The summer of 2020 has brought on a host of new challenges for the Chicago apartment rental market. The Coronavirus pandemic has forced Chicagoans to reconcile everything from massive job losses to eviction bans that have persisted in the first half of the year.
All the changes may have clouded what was shaping up to be a robust summer rental season in Chicago. Annual rent increases for the Chicago market were hovering around 3 percent before the arrival of COVID-19. It’s safe to say that gains in rent prices will be more modest in 2020 as the summer gets into full swing. Still, despite the massive upheaval that Coronavirus posed in the region and across the globe, there are signs of hope in the Chicago rental market. Interest in apartments for rent has recovered from an initial decline following the announcement of statewide stay-at-home orders and Chicago apartment renters' desire to move to a new place has remained steady as Illinois cleared some initial hurdles in managing its virus outbreak.
How are Apartment Rent Prices Holding Up in Chicago?
Speaking of rent increases, how are the numbers looking for the Chicago apartment market? Rent increases are slowing down from previous years. Apartment rents were up 2.5 percent year over year in March of 2020. The following month, that increase was just 1.6 percent.
Landlords looking to weather a disrupted rental market in good shape would be wise to adjust their expectations to slightly muted gains in rent price. The pendulum may wind up swinging back in tenants’ favor with the slower pace of rent hikes observed heading into summer 2020. In the meantime, landlords who want to avoid long term vacancies in their Chicago apartments should do their due diligence to get a pulse of the market and make sure their asking price isn’t out of line with comparable units. Landlords can always check in on Domu’s neighborhood pages for a real time snapshot of rent prices.
The Coronavirus is having a ripple effect beyond economic factors in the Chicago rental market. The prospect of another interruption in day-to-day routines means that many renters are seeking ways to pandemic-proof their housing. This extends beyond deep cleaning methods to other facets of life, like having a comfortable space to work at home, a place for some light physical activity (a true home gym in other words) and an outdoor space that allows for responsible socializing -- or at least a change of scenery.
Which Chicago Neighborhoods are Below Citywide Median Average Rent Prices?
A couple Chicago neighborhoods appeared to have higher median rent prices for studios than 1 bedroom apartments in June, with Lincoln Square and Wicker Park being the notable callouts. This can be attributed to brand-new apartments that were on the market last month with luxury finishes that rival many downtown Class A apartment buildings.
Renters are reassessing their apartments’ locations in the COVID-19 era; living within walking distance of the Loop or other downtown neighborhoods no longer seems as pressing for renters who have the option of telecommuting or flexible work-from-home arrangements. If renters really like the feel of a neighborhood they could be seeking out upscale condos for rent or new construction apartments in that area that create a more inviting home base. Apartments with top-tier amenities, which were traditionally reserved for new apartment buildings near downtown Chicago, are starting to proliferate some of the neighborhoods further out from the Loop.
Technology Shifts Into High Gear to Assist Leasing Apartments During COVID-19
Brokers and leasing agents are embracing the convenience and efficiency of virtual tours in apartments. Vacant apartments can be shown via a self-guided tour, virtual tour or socially distanced in-person tour (completed with masks on, of course). The pandemic has brought on the wide adoption of these technology-based leasing solutions in pretty substantial and swift fashion.
“Prior to the pandemic, our firm leased about 5 percent of our apartments sight-unseen,” said Aaron Galvin, CEO of Luxury Living Chicago Realty. “Of the roughly 1,400 apartment showings Luxury Living Chicago Realty conducted from mid-March through the end of May, we conducted 91 percent virtually,” Galvin added. Today, a renter can virtually tour any of the apartments for rent at buildings in Luxury Living's portfolio like The Logan Apartments.
“We've seen potential tenants use virtual tours to help narrow down their options and following up with a self-guided or in-person showing,” said Galvin. The efficiencies offered by virtual or self-guided tours allow brokers and landlords more time to focus on communication with prospective renters. Prompt responses to renters’ inquiries ranks as one of the key factors in closing an apartment lead into a signed lease for landlords.
Evictions Paused in Chicago Apartments for Summer 2020
Eviction bans have been in place since March of 2020 for Illinois residents. That means that tenants facing evictions due to unpaid rent haven’t been forced to relocate and find emergency housing in the midst of the pandemic. But the Illinois eviction moratorium won’t stay around forever.
With the confluent predicaments of unemployment, business closures and the persistent threat of Coronavirus, conditions could be right for a wave of eviction filings at the end of the summer due to unpaid rent. Both state and local governments have intervened to forestall such a wave of evictions; there’s the statewide ban on new eviction case filings and the persistent closure of Illinois’ eviction courts, and there are also efforts at the city level. Chicago strengthened its protections for renters who are served with eviction notices by adopting a new seven-day negotiating window between tenants and landlords in new eviction cases. Tenants who can point to job losses or lost wages from the pandemic then have a chance to work out repayment plans with landlords before their eviction case proceeds to court.