For the past couple of years, we have been inundated with conflicting articles, blog posts and news stories about the housing market. Some argue we have hit rock bottom and others opinion we still have another 15 to 30 percent to drop. Our potential clients are confused and no one can provide a straight answer.
Aaron Galvin is the broker and owner of Luxury Living Chicago, a boutique apartment marketing firm focused on downtown Chicago luxury rentals.
In a recent interview with CBS’ 60 Minutes, Federal Reserve Chairman Ben Bernake said “…housing can’t get much weaker.” But in that same interview Bernake defended the $600 billion dollar stimulus needed to help “…keep [mortgage] rates low and improve housing.” If Bernake is confused, how are we expected to tell our clients it’s a great time to buy or sell?
The answer: For most, it’s not a great time to buy…but it’s a great time to rent!
For years there was a cachet that came with owning a home. It didn’t matter that you paid exorbitant assessments and taxes or needed to repair something every week. You were a homeowner and you had made it. Now the tides have turned. It has become not only socially acceptable to rent, but viewed as the smart alternative. And there are definitely some great rental options these days.
Specific to the downtown Chicago luxury market, there have been a dozen rental properties with 3000 brand new units that have come online during this “down time.” These are buildings with state of the art amenities and truly modern finishes. These are not starter apartments. These are homes that people are choosing to live in rather than losing sleep debating if buying is a good investment. And more condos are being converted to rentals every month. This trend promises to continue, as evidenced by Walton on Park at 2 West Delaware in the Gold Coast being the latest luxury condo project turned rental.
According to an article in Crain’s Chicago Business, there are nine additional projects totaling 3400 new rental units under construction, set to break ground or currently seeking financing. These properties promise to be even more upscale than the last group of luxury buildings, and are planned in prime areas on the lakefront, Wells Street in Old Town and the heart of River North. These apartments will also command premium rents.
In the suburbs, houses and condos have seen such declines it’s simply not worth selling. This has created even more rentals and a very unique opportunity to rent townhouses and single-family homes many cannot afford to buy in this ever-evolving economy.
When making housing decisions, people tend to compare the rent vs. buy ratio. While in part a great tool, the one aspect this guide does not provide is peace of mind. We don’t know if the price is going to go north or south right now. It’s just too volatile. We do know you can get a great rental property, love where you live and not worry about it for at least a year. 2011: rent it and forget it!