Last week I received a very interesting inquiry from a gentleman named Dave trying to decide between 2 different Lakeview condos. Dave thinks chances are good that he and his fiancee will be moving in 5 years and is wondering which condo will have the better resale value or if they should just rent. Without revealing too much about his situation here are descriptions of the 2 condos for sale.
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.