The median list price in Chicago is $189,900, up 11.8% from January 2013 to January 2014, according to the most recent National Housing Trend Report published by Realtor.com. This puts Chicago close to the national median list price of $195,000; however, Chicago sits at the top of the list for the 146 regions ranked in the report in terms of total number of listings. Of the more than 10,000 Chicago properties currently listed for sale on Realtor.com, ranging in price from $8,000 foreclosures all the way up to a $32 million penthouse condo, there are about 400 homes on the market priced between the median list price of $189,900 and $200,000. Here's a look at what about $200,000 will get you today in Chicago's real estate market.
The 237 square miles of land that make up Chicago is home to an estimated 2.7 million residents living within 77 community areas originally drawn by University of Chicago researchers in the late 1920s. These community areas are grouped into four sides: Central, North Side, West Side and South Side. Like other markets, home prices in Chicago vary greatly depending on location. For example, according to data from online real estate aggregator Trulia, the average listing price in Chicago's Lincoln Park, just north of downtown, was $1.04 million for the week ending March 5, 2014. In nearby North Park, a residential area in Chicago's North Side, the average list price was $244,977 during the same week. Since where you buy is a determining factor in what you get, we'll look at what $200,000 will buy in the different areas of the city.
The Central region is Chicago's commercial and financial hub, including the area known as The Loop, the downtown section surrounded by elevated ("L") train tracks. In this area, buyers with a $200,000 budget will be looking primarily at one bedroom, one bath condos and lofts. Many of these properties are under 1,000 square feet and boast amenities such as roof decks, fitness rooms, extra storage, heated parking and 24-hour security, and many are within walking distance to public transportation, popular restaurants, businesses and shopping. Though on the small side, most properties on the market at this price do offer upgrades such as stainless steel appliances, granite countertops and hardwood cabinets.
Chicago's North Side is the city's most densely populated residential section. Buyers in the $200,000 price range will be looking at properties with one or two bedrooms and one or two baths. Many of the available homes are 800 - 1,250 square foot condos in high-rise buildings that offer amenities such as rooftop decks, fitness centers, business centers, pools, 24-hour security and garage parking. Depending on the exact location, homes may be within walking distance of public transportation, restaurants and shopping. At this price, expect to see older buildings with updated units that include stainless steel appliances, granite countertops, hardwood and tile flooring, and exposed brick.
Chicago's West Side is home to the Chicago Bulls, the Chicago Blackhawks and the University of Illinois at Chicago. Some of the West Side's neighborhoods, especially those closest to downtown, have been experiencing economic revitalization, which has helped increase home values in those areas. With a $200,000 budget, buyers will be looking at condos that typically offer one to two bedrooms and one or two baths, with upgrades including stainless steel appliances and hardwood floors. Condo buildings tend to have about four stories (not high-rise), and may offer decks, small yards and street parking. At this price range, you could also find a small, older single-family home, though the inventory for condos is much higher.
The South Side is the largest section of Chicago, encompassing about 60% of the city's land area. At a $200,000 price, buyers will find mostly single-family homes with a few condos and townhouses. Many of the single-family homes are two-story, 1,800 - 2,000 square foot properties built in the early 1900s, with three bedrooms and two baths. Some on the market have four or five bedrooms, but due to the age of the homes, may still have only one or two baths. At this price, homes may have hardwood floors or new carpet, stainless steel appliances, granite countertops, a fireplace and a small yard.
Buy or Rent?
Nationwide, the gap between the costs of renting versus buying has narrowed, due in part to rising interest rates and home prices. A year ago, Trulia's Rent vs. Buy Report showed that - on average across the nation - it was 44% cheaper to buy a house than rent. Today, Trulia's most recent report finds it is now 38% cheaper to buy than rent. The report compares costs for a seven-year period using five calculations:
- The average rent and for-sale price for an identical set of properties;
- The initial total monthly costs of owning (assuming 20% down and a 30-year fixed-rate mortgage at 3.5% interest, as well as annual maintenance, insurance, utility, and property tax expenses) and renting (monthly rent plus renter's insurance);
- The future total monthly costs of owning and renting;
- One-time costs and proceeds (for owning, this includes closing costs and capital gains tax of 15% for gains above the $500,000 annual exclusion; for renting, this includes one month's security deposit); and
- The net present value to account for opportunity cost of money (this compares cash flows over time.
Although interest rates are still attractive, inventory is improving and lending standards have relaxed since the post-2008 financial crisis environment, buying isn't always the right choice for everyone. The decision to buy or rent depends on many factors, including where you plan on living, mortgage rate, tax bracket and time horizon. For example, if you secure a 3.5% 30-year fixed-rate loan, are in the 15% tax bracket and plan on remaining in a home for seven years, it would be 44% cheaper to buy than rent in Chicago. Now assume you have a 4.8% loan, are in the 25% tax bracket, and plan on moving after three years. Under these conditions, it is only 22% cheaper to buy than rent in Chicago, according to the Trulia Rent vs. Buy Report. Depending on your situation and the exact circumstances, deciding to buy or rent can be an easy decision, or one that requires a lot of consideration and number crunching.
The Bottom Line
Although the most expensive home on the Chicago market right now is a $32 million penthouse condo, there are many properties available that are close in price to the $189,900 median list price for the city. Buyers looking to live close to the downtown area will be looking at properties in high-rise condominiums, while those looking further out will find a selection of condos, townhouses and single-family homes. Many of Chicago's properties in this price range are older homes and buildings that have been updated to appeal to today's buyers, while maintaining the charm and interesting architectural elements found in the city's earlier homes.