Why Another Homeowner Converted to Renting
List Price: $1.2 million
Sale Price: $1.07 million
The Property: Kathy Posner, the longtime Chicago PR exec and civic volunteer, sold her 2,900-square-foot North Michigan Avenue condo for $1.07 million. The deal closed September 4. “I was living in two rooms, about a quarter of the space I had,” she says. “I’m one person, and I had four bathrooms.”
Rather than buy another home, Posner is now renting. She says that the rent on her 1,500-square-foot apartment in Lakeshore East is
less than the $2,239 $2,600, not a lot more than the $2,239 in monthly assessments on her former condo. On top of that, she expects to save about another $40,000 a year in real-estate taxes, homeowners insurance, and other condo-related expenses.
Posner also thinks that, after Illinois finally resolves its $83 billion pension problem, the funding burden will fall on property taxes, and her $22,000 in property taxes “could [have shot] up to $40,000 or $50,000.” While renters also indirectly cover a landlord’s property taxes as part of their rent, Posner believes that landlords will be prohibited from jacking up rents as much as property taxes demand.
Posner’s not alone in thinking that renting is a better way to go these days. Although Trulia research recently determined that, in Chicago, buying costs 50 percent less than renting, the decision to rent is becoming more appealing all the time. Builders certainly know it: last week the Chicago Tribune reported that 1,149 new apartments were completed downtown in 2012 and another 3,018 are coming in 2013 and 2014—as well as 1,933 in the suburbs in 2013.
Like many homeowners, Posner also felt that ownership had her locked down. “I was trapped there,” she says. “If I didn’t like something, I had no choice. I had to stay. Now in this rental, if I don’t like it, I’ll get up and move.”
Posner paid $1.45 million for the 44th-floor condo in 2002, at about the same time that she sold her PR company, which had such clients as Mancow Muller and Jerry Springer. (She says now that she bought so much space because she was ill and expected to need live-in care.) The three-bedroom condo has a cherry-trimmed library, floors of Brazilian cherry and Tuscan marble, solid cherry doors, custom lighting and sound systems, and views of the skyline and Lake Michigan. “Even though I had this big formal dining room,” she says, “I usually ate on a tray in the library or in my bedroom.”
The money she will save by renting also eases her conscience a bit. “It was bothering me, the amount of money I was spending on living when there are kids and others that need my help,” she says.
Price Points: Posner—who was a key part of a group that launched an investigation into the head of the City Club of Chicago that my colleague David Bernstein wrote about earlier this year—estimates that, with improvements she made, her total investment in the condo was about $1.75 million. She listed it for sale in November 2010 with an asking price of $1.3 million, later cutting that to $1.2 million. The final sale—to a buyer not yet identified in public records—is 73 percent of her 2002 purchase price and 61 percent of her stated total investment. “I took a major loss on it,” she says. “That’s another reason to rent.”