I've had a lot of clients reaching out about buying in Chicago in 2022. The conversation has mostly gone something like this:
"Sean, they're raising my rent 25%, this is outrageous!" to which I respond "It's not just your building, rents are pumping everywhere!"
Why?
1) Inflation
2) Increased tax on higher-end class A buildings
3) Disappearance of "COVID deals"
And guess what - interest rates have already responded to the FED's intentions to raise rates this year.
While it's not a cause/effect relationship, 30 year mortgage rates tend to follow the FED funds rate for similar reasons. This trend is likely to continue so locking in financing now is a smart move.
What have I been seeing so far? It's competitive for buyers. Demand has built up and remains strong as less people have been able to fully utilize their amenities and need more space - usually 2bed 2baths. Often when someone jumps from a 1bed in a class A building to a 2bed the math starts to favor buying, especially if you're planning on being in one spot for a few years. With many working from home and having the ability to work anywhere, it's less likely they'll be pulled away and need to sell in a hurry. So why not build up some equity in that time?
A monthly payment of ~$3400 will get you a nice 2bed 2bath in River North in an amenity building and if you're looking to spend less you can drop that to ~$2900 if you prefer a smaller building with no amenities in neighborhoods like Lakeview, River West or Logan Square. That amount includes everything (homeowner's insurance, prop tax, HOAs, principal/interest, 10% down).
But you'll need to come prepared! Have the mortgage prequal ready or your briefcase of cash as cash still talks. In fact, it won one of my clients his dream home even though we weren't the highest offer! We beat out three other offers!
A lot of clients have also apologized for reaching out without having done enough due diligence but this should not be a deterrent. I'm here to help you learn what you don't know, what the steps are and what to expect. Talking to a mortgage broker to see how much you can afford is the first step and no, you don't owe them money and it won't change your credit.
So reach out. I'm ready to help!