The business of being a Chicago apartment landlord has always been a serious one. Still, the rising rental prices in 2022 have produced a serious question for the year ahead: “Am I charging enough for my Chicago apartment in 2023?”
First, to unpack this question a bit, if a landlord wonders whether or not their Chicago apartment’s rent reflects the market conditions in the wake of price increases, they’ll need to first dive into the state of the market. Apartment rents in Chicago skyrocketed last year, but the city’s prices still maintained a lower growth rate than the national average. According to CoreLogic RentalTrends, the average rental price for apartments in Chicago surged by 11 percent last summer year-over-year, while the national annual rent inflation reached a record 14 percent.
Finding Fair Market Value for Chicago Apartments in 2023
The difference in rental price gains did vary by unit type and location within the city. Renters in downtown neighborhoods faced higher average rents as aggressive concessions from the depth of the pandemic finally expired for newer Class A apartment buildings. Trendy neighborhoods witnessing population and rent growth in recent years had a decent recovery in 2021 that continued into 2022. West Loop one-bedroom apartments went up in price by 6% last summer compared to mid-2020 figures. River North one-bedroom apartments had a similar price increase of nearly 6% compared to the previous year. However, there were clear signs of rents cooling down as we came out of the peak season, and some landlords waited longer to fill their vacancies.
Still, it's good practice for landlords to look closely at comparable units already on Domu before aggressively raising rent prices out of the gate. The neighborhood pages on Domu are an excellent resource for this type of analysis. There, landlords can see a range of rental prices for active listings.
And it’s good to keep in mind that landlords who list their apartments on Domu can make on-the-fly adjustments to their listings, so they're never locked into a specific price point and can update rents to meet the market.
How Long Should Chicago Apartment Landlords Prepare to List Their Apartments?
Chicago landlords may enjoy a favorable rental market during the summer, but savvy property owners know to plan for a lull — especially as the colder season approaches. Listing an apartment and finding a renter before the cold months could be essential to avoiding long-term vacancies this year and next.
The demand to live in Chicago notably outpaced the housing supply last spring and summer. More people returned to work in office or hybrid, bringing an influx of renters back to the city. Residents also shuffled the market by setting their sights on WFH-friendly apartments with more space. Additionally, Chicago summer returned to its full glory, drawing renters to the liveliest neighborhoods with great restaurants, entertainment, and shopping.
Landlords leveraged Chicago’s high demand, and rent prices skyrocketed in turn. Both higher rents and inflation in general strained renters budgets. As the prices became less approachable, the movement to find a new place slowed down. Those who have apartments stayed put and locked in their rental rates. Others looking to move to the city decided to wait for more affordable rents.
As a reminder, seasonality is a crucial factor in determining how long it takes to rent an apartment. Chicago’s rental market is typically the most seasonal in the entire country. There’s a surplus of renters looking to move during the warmer months (May through September) and fewer during the cold weather months.
Tips for Avoiding Long-Term Vacancy in Chicago Apartments in 2023
With a veritable roller coaster of price changes hitting the market over the past few years, landlords should brace themselves for the slow season. Regardless of price fluctuations brought on by inflation or other forces in the market, the absolute worst hit to a landlords' bottom line would be apartments sitting vacant. Here are some of the best tips that Domu has seen to reduce long-term vacancy in Chicago apartments.
Avoid Overcharging for Rent and Giving Renters Cold Feet
Landlords should view their rental apartments as an investment, no doubt. But following a tack that favors a quick return on that investment, overtreating it as a sustainable operation, can wind up backfiring for landlords. What does a sustainable operation look like? Getting renters to sign the lease is the ultimate goal of the process, but there are market pressures at each turn.
If rents are set at maximum value to reflect increases in the market, landlords might lose money if the apartment sits empty for too long. Find a happy medium by using Domu’s Rent Calculator. This calculator returns a rental price range based on annual income. This can also help during the tenant pre-qualification process for Chicago apartments when landlords assess a potential renter’s finances.
Landlords may also find that square footage doesn’t automatically equal higher dollar value for their apartment rent. Renters are willing to pay more rent for a place with amenities that make their lives more convenient, like in-unit laundry, central air-conditioning, and smart home upgrades.
A survey of Domu’s users revealed that renters are okay with paying a little extra to have a convenient feature like in-unit laundry in their apartment. So, it makes sense a renter might balk at the prospect of paying a higher rent for a bigger place that doesn’t have the convenience of in-unit laundry or a dishwasher.
The same logic applies to other cosmetic upgrades, such as hardwood flooring, newer bath fixtures, and modern appliances. Upgrading the apartment wherever possible will translate to a more premium rental price.
And last but certainly not least, landlords should never underestimate the value of quality photos when it comes to marketing an apartment listing. At any price point, the images on the listing do some serious legwork to entice renters to see the apartment in person. Landlords should make sure the photos posted to their listing are up to the level they anticipate charging in rent.