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Didem Greco
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Chicago, IL  60625

More than just your home
What do I need to know about condominiums and should I buy one?

One of the pleasures of living on Chicago’s north side is the varied types of housing opportunities. Within just about every neighborhood there exist choices in living arrangements such as single family homes, multi-family buildings and condominiums.  Those arrangements offer differences in rights of ownership, use of space, responsibility and flexibility as well purchase price, and appreciation. 

But choice brings deliberation and the choice of one of these real estate types over another comes down to your objectives in quality of life and return on investment.  Many real estate agents will consult to not look at your home, especially a condo, as an investment, but at DCG Realty we believe the unique opportunity and advantage of owner occupied real estate is to both provide utility, joy and return. 

In other articles we talk about multi and single families, for now we’ll focus on the condominium.  Condominiums had their origin in the US real estate market in 1960 when legislation (coming out of the existing co-op systems) enabling co-ownership was introduced.   The condominium’s popularity is basically an answer to the fundamental principle of real estate – location.  As an area’s location becomes more in demand the cost of the land greatly increases.  The condominium allows the home owner to own just their portion of the living structure while in essence renting the common areas and the land the building is built upon thus greatly reducing the purchase price without sacrificing location. It’s also a boon for developers, as they can develop one piece of expensive land into many units, market to a larger portion of the neighborhood and make good margins on several units.  A match made in heaven which will continue as long as there exists dense populations within our metropolitan areas.

While the first advantages to condo ownership over other types of urban housing is likely to be location and price, the aspect of co-ownership brings both advantages and disadvantages to quality of life and return on investment.  On the side of return on investment, there’s more disadvantage.  Since the appreciation of real estate is most associated with the land and one essentially owns only structure; appreciation should be expected to be significantly less than those options that do include land.    Additionally, the very essence of the condominium’s development means there are many more just like it, some exactly the same.  They lend themselves to more of a commodity rather than a distinguishable piece of property.  When a condo owner goes to sell, it’s hard to justify much of an increase in price over the condo down the hall that sold six months ago.  More so, a needed paint job or messy showing can bring lower offers.  Finally, there is no return on the money you pay towards assessments for common area and structure.  It is essentially a cost of maintenance which has no tax deduction as with mortgage and tax payment.  

Advantage or disadvantage over other options when considering condo living really comes down to the home owner’s objectives.  Condo living is not unlike apartment life and can bring much neighbor and community benefit depending on how heavy footed are the folks upstairs.  Most smaller urban condo associations are self-managed giving owners some ability to manage cost and return depending on their level of interest and availability while larger associations with boards and management teams may give one the feeling of being governed in their living room.  Flexibility is another aspect to consider meaning is the only long term option to reside or sell or can it be rented.  In general condos are very rentable due to surrounding density and location, however, their competition - apartments will usually have a lower monthly cost base for the same square footage and location.  So, the current Chicago north side market rental rate often does not cover more than the condo’s mortgage payments leaving taxes and assessments to be paid out of pocket by the home owner.

Lastly consider responsibilities.  Few would argue against the feeling of convenience one gets from condo ownership, especially those who would rather spend a beautiful Chicago spring day at the café or park rather than caulking windows or patching the roof.

No matter your livability and investment objectives, it matters to consider the options that Chicago’s north side offers.  Bring your ideas and thoughts to us at DCG Realty and we’ll counsel with you to reach those objectives.

Charlie Greco
Managing Broker
DCG Realty