"Chicago rents are in freefall" (real estate market, rental)

[paytonc]

Originally Posted by Vlajos

Zumper is garbage.

Source:
“Caveat Rentor” – beware of crazy rent statistics | City Observatory

Note that they don't even pretend to look beyond the most obviously available data, eg the stuff handed to them on a platter:
https://www.zumper.com/blog/2017/08/...ter-with-data/

[emathias]

I never spent over 20% of my income on rent when I was a renter and more often it was in the range of 10-15%.

Right now, at The Marlowe across the street from me, the least expensive remaining studio apartment is listed for $1,912/month for 480 square feet. The most expensive remaining unit, a 2-bedroom with 1,194 enclosed square feet plus a wonderful, ~400 square foot terrace, is $4,687/month. I don't think most of the people renting at those prices are sticking to 10% or even 20% of their income.

Domu seems to think that 15%, 25%, and 35% of gross income are good targets for rent affordability. At 35% of gross rent, to live in The Marlowe someone would need to earn $65,555 to stretch and barely afford that $1,912 studio. At the other end, Domu figures that someone with gross annual earnings of $374,960 could comfortably afford The Marlowe's most expensive remaining unit with 15% of their income going to rent. $65k/year is at least 25% below River North's median income depending on whose data you believe.

Point2Homes.com says that River North (which they essentially define as the 60654 zip code) had a median household income of $98,196 compared to an average household income of $144,424. That's a pretty broad difference. Average household in River North has over $800,000, too.

[Vlajos]

Originally Posted by paytonc

Source:
“Caveat Rentor” – beware of crazy rent statistics | City Observatory

Note that they don't even pretend to look beyond the most obviously available data, eg the stuff handed to them on a platter:
https://www.zumper.com/blog/2017/08/...ter-with-data/

Yep, it's garbage. The media had stopped reporting Zumper's "statistics" for a while even. I guess they are back to it.

[personone]

Originally Posted by RamenAddict

There is more to it than that. I think a lot of people are willing to pay more for amenities like having central AC that they can control, particularly when more and more jobs are offering telecommuting at least some of the time. If you are going to telecommute once or all week, do you really want your apartment to be 85 in winter or to have no AC or only one small window AC? Do you really want a place that isn’t really wired or set up to allow you to have a home office? Even if you only have to do some work on the weekends, you want to be in a place that’s going to be comfortable.

Not only that, but I've known people who have lived in older buildings that have had all kinds of problems with leaks, etc when it rains/snows. All problems with rodents in some buildings. That can cause major stress. Older bathrooms and kitchens, and smelly hallways and stained carpeting can be nasty. Why not just pay a little more for a nice, clean place where you don't have to worry about any of that and you enjoy coming home to?

That's not to say the building has to have all the bells and whistles or actually has to be brand new. It just has to be well-maintained. I did live in an ultra-modern high rise with all the bells and whistles when I first moved to Chicago, and absolutely loved the building. However, the price was steep.

I now live in an older mid rise building, that has been completely renovated in the inside (building and units) with SS appliances and new hardwood laminate flooring. The price is much more affordable, and the building is very well maintained. The maintenance and upkeep of the building is most important.

In my experience, most "new" buildings have much better maintenance/upkeep than "old" buildings.

[personone]

Originally Posted by chicagobear

"Chicago rents are in freefall. The median 1-BR asking rent plunged 10.2% in June from a year ago, to $1,500, and is down 26.8% from the peak in October 2015. For a 2-BR, it plunged 15.8% and is down a breath-taking 31.7% from the peak in September 2015.

Chicago is in a special category in terms of big cities: There has been plenty of new construction in recent years, but the population has been declining as tax burdens are growing while the city is tottering very slowly toward what may become the largest municipal bankruptcy filing in the US."

https://wolfstreet.com/2018/06/29/us...ases-declines/

City-wide that is probably true, but there is no free fall in the new/newer construction rents that you will find in the city's core. In fact the quote about there being plenty of new construction despite population decline, is because there has been an influx of people downtown. The population loss is in other parts of the city. People are moving into these new construction buildings and are paying top dollar. Look at those problems, and you will see that there is no free fall in rents there.

[RamenAddict]

Originally Posted by personone

Not only that, but I've known people who have lived in older buildings that have had all kinds of problems with leaks, etc when it rains/snows. All problems with rodents in some buildings. That can cause major stress. Older bathrooms and kitchens, and smelly hallways and stained carpeting can be nasty. Why not just pay a little more for a nice, clean place where you don't have to worry about any of that and you enjoy coming home to?

That's not to say the building has to have all the bells and whistles or actually has to be brand new. It just has to be well-maintained. I did live in an ultra-modern high rise with all the bells and whistles when I first moved to Chicago, and absolutely loved the building. However, the price was steep.

I now live in an older mid rise building, that has been completely renovated in the inside (building and units) with SS appliances and new hardwood laminate flooring. The price is much more affordable, and the building is very well maintained. The maintenance and upkeep of the building is most important.

In my experience, most "new" buildings have much better maintenance/upkeep than "old" buildings.

Yes, I moved into a place that had been cosmetically renovated, but on the cheap... there were new appliances, but many issues still remained. The maintenance staff was not responsive at all and issues would not get fixed. Lights would regularly go out in the hallways and take weeks to be replaced. The laundry downstairs would often only have one washing machine working. The water often had to be turned off for repairs. The front entry lighting wasn’t timed correctly so it was turning on in the daytime and off at night. They only seemed to care about renovating the prior units (which would take 3+ months to do a single unit and all the dust and debris would come into the other units). It was certainly worth paying a couple hundred more for a nicer place that was kept up. The maintenance in my new place, while not brand new, is MUCH more responsive.

[MassVt]

There's still something to be said about living in an actual neighborhood, and not in high-rises, which can be quite sterile sometimes. Living in a nice two-family home, for instance, surrounded by grass and trees, can be very desirable..

[personone]

Originally Posted by MassVt

There's still something to be said about living in an actual neighborhood, and not in high-rises, which can be quite sterile sometimes. Living in a nice two-family home, for instance, surrounded by grass and trees, can be very desirable..

I agree. That is actually another big reason that I moved from my modern high-rise downtown to the building I live in now. The neighborhood is much more exciting, and is a “real” neighborhood. Greenery, park, local stores, etc. I really like my apartment building too; as I mentioned above, it is a renovated mid-rise (5 floors) but very well-maintained.

[Chicago60614]

Originally Posted by chicagobear

"Chicago rents are in freefall. The median 1-BR asking rent plunged 10.2% in June from a year ago, to $1,500, and is down 26.8% from the peak in October 2015. For a 2-BR, it plunged 15.8% and is down a breath-taking 31.7% from the peak in September 2015.

Chicago is in a special category in terms of big cities: There has been plenty of new construction in recent years, but the population has been declining as tax burdens are growing while the city is tottering very slowly toward what may become the largest municipal bankruptcy filing in the US."

https://wolfstreet.com/2018/06/29/us...ases-declines/

I wish people would stop creating these click-bait articles. They twist and turn rent information to grab some intense sounding news to get people to click and see what's up.

I've been at a real estate investment company for over a decade, doing research and accounting on tens of thousands of apartment units across the country, including many high profile buildings in Chicago.

Chicago is chugging along despite thousands of new rentals being delivered every six months. It's actually impressive the prices haven't fallen, although it's a direct correlation to the fact the central business district has been adding 10,000 to over 15,000 new jobs every year since the recession and the downtown population is obviously booming.

Year over year rents in Chicago are up a few percent, it really varies based on deliveries, some months are more flooded than others, etc.

Chicago rents aren't increasing at a crazy rate anymore, they're just clicking up a bit, which is probably quite good for the market to cool off and rest a bit. Still given the high rate of deliveries it's impressive.

For the article to say the population decrease in the city is a factor in market rents "crashing" is a huge red flag right there. The areas in the city seeing population declines are on the far fringe regarding industry explanation of what rents are doing in the city. People focus on larger institutional owned buildings, mostly in the central and northern areas of the city. People rent for sure on the south/west sides, but it's much more "mom and pop" type people who own a three flat here and a three flat there and rent then out via signs or online, not really large scale institutional managers and operators. They exist for sure, but the meat and bones of the rental market in the city THAT'S REPORTED ON, takes place in the central, northwest and north sides for the most part. Areas that are growing in population and and where rents are still strong.

[personone]

Originally Posted by Chicago60614

I wish people would stop creating these click-bait articles. They twist and turn rent information to grab some intense sounding news to get people to click and see what's up.

I've been at a real estate investment company for over a decade, doing research and accounting on tens of thousands of apartment units across the country, including many high profile buildings in Chicago.

Chicago is chugging along despite thousands of new rentals being delivered every six months. It's actually impressive the prices haven't fallen, although it's a direct correlation to the fact the central business district has been adding 10,000 to over 15,000 new jobs every year since the recession and the downtown population is obviously booming.

Year over year rents in Chicago are up a few percent, it really varies based on deliveries, some months are more flooded than others, etc.

Chicago rents aren't increasing at a crazy rate anymore, they're just clicking up a bit, which is probably quite good for the market to cool off and rest a bit. Still given the high rate of deliveries it's impressive.

For the article to say the population decrease in the city is a factor in market rents "crashing" is a huge red flag right there. The areas in the city seeing population declines are on the far fringe regarding industry explanation of what rents are doing in the city. People focus on larger institutional owned buildings, mostly in the central and northern areas of the city. People rent for sure on the south/west sides, but it's much more "mom and pop" type people who own a three flat here and a three flat there and rent then out via signs or online, not really large scale institutional managers and operators. They exist for sure, but the meat and bones of the rental market in the city THAT'S REPORTED ON, takes place in the central, northwest and north sides for the most part. Areas that are growing in population and and where rents are still strong.

I completely agree. It is obvious that the article was written by someone who doesn't live here. Which is why I mentioned that someone can’t take the averaged data of the 3rd largest city in the US and tell a complete story or make a conclusion based on those averages. It’s far more nuanced than that.