for the high end finishes and roof deck.
The location for the 3 bedroom is a draw for some, but a drawback for more. This year I’ve already had 2 separate clients who were interested in Lakeview, but very clear that they didn’t want to be near Wrigley. However, last year I helped a couple buy a 4 bedroom duplex condo just a block from Wrigley and they like the location. The area just west of Wrigley is in the Blaine Elementary School District which is a draw for families with children.
Some buyers won’t like that all the bedrooms are in the lower level of the 3 bedroom, but if they have a growing family they’ll pick the 3 bedroom over the 2 bedroom. Lack of storage is a common reason buyers pass on homes. Some buyers also won’t like that there are a few flights of stairs to climb to get to the 2 bedroom.
With so many pluses and minuses for both homes, but none of them too significant, my gut feel is that neither will significantly outperform the other in appreciation. I’d focus on deciding where you and your fiancee will be happier not just today, but a few years from now.
Thank you for an excellent question to ponder, Dave! I hope I at least gave you something new to consider. If anyone else would like to share their 2 cents with Dave, feel free to comment.
ABOUT THE AUTHOR
Fran Bailey shows, previews and tracks downtown Chicago homes for sale giving her the insights needed to help her clients negotiate the best price and terms. Fran has been quoted in numerous Chicago and national publications. To schedule showings of listings regardless of broker or to contact Fran email her at fran.bailey@bairdwarner.com or call 773.793.4516. Learn More
Fran Bailey, Realtor
{ 3 comments… read them below or add one }
Fiancee? Get the 3 bedroom. You’re gonna need it.
One thing I would consider is the cost of each condo as compared to how much I might price it in 5 years and also how much I would price it for if, for some unexpected reason, I had to sell it sooner.
Bare with my algebra:
Let CondoB = CondoA + $60,000 and assume a conservative increase in the real estate market over the next 5 years, you’re basically asking how much of the 60K can you recover if you go with the bigger home. [We can assume that if you priced Condo B = Condo A, you could attract buyers from the pool of CondoA buyers.] So you’re looking at a value of CondoA + X for resale value of CondoB, where X may or may not be greater than 60K.
In the scenario where you have to sell sooner, let’s assume you might have to price your condo lower than you bought it in order to unload it quickly, so you would be taking a hit not only on the amount of CondoA but the 60K on top of that. So I would say, if there is any reasonable chance that you wouldn’t be in your condo for at least 5 years, it’s probably less financial risk to buy the smaller condo.
Hi Chigal, I get your message.
Hi Michael, It’s nice to hear from you again! You bring up a good points. I agree that if there’s a good chance he won’t be in the home for 5 years, the lower priced condo probably has less financial risk. On the flip side, when the market does turn around (and it will eventually), he should see more dollars of appreciation with the higher priced home.