Summer is hot, and so is the rental market. Chicago began the season with a high of 100 degrees and a median rent of $1,850/mo for a one-bedroom apartment in Lakeview. Not sure what this means for landlords? Don't sweat it. We've answered all of your burning questions in our summer market update.
How much has apartment rent gone up in Chicago?
Average Chicago apartment rent has risen by 8% over the past 12 months. Rental growth, however, can vary a lot by neighborhood. Some areas are still showing good deals, but Chicago renters have to dig a little deeper this season to find the perfect apartment within budget.
While rent prices for apartments outpace the rest of the Midwest, Chicago remains a highly desirable city compared to the rest of the region. With a healthy job market, world-class institutions, and a vibrant culture, renters are willing to pay a little extra to live here, especially after emerging from the seclusion of the pandemic.
Why is apartment rent in Chicago skyrocketing?
Rental rates for Chicago apartments for rent are rising across the board due to inflation, and rents have not been spared. Rents keep rising with everything else — like gas, food, and home prices — in the United States economy.
Supply and demand have certainly shifted in Chicago's apartment landscape. During the pandemic, we experienced fewer renters seeking apartments. That's not the case this summer. The tables have turned for renters, and the market favors Chicago apartment landlords. Renters have flooded the neighborhoods of Chicago looking for new places to live. The supply, however, can't keep up with the current influx of apartment hunters.
Where are these renters coming from? One source could be Chicago's thriving job market. Employment has grown by 4.2% over the past 12 months, according to the Bureau of Labor Statistics. Even with the rise of remote work, newcomers are heading to the city. Many companies have adopted a hybrid schedule, only requiring employees to be in the office one to three days per week. That doesn't necessarily mean renters are moving downtown but are heading back to the Chicago area.
What's happening with Chicago apartment rents now?
There's no denying it's a landlords' market. Residential property owners are seeing 20 or even 40 applications for just one apartment for rent. Chicago landlords have the luxury of choosing their next qualified tenant from a large pool of potential applicants.
Renters, on the other hand, must enter the market ready to make a move. If they don't reach out to a landlord soon after an apartment has been listed, they're likely to miss out on the apartment. Savvy apartment hunters are starting their search earlier than ever. Some renters are even resorting to cover letters — including them on applications, hoping it will increase their chance of landing an apartment.
Should I increase rent for my rental property in Chicago?
Before raising rent, check that you're charging a fair market rate. Compare prices for similar properties in your neighborhood on Domu. Asking for an appropriate apartment monthly rent is essential to avoid long-term vacancies, especially after the peak season.
Affordability is becoming an issue for renters in Chicago and the U.S., especially when inflation is already straining the average American budget. When pricing your apartment or considering an applicant, use Domu's Rent Calculator for insights on recommended income. Don't forget that income is a highly regulated aspect of the leasing process, so familiarize yourself with the latest CRTLO rules.
Additionally, some landlords are charging a move-in fee rather than a security deposit to offset the higher cost of rent and to simplify some of the administrative processes required with security deposits. Check out our guide to security deposits and move-in fees for some differences between these two types of administrative fees so you can make a more informed decision.
What's in the forecast for Chicago apartment rents?
Rents in Chicago will continue rising until the apartment market balances itself out, perhaps as early as the first half of 2023. The busy apartment rental season will inevitably slow down in the colder months, so prepare for the lull by securing tenants now. Rent deals are few and far between at the moment, but highlighting net effective rent or offering concessions could help lock in a long-term lease.
