When the pandemic began, photographer and public relations expert Mikae Johnson realized she needed a little extra space for social distancing in the apartment she now shares with her 7-year-old daughter. I got
So she rented a two-bedroom, two-bathroom townhouse on the South Loop near McCormick Place for $3,250 a month.
Johnson, director of Simply Bee in Chicago. The agency was paying $2,875 a month in rent for her two-bedroom apartment in South Her Loop, but upgrading to her townhouse is straining her monthly budget. I was. But the supplemental childcare income her company provided during COVID helped. So was staying at home without traveling.
But as the pandemic began to calm down and things started to turn around, she felt pinched again. And the hearth disappeared in the townhouse.
“We were paying a lot to stay in the South Loop and the landlord didn’t even blink when the furnace went out. We felt isolated, we were on a tight budget and I don’t know what I’m paying for anymore,” she said.
Tired of the struggle, Johnson purchased a 1,700-square-foot, two-bedroom, two-bathroom home in Logan Square in December 2021.
Johnson isn’t the only one worried about rising rents. Average rents in the Chicago area are up nearly 9% since 2021, according to Apartment List, an online apartment listing marketplace. As consumers emerge from the pandemic, a combination of inflation and higher demand for units is pushing up rents, with little to no sign of a price reversal soon. At the same time, many of the rental assistance programs offered during the pandemic have ended.
Some, like Johnson, have been able to transition to home ownership. Some people make lifestyle changes or look for more affordable rooms as a way to cope with rising rents.
Alvin Griffin, 46, moved to Homewood in 2017 so his only daughter could get a high school education. Taylor is currently in his sophomore year at Homewood Flossmoor Community High School, and Griffin isn’t looking to leave the area anytime soon.
But when the monthly rent he was paying for a three-bedroom single-family home jumped from $1,750 when he moved to $2,100 last year, he decided to find more affordable housing while staying within the Homewood school district. I knew I needed it.
It took me two months to find a rental that is currently paying $1,500 a month. And finding that space wasn’t easy.
A PepsiCo employee said, “I think we got lucky. A friend of mine was telling everyone about this rental unit on Facebook. I called her and things took off from there.”
Griffin said the current housing market is tough, but he’s handling it the best way he knows how. The money you saved from moving is pouring into your gas tank as you commute downtown.
William M. Bennett, an adjunct lecturer in real estate at Northwestern University, said during the pandemic, landlords were forced to “freak out and offer concessions,” such as offering rent reductions or rent forgiveness for several months. said. of living in an urban environment during a pandemic. ”
However, the rollout of vaccines in 2021 and the return to in-person work and leisure have increased demand for rental units. As a result, concessions were effectively removed from the market.”
Integra Senior Managing Director Ron DeVries said: “In the first half of 2021…I think there was a general sense that in the summer of 2021 everyone would be back in office operations as normal. “So people who temporarily moved in-state or out-of-state decided, ‘Well, I’d better rent an apartment downtown again.’ …But then that requirement came true.” There was never…so it will be interesting to see what happens next year.”
All of the city’s submarkets are seeing rent spikes, according to DeVries, but West Loop is currently the “hottest” market for development, while Bennett says West Loop, River North, Fulton Market is mentioned.
“All of these buildings are renting the same or more than they did before COVID hit,” said DeVries. “So they’ve dropped rents by more than 20% and almost all of these buildings are now renting above pre-COVID levels. So it’s kind of a V-shaped recovery.”
Kyle Stengl, senior managing director of investments at Marcus & Milichup, a firm that specializes in commercial real estate sales and financing, said smaller units like studios are among the worst hit during the pandemic. said he received it. Need more space.
Meanwhile, luxury real estate has been one of the most successful comebacks of the past year.
“High-end luxury buildings are the first to hit when the market starts to fall, but they’re also the first to come back when the market recovers,” said DeVries.
Real estate agent Maria Smith says rising rents are the reason more families are living together. She said low supply, greater demand, property taxes, and inflation were all reasons for rising rents.
“Landlords are raising rents because lights are higher, gas bills are higher, water bills are higher,” said the former owner of three Southland homes via a comedy video on social media. He said he was trying to educate people about buying. “We see children coming back with their parents. We see many families coming together and buying buildings — two stories, three units. Buy, move to the bottom unit, have someone in the other unit pay the rent, people can afford to buy the property because they are using the rent to qualify for the mortgage .”
Rent increases are partly explained by a lack of available units, along with a strong market in 2021, DeVries said.
Going forward, it is unclear whether increasing the supply of units will ease rents as inflation pushes construction costs higher.As renters land units downtown, as they do in 2020, they will move out. There is no incentive to do so.
“Even with these high rents, it’s very difficult to write out the number of new buildings, so we don’t expect to see excess supply,” DeVries said.
For the first time since 2000, sales in the downtown market are expected to fall below 18,000 units this year, and vacancy rates are expected to be less than half of 2019 levels, according to a Marcus & Millichap report.
In the near future, “rents and the apartment market will continue to rise at a much faster pace than inflation,” Bennett said, as demand remains strong due to the “inflationary environment and supply chain issues.”
So Johnson says he will consider buying one when he finds it in stock. “If you need to rent/sell in the future, get creative,” she said. “The interest rates are high, but when interest rates go down, we can make lower offers and refinance. At Home, we found a great home for our family at a low rate, and now we are no longer temporary in the city where we were born and raised.”
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