The American Dream has been commonly recognized as home or property ownership. In a world where information is readily available with a swipe of a finger, married with the memory of the brutal housing market crash in late 2008, you may have some conflicting thoughts. There’s so much information out there. Oy! It’s enough to make one’s head spin. How are you to know if the next property of interest is the biggest bang for your buck?
What does it mean: “biggest bang for your buck?” Can it be objective? Subjective? Let’s put it in these terms. Can that property/neighborhood realistically command its price? Can you see a future in that property/neighborhood?
Chicago Magazine identified 22 neighborhoods and suburbs where you can still find good buys (March 2017). They effectively broke it down into 4 categories: “First Time Buyers, Move-up Buyers, Downsizers, and Risk-takers.” I revisited this article and asked: is this still true as we enter 2018? The article identified the following neighborhoods in the city of Chicago as good buys (smart investments): Norwood Park, Rogers Park, South Shore, Hyde Park, Lake View, The Loop, Belmont Cragin, Chatham, Jefferson Park and West Ridge. And in the Chicagoland suburbs; Des Plaines, Melrose Park, Niles, Arlington Heights, Aurora, Bolingbrook, Lake Zurich, Prospect Heights, Skokie, Evanston, Glenview, and Palatine. Why is this? Having called Chicago home for over 40+ years now, I was intrigued. I believe it comes down to the core basics, or the “3 R’s”.
If you have ever heard even a whisper of Real Estate terminology, then you’ve heard of the “3 R’s”. Location, location, location. It may sound cliche; however, it’s true.
That same Chicago Magazine article also stated First Time Buyers are gravitating toward Chicago neighborhoods such as Norwood Park, Rogers Park, and the South Shore and to Chicagoland suburbs such as Des Plaines, Melrose Park, and Niles. The underlying theme focuses on locations within close to proximity to transportation into the city’s Loop/Downtown area, all homes ranging from $37,000-$315,000. Together, with the ease of transportation and/or the access to an interstate highway, these First Time Buyers value well-rated public schools, grocery stores, and health clubs within a walkable radius.
“If you build it, they will come.” This speaks true of Uptown. With the renovation of the Wilson Brown Line Stop, the “Asian Town” area of Argyle Avenue, and the installation of well-known retail establishments, Uptown has gained a notable growth spur in both the First Time Buyers and the Risk-taker audiences. This growth has overflowed into North neighboring Edgewater, raising the value and desirability of the area as a whole.
A Market Watch article, published December 2016, stated: “forget the starter home, millennials want the move-up property.” The lines between First Time Buyers & Move-up Buyers have become blurred. Many First Time Buyers have allocated enough funds to secure a larger down payment within a year to position themselves to purchase “more house.” According to the National Association of Realtors (2016), 17% of buyers under 35 were able to save enough for a down payment for a home within a year, compared with 14% of all age groups. And though it was lower than all other age groups, 37% of buyers under 35 said they were able to save enough for a down payment within six months, compared with 46% of all other buyers.
With all the aforementioned conveniences and amenities (transportation, schools, grocery stores, health clubs), the First Time/Move-up buyers have been able to obtain “more home” in Chicago neighborhoods like Edison Park, Edgewater, and Hyde Park. In the Suburbs: Arlington Heights, Aurora, Bolingbrook, and Lake Zurich. In the City: the aforementioned neighborhoods within proximity of Norwood Park, Rogers Park, and the South Shore, or the Chicago neighborhoods named in the Chicago Magazine March 2017 article. However in the Suburbs, only Arlington Heights is within the reach of Des Plaines, another area named. This information leads to the conclusion that Aurora, Bolingbrook, and Lake Zurich most accurately fall into the wants/needs met from the list that includes well-rated public schools, grocery stores, and health clubs.
In working relationships with my most recent buyers, I hybrid the First Time Buyers with the Risk-takers. They are starting to become synonymous. Risk-takers have been gaining interest in the stunning yet unfortunately neglected Greystone multi-unit buildings in and around the Austin Village, Douglas Park, East Garfield Park, and West Garfield Park neighborhoods. Timeless architecture and ample interior square footage have been capturing those who have not even considered these “West Side” areas as home possibilities.
Most of the properties in the previously mentioned neighborhoods have seen better days. However, as we say in the Real Estate Industry, “the bones are good”, or the structural integrity of the property is solid. While the distressed property may need to have new electrical and plumbing installed and updated to code as well as the quintessential kitchen and bathroom renovations, a foreseeable healthy future is attainable. An added bonus to the potential of a “healthy future” of these properties in the Austin Village, Douglas Park, North Lawndale, East Garfield Park, and West Garfield Park neighborhoods is the proximity to Oak Park, Humboldt Park, and West Town. These areas have already positioned themselves as stable and appreciating in the real estate market.
When renovated, these multi-unit properties can command a reasonable, healthy rental income and come close to “self-liquidating”. Minimize the “risk” in Risk-taker. I know, shake your head, and call me crazy. Some of these areas aren’t exactly “ideal”. From recent experience, I can say interest is growing in these areas that are surrounded by tree-lined boulevards, beautifully landscaped parks, walking distance to CTA trains, and stunning architecture. I remember the late 1980’s and early 1990’s: Logan Square, Wicker Park, and Ukrainian Village were overshadowed by Lakeview, Lincoln Park, and the Gold Coast. They too were not on the “list” of attractive neighborhoods. Within the last 25 years (growth starting to take boom in 1992), Logan Square, Wicker Park, and Ukrainian Village have grown to be trendsetters with neighborhood amenities (well-rated public schools, grocery stores, and health clubs) equal to or even surpassing Lakeview, Lincoln Park, and the Gold Coast. It can be said that these “distressed” neighborhoods on the “West Side”, once rejuvenated with enthusiastic property owners looking to restore the beauty of these neighborhoods, should see the availability of amenities & services in the future. Think of Risk-taker as pioneer.
According to a recent Curbed Chicago article, five developers—R&D Builders, Greenline Homes, Urban Equities, Wade Enterprises & Associates, and Click Development—were chosen to build 42 new, market-rate homes on vacant lots scattered throughout the 3900 to 4500 blocks on Prairie, Calumet, and Indiana avenues. These experienced “risk-takers” have invested in the future of Bronzeville by purchasing vacant lots from the City of Chicago for $1 to develop single-family homes with stunning architectural details ornamenting their massive square footage floor plans. With these new construction homes, stunningly renovated row houses, and classic greystones, the Bronzeville neighborhood of Chicago may be the next “best buy” for the “risk-taking move-up” buyer.
This reminds me of Michael Gambon’s speech in the movie Layer Cake. “You’re born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you’re up in the rarefied atmosphere and you’ve forgotten what shit even looks like. Welcome to the layer cake son.” Well. Let’s compare my recollection to real estate. You move out of your parent’s place. You rent. You save enough money. You purchase your first home. You save even more money and/or gain sizable equity in your first home and/or start a family. You purchase “more” home. Your home “make-up” has changed (kids are gone; the acquirement of investment properties has come to fruition; maintaining that large home is no longer ideal; etc.). You downsize. Make sense?
Now that we’ve explored the tiers of “home”, back to neighborhoods and the third of four categorized buyers. The best areas for the Downsizers’ buck, according to that Chicago Magazine 2016 article are Hyde Park, Lakeview, and The Loop in the city of Chicago neighborhoods. For the Chicagoland Suburbs, the best spots are Evanston, Glenview, and Palatine. The aforementioned city neighborhoods offer an abundance of amenities (public transportation, shopping, schools, and leisure activities) with home prices ranging from $175,000-$350,000. They are also adjacent to notable neighborhoods like Kenwood, Lincoln Park, and the Near North/Gold Coast, neighborhoods that provide the same level and number of amenities at a greater cost.
A notable and interesting trend in the suburbs is redeveloping to make amenities more within walking distance. These include public transportation, coffee shops, grocery stores, and retail establishments. The once associated suburban lifestyle of “laid-back” and “sprawling” has morphed into more dense communities with different housing arrangements, such as townhouses, apartments, and single-family homes, together in the same neighborhoods. Look for a new name for it: “surban” in 2018. A December 2016 Marketwatch article declares, “‘surban’ living is becoming a new way of life for many: where the blend of urban and suburban living provides the best of both worlds.” With “surban” living, it’s possible to walk to work, live in a city, and enjoy pedestrian access to groceries, entertainment, and youth- and sport-friendly parks — plus reliably strong public schools. Suburbs like Evanston, Glenview, and Palatine are good examples of this hybrid and rapidly growing “surban” lifestyle.
Are the previously mentioned neighborhoods of Chicago and the suburbs in this passage good examples of that? Can you still enter in at a ground-level price and come out ahead sooner than later? Each one of these areas possesses a widely accepted and desired lifestyle, one with easily accessible conveniences. There are still parts of each area mentioned that have “untapped”, older, “untouched”, and to a surprising degree, neglected homes. With that said, together with the current “best buys” of Norwood Park, Rogers Park, South Shore, Hyde Park, Lake View, The Loop, Belmont Cragin, Chatham, Jefferson Park, West Ridge, Des Plaines, Melrose Park, Niles, Arlington Heights, Aurora, Bolingbrook, Lake Zurich, Prospect Heights, Skokie, Evanston, Glenview, and Palatine, the next “biggest bang for your buck” may just be a zip code over.
Blog by: Arnell Cordero
Arnell is Real Estate Broker with over 25 years of experience in the Chicagoland Real Estate Market. He made his start in running his family’s real estate business in Logan Square in the early 1990’s. Arnell has applied his knowledge in effectively assisting his clients in the many arenas of real estate from rentals to investment property purchases. He currently makes his home in the Northwest Suburbs and services his client’s needs in Chicago and the Tri-County Area. Together with co-founding the Region Realty Group, he is continuing to expand his brand of meeting a one’s real estate needs effectively and efficiently.