The Chicago condo market which has been been lagging behind the Chicago single family home market and the condo markets in almost every other major U.S. city is finally starting to show some life.Year over year the average price was up an impressive 9.5% and market time dropped almost 5%.

The single family home market seems to be slowing slightly. While prices were up 3.5%, the market time was up and closed sales dropped over 10%. 
An improving job market and economy has pushed mortgage rates up some. Rates seem to have settled in higher than they were a few months ago but historically they are still low. 
 
 
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Owning your own home is the American dream and you have decided that 2017 is going to be the year you take the plunge and buy your first home. Since most people do not have the financial resources to just go out and buy a home on a whim, you will need to plan ahead.  It is never too early to begin to get everything in order. Buying a home can be a daunting proposition so we have put together a list of steps to get you started.



Steps for getting ready to buy your first home:

  1. Save money for a down payment. Having enough money for the down payment is the biggest obstacle for many first time buyers. 20% down on a $250,000 home is $50,000. That is a lot of money to have on hand. While 20% is often quoted as the amount you will need that is not always the case. 10% down is enough in many cases and sometimes even 5% will get you into a new home. 
  2. Check your credit score. A bad credit score can prevent  you from getting  a mortgage or at the least push up the interest rate on your loan which will cost you money. Mistakes on your credit history or legitimate credit problems will take time to be cleared up. Raising a low credit score can take months. 
  3. Find a good mortgage broker. A professional mortgage broker can help you in many ways. They will advise you as to the best ways to improve your credit score, inform you as to what your monthly payments will be based on the price of the home you buy and they can help find you any down payment assistance that is offered by the government. 
  4. Obtain a great Realtor. Buying a home is a team effort. There are mortgage brokers, listing brokers, lawyers, home inspectors and buyer’s brokers. For most of us buying a home is the biggest financial decision we will make. A great realtor will not only help you find your dream home they will also coordinate the entire home buying process. They can advise you on the best lawyer, mortgage broker and home inspector for your home-buying needs. They will also work with the mortgage broker and lawyer ensuring that everything moves ahead smoothly.  You can find a realtor by a friend’s recommendation or you can look at online broker reviews.
  5. Set a realistic budget. You need to determine what monthly mortgage payment you can actually afford. Why waste your time looking at homes that you cannot really afford. There are several websites that will give you your ideal home price once you input information like interest rates and monthly payments. You can also talk to a mortgage broker who will advise you as to the size of loan you can get based on your financial situation.
  6. Figure out what is important to you and what you can live without. Unless you have millions to spend you are going to have to make concessions.  You will need to pick a city or neighborhood, house style, size and extras. A real estate broker will not only help you set your priorities, they will be able to tell you if they are realistic.
  7. Get a mortgage preapproval. Most home sellers will not seriously consider an offer without proof that you can get a mortgage. This step should not be done until you are seriously looking. They are only good for a short time 


 
 
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You probably think that early summer is the best time to buy a home because the supply is at its highest. You would be correct about the number of options you will have to choose from. But competition from other buyers will be at its peak. In hot neighborhoods like the West Loop a new place on the market can easily have 10 showings in its first few days on the market and will often receive multiple offers within days. Buyers barely have time to think it over if they find a place they love. Worst case scenario you end up in a bidding war.

Over the winter there will not be many buyers looking. They are busy with the holidays and if they have kids they do not want to move in the middle of a school year.  That is what makes winter the best time to bargain hunt. This January there were 3823 attached homes for sale in Chicago and that had grown to 4673 by June. That is only 22% less homes to choose from in January.  You may think the only thing on the market in January is condos that have been sitting on the market forever and that nothing new will come up. That is not the case. Over 1900 new places were listed this January. Less than in June but still a healthy amount. Sellers are also going to be more anxious to sell. There are less buyers, the market is slow and if they were not in a hurry to sell they would have waited for the spring to list their place.

Tromping around in the cold Chicago weather may not be appealing but if you are willing to do it you may just find your dream home at a bargain price. 


 
 
There are a lot of obvious things that will affect the value of a condo. Things like: the number of bedrooms, neighborhood, condition, etc. These are all obvious factors that all buyers will consider. There are some factors you may not have considered that can have an impact on the sale price of your condo.

1. How close you are to public transportation- There has been a steady and fairly large drop in the number of people under the age of 40 who have a driver’s license. When looking for housing they want to be close enough to public transportation to walk or bike to it in less than 15 minutes.  

2. The distance to the nearest trendy grocery store- Tied in with the lack of driver’s licenses is the fact that many younger buyers want to be able to walk to a grocery store. Not just any grocery store however, they want to be close to Trader Joes or Whole Foods. A Zillow study found homes near a new Trader Joes went up in value 10% more than other similar homes.

3. Pet policy- You may think, I own the condo so I can have a dog or cat if I want. Not so fast. Many building has instituted pet policies. A few ban all pets, some limit you to 1 pet and the new trend is to limit the size or breads of a dog. We have seen size limits as low as 15 lbs. Over 50% of U.S. households have a pet. A strict building pet policy can eliminate half of potential buyers.

4. Renter’s policy- Too many renters can make it hard for buyers to get a loan and many buyers will see it as a sign of problems with the building. Too strict rules against renters will scare away some young buyers. Millennials are willing to move and are often transferred to different cities. They do not want to be forced to sell their condo because they are not allowed to rent it. We have seen interested buyers walk away from a condo when they found out they would not be able to rent it if they needed to.

5. Cable company- Condo buildings get their cable from one company and which company is decided by the condo board. You may not care but we have done very few showings to buyers under the age of 40 where they did not ask whether the building has Comcast or RCN. As a side note most are hoping to hear Comcast

Even having a person's name in huge letters on the outside of your building can have an impact on condo values.  

                                         

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Douglas Boehm is a licensed Illinois real estate broker in the Chicago office of City Point Realty.
Douglas Boehm's profile on Zillow.
mailto:doug@citypointrealty.com 

 
 
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The 680 N Lake Shore Drive building has seen an uptick in sales in 2016. There have been 16 units sold or pending so far this year while 15 places sold in all of 2015. The estimated average price per sq. ft. based on MLS numbers has gone from $233 per sq. ft. in 2015 to $266 in 2016.  The average asking price is currently an optimistic $315.

The near north side, unfortunately they lump the Gold Coast, Streeterville and River North all into one neighborhood, has seen the median sale price of condos go up 4.1% year to date. While sales have declined .4% and market time has gone up from 85 days to 91. The inventory of homes for sale has dropped 13.6% If mortgage rates remain this low and the economy does not stall we should see some upward pressure on prices.

Available Units

Sold Units in 2016

These number are based on the data available on the MLS system. Some foreclosures and other sales may not be represented. 
Please feel free to contact us if you would like a free price evaluation for your home, would like a price analysis for your building or if you just have a real estate question.  



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Douglas Boehm
Real Estate Broker
City Point Realty
312-623-0016
doug@citypointrealty.com
Doug Boehm on Zillow

 
 
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The Chicago housing market continues to be plagued by a lack of inventory. The lack of places for sale, the number of condos and town homes for sale is down 16% from last year, is limiting the choices of buyers.  Buyers will need to adjust their searches. The odds of finding that perfect place are slim so you will need to make some compromises. It also means that you will have to be willing to move quickly when you find the home you want. Market time has dropped from 65 to 58 days. Sellers have the upper hand in most negotiations. This is true for the city as a whole, but Chicago is a city of neighborhoods and each has its own housing market. Some neighborhoods like the West Loop and Logan Square are so hot that buyers have no power and have to jump as soon as a place hits the market. While in others the buyer has a chance to look around. You will either need to do your homework or better yet find a good real estate broker who understands the state of each neighborhood’s housing market.

Inside the Numbers

The number that continues to stand out is the lack of inventory. Attached home inventory is down almost 16% year over year. Single family homes available for sale are also down but not nearly as much, 10.8%. This lack of condos for sale is finally starting to push up prices. The average price increase was a seemingly sustainable 4.6%. If interest rates remain this low and the job market stays healthy prices will probably continue to go up. 


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The July Chicago attached housing numbers.
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The July Chicago detached housing numbers.
 
 
The June 2016 Chicago housing numbers are out and there are a few surprises. The year over year number of attached homes for sale has dropped 18.4%. Interest rates also continue to be very low. The lack of supply and low interest rates have not translated into higher prices. The number of homes sold increased a bit over last year but there has been a slow down from the busy market of earlier this year. 


Detached single family homes however have seen a nice price increase of around 10%. Market time has also dropped 8 days. Demand for single family homes seems to be picking up.
 
 
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While most of what goes into buying a condo is the same as what goes into buying a single family home there are some important differences.

Assessments.   All condominiums, whether they are in large high-rises with 24-hour doorman or in a small 3-unit building with virtually no amenities, have assessments. Assessments pay for employee salaries, building maintenance and condo association management fees. They should be added to your mortgage and taxes payments when you determine your monthly payments. In some buildings they can be almost as much as your mortgage payment.  

Health of the condo association. The last thing you want to do is purchase a home in a poorly run building. A building with little or no financial reserves and/or poor maintenance can end up costing you thousands in special assessments. Homeowners that are unaware of the health of their building may be forced to pay money that they cannot afford.  Special assessments will also hamper the sale of your home as well.

The building. When you buy a house you own the entire building and the land. When you buy a condo you own a percentage of the building and no land.

Maintenance and repairs. Home ownership means that you are responsible for the leaky roof, the moldy basement or the cracked driveway.  When you own a condo you are just responsible for the inside of your unit. The appliances, lighting and plumbing are your responsibility but nearly everything external to your apartment is the condo association’s responsibility. Yes you have to pay your share of the assessments, but a well-run association will have money set aside n their financial reserve to handle routine maintenance and anticipated repairs.

Attorney reviews. Once you decide to buy a home, you are best advised to have a lawyer review everything. When purchasing a condo you need a professional to look over the building’s documents and financial statements to determine if it is well-run.

Utility bills. Many condominium associations pay some of the utilities as a building. Most buildings contract with a cable company which provides residents with free basic cable. Do not expect to receive a water bill. Many larger buildings also provide the heat and air conditioning. A $50 utility bill in the middle of winter will look awfully nice compared to what house owners will be paying.

Control of your home. You may own the condo but that does not that mean you can do whatever you want. Buildings have repair and/or remodeling rules and oftentimes you will need the association’s approval for any projects or renovations.

Pets. Buildings in Chicago have an array of rules when it comes to pets. Almost all have a limit on the number of pets you can have and the type of animals that are allowed. Some have size restrictions such as no dogs over 50 lbs. etc. In extreme cases building do not allow any pets at all. 

Rental restrictions. Many buildings limit the total number of units that can be leased at any given time. If there are too many units in the building that are rented vs. owned you will likely have trouble getting a loan. Additionally, there is the risk that investors will not want to spend money to maintain the building properly. On the other hand, a no rentals allowed policy can tie your hands if something comes up and will limit your options. For example if you get transferred at work or need to go home to care for a parent you will not be able to rent your place during that time.  With a not rental policy you will either have to sell or make monthly payments on an empty place.

There are differences but these are the important ones. We recommend working with a good Chicago real estate agent who will be aware of the problems that can arise when buying a condo.