The rental market in Lakeview, and throughout the majority of the city saw a very strong 2011. During the “hot months” of the rental season, May through October, I saw multiple applications submitted on most rental properties I dealt with. During these times rental prices were up dramatically, in some cases by over 10 and 12%. The real question is, how did the market handle itself over the entire year including the winter months? Here is the data. To better under this data and why I am using it please quickly read this following blog I wrote previously concerning the leasing market in Chicago. HOW TO UNDERSTAND THE RENTAL MARKET IN CHICAGO
The Lakeview neighborhood is comprised of several areas including but not limited to East Lakeview, Boystown, Wrigleyville, Southport Corridor and West Lakeview. All these areas and everything in between were included in my search. The search area on the MLS is known as “8006.” Data was combed to exclude any “extreme” numbers as well as to exclude any listings that were rented before print or any listings with a market time of greater than 150days as these listings do not represent typical scenarios in the rental market.
2010 Units Rented: 515 Average Market Time: 32days Average Price: $1,203.28
2011 Units Rented: 492 Average Market Time: 23days Average Price: $1,288.00
Total Price Increase of 7.04% with Average Market Time declining by 9 days.
2010 Units Rented: 547 Average Market Time: 40days Average Price: $1,719.39
2011 Units Rented: 782 Average Market Time: 29days Average Price: $1,898.68
Total Price Increase of 10.43% with Average Market Time declining by 11 days. Also very interesting is that the number of units rented increased by 43% yet we still had a substantial decrease in market time as well as a substantial increase in price.
2010 Units Rented: 259 Average Market Time: 38days Average Price: $2,321.22
2011 Units Rented: 355 Average Market Time: 29days Average Price: $2,479.89
Total Price Increase of 6.84% with Average Market Time declining by 9 days.
When we look at this data what does it tell us? The most important number we want to look at is Market Time. Market Time will always be the first to change when supply and demand shifts. Prices will change after a sustained period of increased Market Time. Market Time will always shift from month to month as some months are more popular for renting than others. If we were to break the data down month by month we would want to compare October 2011 to October 2010 for example, as opposed to October 2011 to September 2011.
What does all this mean for the 2012 rental season? In my opinion the 2012 rental season will remain very strong. I believe we will see moderate price increases, however not some of the double digit growth we saw last year. If we just look at the numbers you might say I’m wrong. Look at the 2 Bedroom data. We saw an increase in price by 10% plus an increase in supply by 43% and a decrease in market time! Just looking at these numbers one might say “Well, if supply doesn’t increase at all we very easily could see an additional 10 or even 15% increase in price again.” If Lakeview was an isolated market, then yes this could be true. However, we must take our blinders off and consider other neighborhoods as well such as Buena Park, Uptown, Anderonsville, Edgewater, and others that can be comparable substitutes for those looking in Lakeview. It is these substitute areas that will help absorb some of the demand from Lakeview as renters get priced out.
Paul Blackburn is an Illinois licensed Realtor and Broker with @ Properties in Chicago. His experience ranges from new construction development, condo conversion and luxury restorations to residential leasing and sales throughout Chicago. He has served as an expert witness on both residential and commercial property values and has been interviewed by numerous sources such as Fox News Chicago and the Chicago Tribune. CONTACT PAUL AT ANYTIME FOR ASSISTANCE SEARCHING FOR A NEW HOME, TO SELL OR LEASE AT PAUL@PKBLACKBURN.COM