Well, the craziness continues. Another apartment developer just acquired a piece of land in the west loop on Jackson and plans to break ground by November on a new apartment building. Buildings that broke ground at the beginning of the rental boom are now finally open and filling up quickly but the question still remains how long will this craze last?
Personally, I’ve seen market times increasing for rentals in Chicago. I’m observing this from my own personal listings only and have not run my own data analysis but I would assume market times are slowly increasing across the board. Prices increased a great deal over the past couple years but I cannot see any large year over year increase in 2014 as thousands of new class A rental units hit the market.
What I find most amazing are the amount of developers who continue to push forward and investors who continue to acquire large scale apartment projects as cap rates continue to decline as prices rise….when will it end? Many apartment developers continue to use to the phrase “apartment demand is sustainable” but for those of us who have a half way decent memory we heard this phrase plenty of times from developers in 2005, 2006 and even at the end of 2007 when the condo boom was coming to a screeching halt. Will we ever learn?
Smart Money: I saw smart money move over a year ago from apartment buildings back into condo development. Right now they’re sitting pretty selling out even before completion of their small projects.
Sure, there will always be demand for apartments but if there is one thing the real estate market has taught me, it is that when demand is for 2,000 units developers love to build 4,000.
One of the questions I ALWAYS get asked, whether by friends or by clients, is “When should I seriously start looking for a new place to rent?” How many days before I need to move should I start shopping?
In Chicago the best time to start looking for a place to rent is roughly 60days out. Privately owned condos come on the market for rent at various times. If you’re looking for August 1st for instance you may see a privately owned condo his the market anywhere from June 1st or sooner or you may see them come on the market at the end of July. A great rule of thumb though is to start looking 60days out. Make sure when you are looking that you are only looking at units that fit your move in date. The rental market is extremely hot right now so owners have absolutely zero incentive to keep a place vacant for a tenant. For instance if a place is available for August 1st, owners will not hold it for September 1st.
With all this being said though it is never too early to start looking online! You can always look online and even have a Realtor send you listings in order to start to get an idea of what your money can buy you. This is extremely important in the current rental market as places rent fast (typically in a few days). Looking online for a while before actually shopping for a place will allow you to understand what a great deal is as soon as you see it and then you can jump on it!
How much can a landlord raise your rent in Chicago? Some people believe there is a “Rent Cap” in Chicago as there may be in other cities that have some sort of rent control. In the city of Chicago, however we have no such rent control. Your landlord can raise your rent as much as he or she would like provided that you do not have an “option to renew” clause in your lease. If you are asking yourself “What is an option to renew?” then you probably don’t have one in your lease as it is NOT STANDARD in the typical Chicago Apartment or Chicago Condominium Lease.
Rent prices in Chicago have increased from 2010 to 2011 roughly 7 to 10% depending on neighborhood and of course depending on what size of unit you have. In some areas One Bedrooms have increased 10% while Two Bedrooms may have only increased 5%. Analysts are predicting a 5 to 6% increase in 2012. Given the state of the market I find this to be a fair and accurate assumption.
While the landlord can raise your rent as much as he or she would like they also must provide you with some notice which will vary depending on the lease you may have signed. Typically the landlord has to give you notice, in writing, of whether or not he/she plans to renew your lease and at what price. This typically must be given 30 to 60 days in advance but may vary depending on your lease.
Auto Renewal Option Many people do not believe that an Auto Renewal Option is legal. This is when the lease states that if you do not contact the landlord in writing to state that YOU WILL NOT BE RENEWING then your lease automatically renews. This is in fact completely LEGAL! It is not standard language in a Chicago Apartment or Condo lease however many individual landlords may add this language.