Moving to Chicago - Buy or rent (loop area) (Washington: real estate, apartments)

[cno]

Quick background - Single guy, early 30s. I moved from Chicago to Washington, DC in 2009 and now planning a move back. Given the situation of rental market in Chicago, I have been seriously considering purchasing a condo. According to my estimates the 'breakeven horizon' is pretty low for chicago. But I have been away from Chicago market for a while so a little help would be appreciated.

My area of focus is loop - something across millenium park/ lake. This applies to rental and condo, both but especially condo. I can't have another building block my view and I understand this will cost a premium but it will payout the same.

Spending - Most luxury buildings in the area such as Aqua are charging north of $2400-2500/mo for 1BR rentals. I believe, an equally (or almost equally) nice condo would cost me 300k-350K. 2BR's somewhere around $550K-650K (if Redfin listings are accurate). Now, I could use some help in estimating a % appreciation/depreciation in condo value and inflation on rental market and how are the real estate gurus projecting it for next 3-5years for Chicago downtown. Since I am only looking at a short-term view (let's say 3-4years of owing the property), I am using 0% appreciation on property and 2% inflation on rental market. Given those numbers, it is taking me around 3 years to breakeven on the property. If rental market has a correction or property depreciates, I am in the red.
Am I making sense here? Can I get some help here with validating my numbers?

I never owned property because short-term ownership was always a bad idea. But Chicago's rental market is at 98% capacity (source: unconfirmed) and prices/mortgage rates low. Owning is actually coming out to be cheaper in 3-5year view.

[marothisu]

Quick question...is the only reason you want to buy in the Loop is so you can have an unblocked view? If so, that doesn't make much sense. The loop has some nice places in Lakeshore East, but the areas for residential in the Loop are rather dead (i.e. culturally) and in no way have ridiculous demand. There are some nice buildings there, but most of the demand for luxury high rises are in River North or Streeterville.

[3Series]

If your'e looking at Aqua, there's 500+ apartments coming online in the next couple of months. I would rent. Have you factored in the investment gain you'd get by putting your down payment to work some place else?

[cno]

morathisu, views aren't the reason. I used to live on inner LSD and views were spectacular from there as well. Also, agreed upon loop being a somewhat cultural deadspot but my work keeps me on travel M-F. Just looking for some change (having never lived in loop) and trying to be close to my friends/family.

3Series, I looked at Aqua for comparison but I am looking at places on a similar level. I considered investment gain at 2% that is similar to my savings account. Ofcourse there are more aggressive investment strategies but that's talk for another thread. Are these 500+ units rental or condos? Nothing is mentioned on their website.

[marothisu]

Originally Posted by cno

morathisu, views aren't the reason. I used to live on inner LSD and views were spectacular from there as well. Also, agreed upon loop being a somewhat cultural deadspot but my work keeps me on travel M-F. Just looking for some change (having never lived in loop) and trying to be close to my friends/family.

Gotcha. Guess I don't understand the travel portion of your requirement. You mean you travel for work, outside of DC, Monday through Friday? I take it this is more of an investment property then..? There is stuff being built in the Loop, but again, most of it is just north of that and it will continue to do that. There is still a lot of land available for developers if they want to make skyscrapers on the Near North Side. The Loop is actually pretty filled up for a ways.

[ChiGuy2.5]

Originally Posted by cno

3Series, I looked at Aqua for comparison but I am looking at places on a similar level. I considered investment gain at 2% that is similar to my savings account. Ofcourse there are more aggressive investment strategies but that's talk for another thread. Are these 500+ units rental or condos? Nothing is mentioned on their website.

I am curious on this as well. I was looking into renting from Aqua, if the price is right, within the next couple of months.

[marothisu]

I have a friend who rents in Aqua. It's a really nice building, but IMO not enough stuff around it for me. There are some really interesting rentals coming up too in the area. I believe Coast just got the go ahead for accepting people. 500 N Lake Shore Drive. Optima Center. AMLI River North. Hubbard street one (forgot the name..42 story building closer to the river), etc. There's a few which have been going up in the north side of the Loop for a little bit too like 73 E Lake that is a little more interesting of an area than Lakeshore East and a lot closer to public transit.

[Vlajos]

I always think it makes sense to rent for at least a year to make sure you know where you want to live within the area.

[Aleking]

I think the Aqua units are frankly awful...low ceilings and cookie cutter.

[hindukid]

What are you using as a transactional cost to sell the place? I would probably assume 8% though if you are good at doing things on your own you could probably cut that in half. 2500 rent translates to probably 300-350K purchase price. Chicago has a better buy to rent ratio than any city I can think of. Ratios seem very off now. I think either prices will have to rise or rents will have to drop.