Across the nation, rents are going up and securing an apartment has become harder and harder. The news has caught on – It’s shown up 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. Apartments are renting in just a couple of days, landlords are taking multiple applications, 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 to win in this market – let’s go over some of the reasons the rental market is so tough:
1. Record Household Formation
After years of living with their parents or with roommates during the pandemic, singles are ansty 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 is through the roof.
2. People Want Bigger Places
Not only do Americans need a break from family and roommates, they also want more space for themselves. 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.
3. 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.
4. 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 have 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 success finding apartments for our clients 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.