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A couple of girls with the same problem the younger New Zealanders have.
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A couple of girls with the same problem the younger New Zealanders have.
Frustrated Chicago Homebuyers Restore Market for the Two-Flat
By Mary Umberger
Chicago Tribune
RISMEDIA, August 5 – (KRT) – Kara Pelleton was thinking about buying a house -- until she saw the prices. It was the same story with her former roommate, Mary Bravo.
Her thoughts turned to condos, but she wanted a yard. Ditto for Bravo. The friends commiserated over their real estate frustrations, then decided to pool their money -- to buy a two-flat.
Today, theirs is a happy upstairs-downstairs partnership in Evanston, where they've found a back door to homeownership that's catching on as housing prices surge.
Yes, the two-flat, that bastion of the working-class and the extended family found throughout the Chicago area, is suddenly -- almost improbably -- becoming hot stuff.
"It's the last place where you can afford to get anything cheaply," said North Side realty agent Pamela Ball, who says two-flats in her area sell quickly. "And their prices are exploding."
These are not necessarily your grandfather's two-flat. The buildings started getting makeovers -- literally -- a few years ago in neighborhoods where prices seemed to be on steroids. Frustrated buyers started snatching them up and converting them into single-family homes.
Then the real estate investment craze created a wave of interest in two-flats among novice landlords, who appeared not to have noticed that the rental market was soft and continues to be so.
The newest group to cast an approving eye on two-flats is pairs of unrelated buyers, who see them as a way to own an apartment.
"It made perfect sense," said Pelleton. "We were both looking at the same time, and a two-flat made a better deal. We got a garage, storage space, basement and yard."
What they didn't get was a monthly assessment and the potential fractiousness of the condo association that can go with it -- sort of a condo-without-the-condo.
Pelleton and Bravo, now in their fourth year of joint ownership, say it works well and hasn't been complicated by the fact that Pelleton has married and had a baby, or that they never formalized their understanding of the deal through a contract.
"We're both easygoing and trust each other's judgment," Bravo said. "I don't think we've ever had a single fight about the house or expenses or rehabbing."
John O'Brien, chairman of the Illinois Real Estate Lawyers Association, strongly recommended that buyers define their relationship on paper.
"They're tying their fate to somebody," he said. "What if it turns out they didn't know them so well as they thought?"
Real estate agents say such dual-ownership arrangements are relative novelties here, but appear to be on the rise.
"It's certainly happening here. The young set is doing it because of economic survival," said North Side agent Roland Kline. "I saw it happening somewhat between 1978 and 1983, when interest rates were so high. Now, I'm seeing it again, because prices are so high."
Such deals have become routine in parts of real-estate crazed California, where many of the nation's housing trends begin. Some agents -- even entire agencies -- in San Francisco specialize in matching strangers to buy two-unit buildings.
"It goes on all day long here," said San Francisco agent Mollie Poe. "I'll bet it catches on like wildfire in Chicago."
All of which may point toward a status change for the relatively humble two-flat. Built by the thousands in the 19th and early 20th Centuries, two-flats tended to be embraced by workers who coveted them as a way to house their extended families.
"There's a tradition in many immigrant neighborhoods where family members would occupy the flats," says Tim Samuelson, cultural historian for the City of Chicago, who grew up in a two-flat owned by his grandfather. His parents occupied the upstairs apartment.
"Sometimes people built them as their own residence and the upper floor was for speculative rental," he said. "You often saw that in three-flats, but the two-flats tended to be occupied by somebody in the same family."
And now, increasingly, by close friends, brought even closer by the housing market, particularly on the North Side.
"The prices are so high," explains Ball, who has worked with unrelated two-flat buyers priced out of single-family homes.
To illustrate, she did a search of the multiple-listings database for lakefront Chicago neighborhoods. In the first six months of the year, the average reported sale price for a single-family home was $797,000. Today, the average listing price is $1.3 million.
The sticker shock sends many people to condominiums, she says. "The average sales price for two-bedroom condo units in that same area in those first 180 days of the year was $297,000. Right now, the average price of those condos that are active listings is $341,000."
But then, she says, look at two-flats. "The average active listing for two-flats 1/8in that geographic area3/8 is about $600,000," Ball says. "If two people can buy that two-flat, it's $300,000 apiece as opposed to $341,000 1/8for a condo3/8 -- and no assessments."
Renee Longbons and Jason Van Hoose did the math, and a few months ago they bought a Logan Square two-flat. Van Hoose works for the window-washing company owned by Longbons' fiance, Sid Feldman. They are longtime friends.
"The only way real way to do it was to buy a two-flat and find someone to do it with," Van Hoose said.
An obvious benefit of a partnership is that the downpayment is smaller; buyers say they've had no trouble applying for a joint loan even though they are unrelated.
Other than the mortgage, Van Hoose and Longbons say they don't have a written agreement for who does what. Such informal arrangements seem to be common among partnered two-flat owners.
"I don't think we have anything in writing," says Nadia Niggli, who with her husband Chris Moore bought an Edgewater two-flat with his friend Bill Comisky.
"We understood how we would split any building costs, repairs and garden work, anything that would improve the value of the building," she said. "It hasn't been difficult at all."
O'Brien, of the Illinois Real Estate Lawyers Association, said he would recommend that buyers set up a trust that spells out the "what-if's" and individual responsibilities and that converting the two-flat to condominiums might be prudent for resale when that time comes.
That might be soon for Pelleton and Bravo. "If we have more kids, we might move. We have limited space here," Pelleton said, explaining that Bravo might buy out her share of the building.
But she and Bravo insist their informal agreement works adequately. "Of course, you'd have to be careful," Bravo said. "I think there may be only one other person in the world I'd do this with."
By Mary Umberger
Chicago Tribune
RISMEDIA, August 5 – (KRT) – Kara Pelleton was thinking about buying a house -- until she saw the prices. It was the same story with her former roommate, Mary Bravo.
Her thoughts turned to condos, but she wanted a yard. Ditto for Bravo. The friends commiserated over their real estate frustrations, then decided to pool their money -- to buy a two-flat.
Today, theirs is a happy upstairs-downstairs partnership in Evanston, where they've found a back door to homeownership that's catching on as housing prices surge.
Yes, the two-flat, that bastion of the working-class and the extended family found throughout the Chicago area, is suddenly -- almost improbably -- becoming hot stuff.
"It's the last place where you can afford to get anything cheaply," said North Side realty agent Pamela Ball, who says two-flats in her area sell quickly. "And their prices are exploding."
These are not necessarily your grandfather's two-flat. The buildings started getting makeovers -- literally -- a few years ago in neighborhoods where prices seemed to be on steroids. Frustrated buyers started snatching them up and converting them into single-family homes.
Then the real estate investment craze created a wave of interest in two-flats among novice landlords, who appeared not to have noticed that the rental market was soft and continues to be so.
The newest group to cast an approving eye on two-flats is pairs of unrelated buyers, who see them as a way to own an apartment.
"It made perfect sense," said Pelleton. "We were both looking at the same time, and a two-flat made a better deal. We got a garage, storage space, basement and yard."
What they didn't get was a monthly assessment and the potential fractiousness of the condo association that can go with it -- sort of a condo-without-the-condo.
Pelleton and Bravo, now in their fourth year of joint ownership, say it works well and hasn't been complicated by the fact that Pelleton has married and had a baby, or that they never formalized their understanding of the deal through a contract.
"We're both easygoing and trust each other's judgment," Bravo said. "I don't think we've ever had a single fight about the house or expenses or rehabbing."
John O'Brien, chairman of the Illinois Real Estate Lawyers Association, strongly recommended that buyers define their relationship on paper.
"They're tying their fate to somebody," he said. "What if it turns out they didn't know them so well as they thought?"
Real estate agents say such dual-ownership arrangements are relative novelties here, but appear to be on the rise.
"It's certainly happening here. The young set is doing it because of economic survival," said North Side agent Roland Kline. "I saw it happening somewhat between 1978 and 1983, when interest rates were so high. Now, I'm seeing it again, because prices are so high."
Such deals have become routine in parts of real-estate crazed California, where many of the nation's housing trends begin. Some agents -- even entire agencies -- in San Francisco specialize in matching strangers to buy two-unit buildings.
"It goes on all day long here," said San Francisco agent Mollie Poe. "I'll bet it catches on like wildfire in Chicago."
All of which may point toward a status change for the relatively humble two-flat. Built by the thousands in the 19th and early 20th Centuries, two-flats tended to be embraced by workers who coveted them as a way to house their extended families.
"There's a tradition in many immigrant neighborhoods where family members would occupy the flats," says Tim Samuelson, cultural historian for the City of Chicago, who grew up in a two-flat owned by his grandfather. His parents occupied the upstairs apartment.
"Sometimes people built them as their own residence and the upper floor was for speculative rental," he said. "You often saw that in three-flats, but the two-flats tended to be occupied by somebody in the same family."
And now, increasingly, by close friends, brought even closer by the housing market, particularly on the North Side.
"The prices are so high," explains Ball, who has worked with unrelated two-flat buyers priced out of single-family homes.
To illustrate, she did a search of the multiple-listings database for lakefront Chicago neighborhoods. In the first six months of the year, the average reported sale price for a single-family home was $797,000. Today, the average listing price is $1.3 million.
The sticker shock sends many people to condominiums, she says. "The average sales price for two-bedroom condo units in that same area in those first 180 days of the year was $297,000. Right now, the average price of those condos that are active listings is $341,000."
But then, she says, look at two-flats. "The average active listing for two-flats 1/8in that geographic area3/8 is about $600,000," Ball says. "If two people can buy that two-flat, it's $300,000 apiece as opposed to $341,000 1/8for a condo3/8 -- and no assessments."
Renee Longbons and Jason Van Hoose did the math, and a few months ago they bought a Logan Square two-flat. Van Hoose works for the window-washing company owned by Longbons' fiance, Sid Feldman. They are longtime friends.
"The only way real way to do it was to buy a two-flat and find someone to do it with," Van Hoose said.
An obvious benefit of a partnership is that the downpayment is smaller; buyers say they've had no trouble applying for a joint loan even though they are unrelated.
Other than the mortgage, Van Hoose and Longbons say they don't have a written agreement for who does what. Such informal arrangements seem to be common among partnered two-flat owners.
"I don't think we have anything in writing," says Nadia Niggli, who with her husband Chris Moore bought an Edgewater two-flat with his friend Bill Comisky.
"We understood how we would split any building costs, repairs and garden work, anything that would improve the value of the building," she said. "It hasn't been difficult at all."
O'Brien, of the Illinois Real Estate Lawyers Association, said he would recommend that buyers set up a trust that spells out the "what-if's" and individual responsibilities and that converting the two-flat to condominiums might be prudent for resale when that time comes.
That might be soon for Pelleton and Bravo. "If we have more kids, we might move. We have limited space here," Pelleton said, explaining that Bravo might buy out her share of the building.
But she and Bravo insist their informal agreement works adequately. "Of course, you'd have to be careful," Bravo said. "I think there may be only one other person in the world I'd do this with."
Regards