The business of being a Chicago apartment landlord has always been a serious one, but fluctuations to rental prices in 2021 have produced a serious question for these times: “Am I charging enough for my Chicago apartment in 2022?”
First, to unpack this question a bit, if a landlord wonders whether or not their Chicago apartment’s rent price reflects the market conditions in the wake of price increases, they’ll need to first dive into the state of the market. The average rental price for apartments in Chicago went up 4% in 2021 according to RE Journals, which is significantly lower than a national average increase of 13% for apartment rent prices reported in the same publication. Apartment rent prices in Chicago had a decent year in terms or rent growth, but not a banner year by any means.
Finding Fair Market Value for Chicago Apartments in 2022
The difference in rental price gains did vary by unit type and location within the city. Saying there was an across-the-board increase for ALL apartments in Chicago would be oversimplifying things. Some neighborhoods saw better-than-average price increases as aggressive rent concessions from the depths of the pandemic finally expired. This rent growth was more concentrated in downtown neighborhoods as newer, Class A apartment buildings retired their most attractive leasing offers from late 2020 and early 2021.
For example, trendy neighborhoods that have been witnessing population and rent growth in recent years had a decent recovery in 2021. West Loop 1 bedroom apartments went up in price 6% compared to mid-2020 figures. River North 1 bedroom apartments had a similar price increase of nearly 6% compared to the previous summer. And Old Town apartments had a very robust recovery in 2021 with average rent prices increasing by nearly 18% for 1 bedroom apartments.
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 a great resource for this type of analysis. There, landlords will see a range of rental prices for places that are currently active.
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 they may change to meet the market.
How Long Should Chicago Apartment Landlords Prepare to List their Apartments in 2022?
After a period marked with as much uncertainty as 2020-21, the return to the rental market was a swift one. Renters were so keen to sign leases for desirable apartments that they were making offers above listing price in some cases. This wasn't a widespread phenomenon, but it speaks to the recovery on the horizon for a city such as Chicago as more people returned to work and engaged in somewhat "normal" behavior as they did pre-pandemic.
But this excitement over leasing wasn't universal as we noted, and it appears that a temporary winner in the re-shuffling brought on by the pandemic may require more patience from landlords in 2022. These are studio apartments, which were snapped up in short order at the height of lockdowns and restrictions in 2020. The appeal of a private space that didn't have common areas shared among roommates was at its height during the uncertainty of 2020 (remember people sterilizing their mail?). Compare that desirability of studios to now, and these smaller units are in surplus as renters pursued their desire for more expansive apartments. Landlords may want to brace themselves for potentially longer time on market for studios than previous seasons.
Seasonality is another key factor in determining how long it takes to rent an apartment. Chicago’s rental market is typically the most seasonal in the entire country, meaning that there’s a surplus of renters looking to move during the warmer months (May - September) and fewer during the cold weather months outside of that window. That said, an influx of apartments for rent at low season in 2020-21 created an atypical leasing calendar. As more renters reassessed their situation during that time, they made moves outside of the peak rental season to take advantage of rare incentives such as 3 months of free rent. The resulting shakeup of the rental calendar created a longer plateau for leasing activity that has carried over into the fall of 2021.
Tips for Avoiding Long-Term Vacancy in Chicago Apartments in 2022
With a veritable roller coaster of price changes hitting the market over the past year, many landlords may be bracing for another volatile year ahead. Regardless of price fluctuations brought on by inflation or other forces in the market, the absolute worst hit to 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 quick return on that investment over treating 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 recent increases in the market, landlords might end up losing 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 act as a guidepost during the tenant pre-qualification process for Chicago apartments when landlords assess a potential renter’s finances.
Landlords may also find that more square footage doesn’t automatically equal higher dollar value for their apartment rent. Renters are willing to pay more in rent for a place with amenities that make their lives more convenient like in-unit laundry, outdoor space, and newer appliances.
A survey of Domu’s users revealed that renters are OK with paying a little extra to have a convenient feature like in-unit laundry in their apartment. So, it makes sense that a renter might balk at the prospect of paying a higher rent for a place that’s bigger in terms of square footage but doesn’t have the convenience of in-unit laundry, or an outdoor space.
The same logic applies to other cosmetic upgrades, such as hardwood flooring, newer kitchen and bath fixtures, a dishwasher, and so on. 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 photos 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 that they’re anticipating charging in rent.