May 4, 2007

Students opt for condos with parents’ checkbooks

Meredyth Richards, a second-year in the College, called living in University housing her first year “a less than desirable experience, to put it lightly.” When time came to decide on housing for this year, she turned her focus toward finding an apartment to rent, but felt she would be “throwing away monthly rent and getting nothing lasting from it.” So Richards refocused her housing search toward an option many students don’t consider: She bought a condo.

“The purchase...was partially driven by my inability to ‘find’ housing in a non-sketchy building run by a non-sketchy management company, but probably more so by the fact that renting for both undergraduate and graduate school is silly and completely wasteful,” Richards said.

And while Richards is hardly the only student embarking on this new investment and living venture, she is one of the few who feels comfortable enough to talk openly about it. When asked about their move into a relatively expensive housing option, other students whose families have purchased Hyde Park condos agreed to share their experiences, but under the condition of anonymity. They expressed ambivalence over making their family’s financial situation known to others in the University community.

One third-year said he considered purchasing a condo after his first year of college. However, unlike Richards, he ultimately decided against it after discussion with his roommates. Now, with his final year in college approaching, he regrets not having bought his own place.

“Economically, it was stupid,” he said. “Five hundred dollars a month for three years—that’s $18,000 of rent pissed away instead of equity on a condo.”

The students who live in family-owned properties embody a variety of situations. Julie, a third-year student and Chicago native who requested that her full name be withheld, lives in a townhouse owned by her mother, albeit not for the typical reasons.

“My mom bought the condo when I was 10, mainly for investment reasons,” she said. “She was mainly concerned about me and my siblings being able to graduate [from college] without too much debt.”

Julie originally did not intend to live in her mother’s condo, but she and her roommates found it difficult to find a suitable four-bedroom apartment. “I never thought of asking my mom or anything because when you attend a college in your hometown, you feel like you need to assert your independence more,” she said. Still, the day before she was to sign a lease for a townhouse on East 55th Street and Kenwood Avenue, she spoke to her mother, who was shocked at the rent and small size of the townhouse.

Julie promptly signed a lease with her mother. Now, she is glad to live in her mother’s building, calling her mom a very professional landlord. “She tries to keep out of personal issues, and she treats me like a tenant,” she said.

Many students have considered purchasing their own place but dropped the idea because of insufficient time and financial resources to spend on such a large decision. Second-year Rowena Ruan’s parents entertained the idea of buying her a condo, considering it a good investment, but she ended up just returning to University housing.

“It was too much of a hassle, so it was definitely not worth it,” Ruan said, describing the search process.

Grant Gordon, another third-year, offered an alternative perspective on students purchasing condos. “They’re invasive species,” he said, speaking on how U of C students fail to become involved in their neighborhood even when they purchase properties.

Gordon called that behavior “irresponsible,” saying that all individuals ought to participate in their communities, including college students who rent their apartments. This particularly applies, though, to students who own their properties, he said, adding that these students displace other residents.

Bill McLenahan, a Hyde Park real estate agent with Century 21: Kennedy, Ryan, Monigal & Associates, Inc., said that each year his office works with a sizable number of students looking to purchase properties. Students usually seek moderately priced one-bedroom properties near campus, he said.

McLenahan put the selling price of a typical Hyde Park one-bedroom, one-bathroom condominium at around $140,000–$150,000. In his experience, proximity to campus usually raises the purchase price. Many Woodlawn properties are newly renovated and larger, so they typically sell for around $200,000, he said.

For eager investors anticipating a potential Chicago-hosted 2016 Olympic Games, McLenahan cautioned that it’s a bit early to purchase properties in hopes that the Games will inflate local housing prices. But he added that the Olympics, with a proposed Olympic stadium in Washington Park, will certainly push up real estate prices in Hyde Park and surrounding areas if the event is held in Chicago.

“The market is very stable,” McLenahan said of the current real estate situation in Hyde Park. “Unless something drastic happens, students should be able to sell properties at purchase price and maybe even for a little more.”

McLenahan urged students to “carefully work out the numbers” before purchasing a condo. “Compare the down payment, loan payments, and loan assessments [for the condo] per month to rent per month,” he said.

Richards, the second-year who purchased a condo last year, offered similar advice. She said that the cost of monthly assessments, furniture, utilities, and other amenities added up quickly. “Make sure the purchase is financially feasible and realize that the cost of the unit itself will probably be less than you—or your family—ultimately end up paying,” she said. “While I’ve been completely happy here, unless you’re planning on being in Hyde Park or Chicago for a prolonged period of time like I am, it’s probably better to rent and not mess with the hassle of agents and of owning.”