An article in this week’s Crain’s cites anecdotal evidence of an incipient shift from rental to ownership, suggesting:
… that a confluence of factors — from low interest rates to escalating rents — are starting to push would-be buyers off the fence. The anecdotes don’t mean the market has tipped from apartments, the favored choice for downtown dwellers in the post-crash years. But the first faint glimmers of a shift may be in sight.
A favorable cost of ownership is one of the factors contributing to a purchase decision. According to Crain’s, a qualifying buyer able to put down 10 percent for the 1,048 square foot Unit 1919 at 235 Van Buren could save $289 a month by purchasing the unit for $279,900 rather than renting it at $2,249. The monthly ownership cost estimate assumes the buyer finances with one of the building’s preferred lenders which will pay for mortgage insurance.
235 Van Buren still has units available through its rent-to-own program, enabling fence-sitters or buyers who need time to complete their down payment or repair their credit to lock in the purchase price of a unit and rent in the interim.
According to Vik Wadhwa of Urban Living Chicago, one of whose clients was featured in the Crain’s article:
We are starting to see that increasing rents in the downtown market are influencing some would be renters to decide to purchase. Rising rents, low inventory of available apartments, low interest rates, and low condo prices are all contributing to this shift from renting to buying. We are advising clients to buy only if they have at least a 3-5 year time horizon.
Pricing appears to have bottomed in certain pockets of downtown that are popular with young professionals such as Mr Kumar, who we helped purchase a new 1 bedroom condo with parking and great view for $249,000 at Silver Tower.
NOTE: 235 Van Buren and Urban Living Chicago are both clients of ours.