Chicago Real Estate Rental Market Hot

As Chicago home values drop, rental prices rise. As more Chicago homes become vacant, rental buildings fill up.
But the surge in the Chicago rental market is not just a sign of a struggling economy.
“More and more people are renting; more and more people are moving back into the city,” said Maurice Ortiz, director of operations for Chicago-based Apartment People. “Companies are starting to hire, and that hasn’t happened in a couple years where you have corporations doing massive hiring again. And, as the economy recovers, people are starting to move out of the roommate situation and they’re living on their own.
“All of that has just put a huge demand on the rental market, and unfortunately there hasn’t been a lot of new apartments added, so there’s just a lot less inventory than there has been in the year’s past.”
Of course, the housing crisis has also boosted the rental industry.
Many available rentals out there belong to underwater homeowners who are forced to rent smaller homes while renting out their properties to try to make the mortgage. Other rentals come from investors who bought condos to sell and can’t.
Other renters are just staying away from the struggling housing market.
“People are still very leery of buying, even the ones that certainly can afford to,” said Ortiz. “It seems like there’s always news about housing prices going down, and people just don’t want to get into it at this point.
“I think it’s still going to be a couple years before people are really feeling any confidence whatsoever in terms of making a purchase, so until they have it, they are going to continue renting.”
More renters, less rentals, higher prices. Ortiz called the current Chicago rental industry a “landlord market,” and he should know, his company has been there from the start.
“We originated this whole apartment rental agency business model,” said Ortiz. “A lot of agents out there initially worked at our office at one point or another. It’s a great concept, and I’m surprised that I don’t see it in more cities.”
Apartment People has been in business for 28 years and has captured multiple awards, including the Better Business Bureau’s Marketplace Ethics Award in 2001.
The company is based primarily in the city but has an office in north suburban Evanston, and Ortiz says the possibility of expanding to the suburbs is good. Right now, however, agents at Apartment People are just trying to keep up with demand in the city.
Ortiz say his company will service 20,000 renters this year; the most in six to eight years. He predicts the downtown area of Chicago to post rent-price increases of 8 to 11 percent this year while the Near North Side could see hikes of 5 to 6 percent. And, many of these buildings are already upwards of 96 percent full.
Many renters in this market end up sacrificing their wants, such as choosing a different neighborhood than first desired or settling on a studio after searching for a one-bedroom.
Despite the lack of supply and rise in demand, Apartment People finds rental units for renters for free and, for now, plans to remain that way.
“There’s so much information online these days,” said Ortiz, noting that Chicago real estate company Koenig & Strey is now charging its customers to work with them. “Why would someone pay if they didn’t have to? It just doesn’t make sense. We have always been free and we plan to stay that day. Even if it takes off with other realtors in the business.
“It’s amazing to have a service like this. We pride ourselves on customer service, and we try to do our best job for each and every person that walks in the door, whether we can help them or not.”
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