NOV 3, 2011
Buyers at Lexington Park Find It's Cheaper to Buy Than Rent
It used to be a pretty safe bet that renting was cheaper than owning a home. But today, many renters are crunching the numbers and finding that, in many cases, it is actually cheaper for them to purchase a home, even factoring in minimal down payments, association fees and taxes, says Jeff Benach, co-principal of Chicago-based Lexington Homes (www.lexingtonchicago.com). In fact, a number of homebuyers at the developer’s Lexington Park community in northwest-suburban Des Plaines agree.
Lexington Park offers 149 townhomes, 85 of which have been sold, and is located within walking distance of downtown Des Plaines and the Des Plaines Metra Station, at 1232 Harding Ave. near Western Avenue. The community has three floor plans ranging from 1,605 to 1,913 square feet. Base-priced from $239,990 to $264,990, the three-story homes come standard with two to three bedrooms, 2½ baths and attached two-car garages. Lexington Homes is currently offering a selection of five incentives to homebuyers, such as paying the mortgage for up to a year and half off all upgrades.
“More Americans have become renters in the tighter economic times of the past few years, and rents have skyrocketed everywhere as a result,” says Benach. “Some rents have gone up as much as 20 to 25 percent over the last two years. Many experts expect that rise to continue for some time.”
In addition, according to real estate website Trulia.com, it is now more affordable to buy a two-bedroom home in 72 percent of the country’s 50 largest cities than it is to rent one. A National Association of Realtors survey, released in January, found that 95 percent of homeowners and 72 percent of renters believe that over several years, it is still smarter to own a home.
According to Benach, many of the buyers at Lexington Park are renters who found it was cheaper to own than rent. Eydie Glassman made her first step into homeownership with a new townhome at Lexington Park after renting at 26 different addresses in her 45 years. “My mortgage now is comparable to what my rent was on my condo downtown in the city, plus I’m not paying $300 a month for a parking spot,” she said.
Danny Proctor, 49, had been renting in the northwest suburbs for the past 15 years after a divorce when he took a good look at the costs of homeownership versus renting and decided to buy at Lexington Park. “I decided to pull the trigger when I was looking at my retirement plans,” he said. “I was paying $1,500 a month in rent, so basically throwing my money away. My mortgage will be about the same.”
Benach breaks it down: “Our entry level home is priced at $239,990. That gets you two or three bedrooms, 2½ baths, a two-car garage, and the finest of appointments, in homes between 1,605 and 1,915 square feet, all in a townhome you own. If you make a down payment of just 3.5 percent, which is the minimum the FHA will allow, that's $8,400. Then, you can lock in a low 30-year fixed rate interest rate of 4 percent, and you end up with a monthly payment of around $1,405, including tax escrow and PMI. This is definitely competitive with the rent on a two-bedroom apartment.”
In fact, Benach says most two-bedroom, two-bath rentals in Des Plaines’ newer, nicer buildings average approximately 1,200 square feet in size, which is significantly smaller than a townhome at Lexington Park. And, he adds, about 70 percent of all two-bedroom, two-bath Des Plaines rental units are in the $1,600 to $1,800 range for monthly rent, costing significantly more than the monthly mortgage outlined above.
“To put it in perspective, let's say a renter pays $1,700 a month for a 1,200 square-foot apartment,” said Benach. “If you stay two years, that’s $1,700 times 24 months, which totals $40,800. At Lexington Park you can buy a 1,605 square-foot home with a 3.5 percent down payment and pay only $1,405 a month for 24 months, for just $33,720.
“That $7,080 savings over two years means buyers can essentially pay off their $8,400 down payment within just two years,” he said. “Plus, you get more square footage, your own two-car garage, a kitchen and living room/dining room layout with features you can’t get in any rental unit anywhere, and a huge private balcony. Not to mention privacy and the pride that comes with homeownership.”
In addition, Benach notes, none of that takes into account tax savings, increases in property value and going with an even cheaper mortgage product, like a 5/1 ARM.
Lexington Park offers three decorated models to tour. To visit from the south, exit I-294 at Dempster Street and head west for 1½ miles. Turn right at Laurel Avenue and continue for ¼ mile to Harding Avenue. Turn left at Harding Avenue and the sales center will be located on your right. From the north, exit I-294 at Golf Road. Go west on Golf Road for ¾ of a mile to S. Des Plaines River Rd., turn left and proceed for one mile to Route 14 (Miner Street). Turn right on Miner Street, and go ½ mile to Laurel Avenue. Turn right at Laurel Avenue and continue for ¼ mile to Harding Avenue. Turn left at Harding Avenue and the sales center will be located on your right. Sales center hours are from 10 a.m. to 6 p.m. daily. For more information about Lexington Park, call (847) 299-0500 or visit www.lexingtonchicago.com.
A premier name in Chicago real estate, Lexington Homes is one of the city’s most successful builders. In the past four decades, Lexington Homes’ real estate development team has built more than 40,000 homes in Chicago and surrounding suburbs, solidifying its reputation for excellence and innovation in homebuilding.
"As first time home buyers, we were nervous to say the least when we decided to start looking for a place to buy."
- Ravi and Indira