Rental Market in Chicago starting to slow?

Is the rental market in Chicago starting to slow? I have yet to run any statistical analysis from the MLS regarding rental data but my pulse on the market has accurate in the past and now I’m getting the feeling that the rental market is starting to slow. The fall is always a slower time to rent and December will be even slower than previous months, but I have noticed activity slow in the market place in comparison to last year.

While I have seen rental activity slow I have seen buyers come out of the woodwork, many of whom plan to buy this winter!

What do I believe is causing the slow down? I think we are seeing more renters turn into buyers. This is evident by inventory levels of homes for sale decreasing month after month in Chicago. The rental market slow down I speak of is only very minor. Prices are still at record highs and rentals are still renting quick but when I am starting to get the sense that rental prices are hitting a plateau. In Chicago we will see over 3,000 rental units hit the market in the coming year. While all these rental units target the class A downtown rental market (studios near 2,000/mo, 1 beds from 2,500, etc) other rental markets such as Lakeview, Lincoln Park, etc. can still feel the impact of increased inventory levels if a price war ensues downtown.

 

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RENT PRICES CONTINUE TO RISE AS SUMMER ENDS

Rent prices have continued to rise, as expected in Class A Chicago markets such as River North, Gold Coast, Streeterville, Lincoln Park and Lakeview.

The following are my own stats for the time period of July 1st to August 15th.

“Near North Market” Comprised of River North, Streeterville, Gold Coast, & Old Town

2010 – Total of 497 Units Rented with an Average Rent Price of $1,978

2011 – Total of 446 Units Rented with an Average Rent Price of $2,182

TOTAL INCREASE IN “NEAR NORTH MARKET” OF 10.3% YEAR OVER YEAR

Lincoln Park

2010 – Total of 161 Units Rented with an Average Rent Price of $2,166

2011 – Total of 229 Units Rented with an Average Rent Price of $2,251

TOTAL RENT INCREASE FOR LINCOLN PARK OF 3.9% YEAR OVER YEAR

Lakeview

2010 – Total of 335 Units Rented with an Average Rent Price of $1,632

2011 – Total of 335 Units Rented with an Average Rent Price of $1,892

TOTAL RENT INCREASE FOR LAKEVIEW OF 15.9% YEAR OVER YEAR

While Lakeview and the Near North Market have similar increases to previous months we see Lincoln Park only saw a 3.9% increase…what can explain this? What I believe we need to look at in Lincoln Park is the total average rent price. We saw that last year during July/August the average rent price of already relatively high, above $2,100 which would make it higher than the downtown market. In comparison to other months, this is unusually high for Lincoln Park. I contribute this to a few different factors, but mainly I believe due to DePaul’s school year (trimester schedule) which has many people looking for apartments around this time frame. Since this time of year is already unusually high, rent prices cannot truly act in accordance with other markets such as Lakeview or Downtown. I believe with an average rent price of $2,251, Lincoln Park is starting to cap itself off. With this pricing, renters can easily look at more desirable areas such as River North or Gold Coast and those renters who cannot afford to pay the higher prices in Lincoln Park probably moved further north to Lakeview where their dollar stretches more. This could account for the very high 15.9% rent increase in Lakeview.