The cost of renting in Chicago just continues to go up. Just weeks after news that one-third of Chicago renters spend half their income on rent, Crain’s is reporting that the cost of renting downtown apartments has reached 2007 levels. This trend is due, in large part, to landlords recognizing that demand far outweighs supply.
Rent in downtown Chicago now averages about $2.29 a square foot in the first quarter of 2011, a 2.7% increase over 2010 fourth quarter rates and a 6.0% increase compared to last year at this time. The cost of renting, according to Appraisal Research Counselors, will just continue to climb. They predict that rent will continue to rise for about another two years, or until supply finally meets demand for apartments. These predictions are supported by the numbers; there’s 5,226 more renters this year, as compared to 2008, meaning the rental market has seen a 35% increase in the number of renters.
Another trend that speaks to this raise in rents comes from how many downtown buildings are now converting from condominiums to apartments, a reverse in how real estate was working just a few short years ago. In the past three years alone, developers have created 5,800 more rental units. That number is expected to increase as well, considering that developers currently have another 7,400 units under development. This increase in number of units may oversaturate the market eventually, but for now landlords see this as a way to fill demand.
But attempting to catch up to demand doesn’t make renting any more affordable. In fact, rent is higher than ever before. So, even with tighter lending standards, it makes sense to think about buying. In fact, the reverse trend is currently true in the condo market; there’s a glut of unsold condos on the market, meaning sellers are more willing to negotiate than ever before.
While landlords continue to list apartments at an unheard of pace, developers have already listed another 2,500 condo units for sale so far this year. Check out CondoDomain’s downtown condo listings by searching the MLS here.