Whether you’re a potential first-time home buyer, an owner looking to downsize, a growing family looking for more space, or a young professional moving for a job, the question of buying vs. renting can be one of the most difficult, especially in a city like Chicago with so many housing options.
While there’s no substitute to crunching your own finances and looking at real properties for rent or for sale, here are some of the most common pros and cons for Chicagoans making the decision: Should I buy? Or should I rent?
Pros of Renting in Chicago
1. Mobility
A big advantage many renters cite for not buying is the flexibility to move. The thinking goes that committing to owning your home makes it more difficult to pick up and move. While this may be true in some cases, it’s less the case these days in Chicago, where housing inventory is low and properties are selling quite quickly. Rental agreements are typically at least a year, and the average time to sell a home in Chicago, as of June 2024, was just 31 days.
2. Low Upfront Cost
Renting typically requires a security deposit and the first month’s rent. This is almost certain to be substantially lower than the down payment and closing costs for purchasing a home. This makes renting more accessible to more people. However, in the case of the first-time home buyers that are most commonly facing this question, a down payment can be as low as 3 percent in some instances.
3. Freedom From Maintenance
When renting, the responsibility for repairs and property upgrades falls on the person you write checks to every month: the Landlord. And certainly, the so-called hidden costs of homeownership in terms of ongoing maintenance, repairs, and upkeep should always be properly considered. But those costs should also be weighed against the extra financial benefits of home ownership.
Cons of Renting in Chicago
1. Lack of Equity
The biggest downside to renting in Chicago is the same as anywhere: Every month you're giving money to someone instead of yourself. When you’re renting, you’re building someone else’s equity, not your own. Over time this can be a significant financial disadvantage compared with the forced equity building created by simply making mortgage payments instead of rent payments. And in Chicago, like most desirable major cities, this is an even bigger consideration. That’s because larger metro areas like Chicago have seen greater housing price appreciation, making the benefit of homeownership greater and the downside of renting greater, when compared with smaller cities with less appreciation.
2. Rent Increases
Chicago does not have rent control. Rent prices can increase with each lease renewal, sometimes unpredictably.
3. Limited Personalization
Without ownership, the ability to customize or renovate your property is greatly limited. While some landlords may be flexible on minor things like painting, some may not. And certainly bigger changes will be off the table. In Chicago, this may be an even bigger downside in the winter when we all tend to spend more time indoors.
Pros of Owning in Chicago
1. Creating Equity
The biggest benefit of home ownership anywhere is also the biggest benefit in Chicago — but even more so. Buying a home can be financially challenging upfront, but financially rewarding long-term. And as mentioned earlier, the upside is even bigger in a desirable metro area like Chicago when compared to a smaller city or town.
2. Cost Stability
By locking in a long-term fixed rate mortgage, you’re also locking stability and predictability into your housing costs. This is particularly beneficial in a city like Chicago without rent control and in an era of continually increasing housing costs.
3. Personalization
The ability to customize and control your living space is a big plus to home ownership. If you can afford it, ownership potentially gives you the ability to completely renovate your home inside and out. And in Chicago this can be especially beneficial.
4. Possible Tax Benefits
Owning your home may allow you to claim tax deductions for things such as mortgage interest and property taxes. Consult your accountant or financial advisor.
Cons of Ownership in Chicago
1. High Upfront Cost
Buying a home definitely requires more money upfront than renting. This typically includes a down payment, closing costs, and additional fees. This can be a barrier for those without adequate savings. However, first-time home buyers may be eligible for special loan programs that allow for as little as 3 percent of a down payment, which based on Chicago’s median sale price of $335,000 would be just $10,050.
2. Maintenance and Repairs
Sometimes referred to as the “hidden cost of home ownership,” the ongoing maintenance, repair, and upkeep of owning your own property should always be properly considered. But don’t let the uncertainty scare you. Talk to other owners about their ongoing expenses and weigh it against the long-term financial benefits of building equity. Many will likely tell you that the equity they’ve built provides more than enough financial leeway to cover those ongoing, or even surprise, costs of maintenance and repairs.
3. Decreased Mobility
Picking up and moving when you own your home can often be more difficult and time consuming than if you’re a renter. While the average time on market is just 31 days compared with the average lease of one year, selling a home actually requires additional time to prepare a home for sale. Your best bet in both cases is to consult a real estate professional as far in advance as possible.
Sort Through the Pros and Cons With Matt
Most real estate agents will always push buying — not Matt Shrake. Matt will always give you straight talk about what is best for your situation at this time, renting or buying. And he can also help advise you on what you need to prepare to take the next steps toward purchasing or selling, should that be the right move for you.
