It’s been common knowledge that Chicagoland’s rental market is on fire, but is that narrative slowly changing?
For some time now, the rental narrative has been one as commonly told as that of low mortgage rates. Rents, spurred on by surging demand the nation over, have risen strongly, while the rental vacancy rate has fallen to historic lows.
Did that trend continue in 2015’s first quarter, though? Courtesy of the latest trends report from Reis, we were granted an uncommonly detailed look at our local rental marketplace, and arrived at a surprising conclusion – Chicagoland’s rental market may finally be leveling out.
First, take a look at the graph below, which shows how rent has grown in the U.S.’ largest metro areas from 2014’s fourth quarter to 2015’s first quarter:
It’s very interesting, what’s happened so far this year. While markets such as Houston and San Francisco have seen their rents rise 1 and 1.8 percent, respectively, Chicagoland’s increased by a minuscule 0.3 percent, among the lowest of the metro areas we sampled.
And when it comes to average effective rents, our next graph shows that Chicagoland certainly remains cheaper than other large, world-class cities:
It’s rather amazing to consider that Chicagoland’s average rent is around a third of New York’s!
Finally, here is a graph on the 12-month trend of rental growth:
As you can see, Chicagoland’s 2015 Q1 number is no fluke. Even when we stretch back to early 2014, Chicagoland’s rental gain has been nearly the slowest in the nation, with only Los Angeles’ 2.6 percent squeezing past it.
Could it be that Chicagoland’d soaring supply of rentals is keeping rents in check? It’s a distinct possibility, and one we’ll be tracking very carefully as 2015 progresses; after all, if rents balance out in Chicago, they’ll stand as a most interesting contrast to median home prices, which only continue to grow out of the reach of the typical consumer.