JMR, Home Buyer in 60610

Smart to buy a studio?

Asked by JMR, 60610 Sat Nov 3, 2007

I live simply and am highly organized so I am looking into purchasing a 600 sq ft studio. Assesments are under 300, garage parking is included, w/d in unit, fireplace, balcony. My concern is resale? On average, do studios tend to take a lot longer to sell and will I be somewhat limited re: appreciation value? Am I better off with a small 1 BDR?

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6
Patti Pereyra, , Chicago, IL
Sat Nov 3, 2007
A Near North Chicago studio can be a great investment. The Near North area is one of the most expensive in the city, and as Robert said, a studio provides the opportunity to take advantage of "location location location" at an affordable price.

Just make sure it is a sound building with solid amenities (good amenities is something that will help your resale, and something that studio dwellers tend to look for to make up for smaller space).

Because you are considering a unit with a balcony, be sure to check into any special assessments coming down the pike. Balconies are great and can be a plus for resale, but on a practical note, we all know in Chicago they are enjoyable about 4 months of the year, and because of maintenance issues, balconies open up more possibilities to special assessments. So just do your due diligence.

From what you describe, it sounds like this studio has all the makings of a good investment with not only good resale value, but because of the location, great rental potential, too, should you decide to hold longer.
1 vote
Joy Sinegar, , Chicago, IL
Tue Apr 21, 2009
I think that it truly depends on how studio sales have fared in the past.

Looking at the market, one bedrooms are having a tough time too..but they are doing better than studios. Possibly, if you could give us a general idea of the area you are looking in, I can tell you market time and sale prices. Otherwise it is like a shot in the dark.

Try looking at short-saled one-bedrooms. You might be able to get more space for the same investment. Even though I know you don't NEED the additional space, it will help you when it comes time to sell. You'll get more bang for the buck and increase your return on your investment.
0 votes
Jeffrey Kropp, Agent, Chicago, IL
Thu Feb 7, 2008
I agree with everyone below, but why not get a good idea of how studios have fared in that particular building over the last few years, relative to one bedrooms and two bedrooms. Calculate appreciation rates and that should hopefully confirm our thoughts.
0 votes
Ginger R., Home Seller, Massachusetts
Sat Nov 3, 2007
You should buy the size that you want, and not worry too much as to whether a studio will appreciate as much as a one bedroom. The reason is, that answer will change over time. Unitl recently in NYC, for example, two bedrooms were the rage. The larger the apt, the more per square foot.
That has turned around. Recently, studios have been going for more per square foot. Why? Inventory shrank as new construction featured larger, moe expensive units and people combined studios into larger apts. At the same time, as boomers age, people are starting to downsize and demand has risen.
So the price per square foot equation can shift over time.
On a personal level, if living alone, I am much more comfortable in a large, open studio than a small one bedroom, where both the livng room and bedroom tend to be small. It sounds like an excellent investment.
0 votes
Stacy Karel, Agent, Chicago, IL
Sat Nov 3, 2007
I think that if you want a certain area and you can only afford a studio.. then it is better to buy it and get in the market then just rent. This starter place could help secure your financial future. When you are ready for your next place, keep it and rent it out, let it continue to appreciate. Best of Luck!

Stacy
0 votes
Robert Darrow, Agent, Fort Lauderdale, FL
Sat Nov 3, 2007
Hello!

Traditionalists will tell you that it's not a good idea to buy a studio or a one bedroom condo, and they're right in 90% of the country. But we have a different dynamic here in Chicago.

Studios are frequently the most affordable way for a single professional to own a home in a city like Chicago. Demand for affordable housing can be quite strong in urban settings such as near the Loop and the near north side.

Homes priced on the more affordable end of the scale can often appreciate at a greater rate than more expensive ones. In the Loop, Near North and throughout Lincoln Park, the appreciation rate for studios is higher than the appreciation rate for two bedrooms.

If the studio you are considering is close to downtown or other major employment center like a hospital campus, demand will be strong for an affordable studio.

Amenities like the ones you mentioned in your question are also in great demand. Selecting a smaller condo with more amenities such as the laundry in unit, the garage parking, the fireplace and the balcony will all add to the salability of your condo in the future.

It sounds like you've selected a winner.
0 votes
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