Page 54 - April 2017 Newsletter

Attention, renters: It’s time to buy
Today’s housing market has more renters than ever. Of Chicago’s 2.7 million residents, 54 per- cent are renters, and occupancy is above 96.3 percent. Almost 60 percent of these renters have incomes of more than $75,000 a year, and the high- est demand for rentals comes from young, high- income workers making $74,000 to $123,000 a year. A tremendous amount of new construc- tion is taking place in Chicago’s downtown, with 8,400 new apartments built or being built
to meet the growing demand of renters over the past two years, mostly among millennials. Another 5,000 units are expected to become available in 2018, which could cause oversaturation.
Renting has been on the rise for the past 10 years, but is it really the best option? I have researched and found that the overall smartest choice in today’s market is to buy, with some exceptions.
The nationwide surge in renters during the past decade has been driving up rental rates. With continued demand, prices are expected to keep climbing, and renters will con- tinue to have trouble finding affordable rents. The average rent in Chicago, for example, is 4.8 percent higher than it was a year ago.
Homeowners account for 63.5 percent of the U.S. popu- lation, and that figure is the lowest it’s been since 1967. Al- though buying requires a down payment, which is general- ly heftier than a rental deposit, the investment is worth it in the long run. Lenders have many programs that allow you
to put down less than the standard 20 percent (e.g., loans that require just 5 percent down, first-time home-buyer programs and FHA or VA programs with lower down pay- ments.)
One of the biggest benefits to buying a home is that you can build equity over time, money you can later use for whatever you wish—like retirement or another home. If you are the type of person who has a hard time socking away money for the future, building equity is an almost ef- fortless way to amass wealth. On the other hand, monthly rental payments are like throwing money out the window. You’ll never see it again or benefit from it.
Tax breaks are another huge benefit of being a home- owner. The interest you pay on your mortgage is tax de- ductible. Your property tax is tax deductible. If you pay for PMI, that’s tax deductible, as are the points you pay when you close on the property. Another huge tax benefit comes when you sell your home. If you lived in the home for two of the past five years before selling, you don’t have to pay the 15 percent capital gains tax on your profit.
I hope this article has demonstrated that buying a home is well worth the effort in the long run. If you can’t hack it, you can always sell. But remember, your lease is unpre- dictable, the apartments are small, the prices are high and there’s always someone in line right behind you who is will- ing to pay the increased rates your landlord is demanding
Tammy Wendt is an associate attorney at the Law Offices of Daniel Q. Herbert & Associates. You can reach her at 312- 655-7660 or tammy.wendt@danherbertlaw.com.
TAMMY WENDT
54 CHICAGO LODGE 7 ■ APRIL 2017