Daniel and Yoni Pogofsky of the Pogofsky Real Estate Group

Daniel and Yoni Pogofsky, the brothers behind Pogofsky Real Estate Group – a residential brokerage specializing in single and multifamily properties – explain the nature of Chicago’s rental boom, and how the city’s Millennials play an integral role.

The 2016 rental market in Chicago has been a wild ride thus far. With almost 4,000 new rentals hitting the market this year, it would seem the supply would outweigh the demand; yet, rents continue to skyrocket, and are increasing at a greater rate than last year.

The market has surpassed what many property managers thought possible, and it suggests a number of things for the business of residential real estate agents. Below, we answer four questions about the rental market, and how it applies to agents’ business.

1. Why are Millennials are Still Renting? – If rents continue to rise to record highs (and mortgage rates remain at record lows), why are Millennial still renting? In a word – simplicity. With massive amounts of new high-end rentals around the city, it seems easier for Millennials to rent a swanky apartment for another year or two rather than purchase.

Renting is simple. You move in, pay rent to your landlord, and they will fix whatever goes wrong. Simple, right? The thought of HOA fees, taxes, maintenance, and of course, down payments makes renting seem, by contrast, like watching the Cubs in the World Series. It was a bit nerve wrecking, but in the end, they pulled it off!

2. When Can We Expect Millennials to Start Purchasing? – That said, we are still meeting Millennial clients who, after renting for a few years, are ready to purchase. Student debt is still a concern, but salary increases and record low interest rates have significantly contributed to the thought of purchasing.

But how can agents position themselves to work with such Millennials? For agents looking to build upon their business, social media is the sure fire way to grab those potential buyers’ attention. Additionally, do not assume first-time homebuyers understand the buying process. Stay in front of them by giving purchasing steps/advice. Show them what it takes to find a property, and how the payments break down.

3. How Much Higher Can Rents Really Go? – It’s hard to imagine rents increasing even more than they already have. At some point over the next few years, it’s likely rents will be too high and the Millennial demand will start to ease into buying, seeing it as a better long-term investment. If rents continue to climb over the next two years, we will start to see a hefty increase in high-end apartment vacancies and lower rents around the city. Last year was a strong year for rents, and 2016 prices seem to be approaching somewhat of a peak. Agents should put in extra effort to stay in touch with their renter clients if they want a chance to help them purchase in the very near future.

4. Is There a Rental Market Bubble? – With arguably the largest apartment inventory in recent Chicago history coupled with low vacancy rates, it’s exciting to see how strong the rental season finishes this year. And, with another few thousand apartments planned to hit the market in 2017, the rapid growth of the Chicago rental market is promising, yet somewhat frightening.

Pogofsky Real Estate Group is a residential brokerage specializing in single and multifamily properties that was started in 2014 by brothers/managing partners Daniel Pogofsky (left side of picture) and Yoni Pogofsky (right side of picture). Yoni and Daniel have been in the property management business for more than six years, leasing and managing 2,000-plus units across the North Side of Chicago. In 2014, the Pogofsky Group opened their doors and expanded on the selling & buying side finding success in transitioning from leasing to selling.