Sunday, November 4, 2007

Is it smart to buy a studio?

A customer posed the question a couple days ago:

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?

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.