Across the nation, securing an apartment has become harder and harder. The news has caught on – pieces on the rental market have appeared on 60 Minutes, The Atlantic, and John Oliver.
If you looked for an apartment during the pandemic, you may have seen apartments sitting on the market for months and desperate landlords offering free months of rent. Those days are gone. Today, the rental market is brutal.
My clients are seeing apartments rent in just a couple of days and the best units are going for over the list price. I just saw a nice, but nothing amazing 2-bedroom apartment in Lincoln Park listed at $3200 rent for $3500! The data back it up – rents in Chicago are up 11% from last year (and even more in popular neighborhoods).
Before we talk about how we win in this market – let’s go over some of the reasons
the rental market is so tough:
Record Household Formation
After years of living with their parents or with roommates during the pandemic,
singles are antsy to live on their own. More than 80% of the new households formed
since 2020 have been individuals living alone. This record-setting pace of new
households has put a massive strain on the rental housing supply. With a record
low supply of rentals, prices and competition are through the roof.
People Want Bigger Places
Not only do Americans need a break from family and roommates, but they also want
more space for themselves. One reason is the growth of work-from-home. People who may have rented a 1-bedroom apartment now want an extra room for their Zoom meetings. The demand for more space also contributed to the strain on the rental housing market. Cities just don’t have enough space to go around.
People Aren’t Moving
The news is out that finding an apartment is such a challenge and rent inflation is
skyrocketing. Renters that may have been tempted to find a new apartment are
staying in place, leading to still lower rental supply.
Housing Prices and Interest Rates
In 2021, skyrocketing home values priced many young families out of buying their
first home. Now, interest rates above 6% have had a similar impact. These families
that can’t buy has led to more competition for the rental units that are available.
Rising interest rates have also made building new housing developments more
expensive, compounding the problem.
Strategies to Win in a Tough Rental Market
My clients and I have had sucess finding apartments for our client’s despite the
competition. Here are some ways we beat the competition.
Look Through New Listings Daily and Act Fast
In a market where the best apartments are renting in a matter of hours, speed is
everything. I can set up a search that sends you new listings fitting your search
criteria as soon as they come on the market. If you see something you like, we
should get in to see it as soon as you can. I can usually get my clients in within
24hrs. Or, if the place looks perfect, I can get you the application right away!
Be Prepared to Stand Out
In years past, landlords mostly selected tenants in a first-come first-serve way.
The first qualified applicant would get the apartment. Now, it’s become standard
practice to take several applications and take the most attractive offer.
In this market, you can assume that any nice apartment will have several
applications. You need to prepare to make your offer more attractive. Adding
$50 – $150 to the rent amount (depending on the price bracket of the apartment)
and/or a second year to the lease can set you apart from the competition. You
might even want to cap your search a bit below your actual budget so you have
some extra room to offer more.
Expand Your Search to Less-Competitive Neighborhoods
Certain areas of Chicago have more competitive markets than others. Some
neighborhoods that have become super-competive include the West Loop, Lincoln
Park, and Old Town. For the most part, the closer you get to The Loop – the tighter
the market will be.
It might make sense for you to look a little further out. Even a couple blocks can
make a big difference. I had a client try looking north across Diversey from Lincoln
Park into Lakeview. It was just a few blocks but the competition was significantly
lower and they were able to get into a nicer space than their budget was delivering
in Lincoln Park.