Rental Season is Coming Soon to Chicago

It?s no secret to anyone that the current sales market is less than ideal. Under most normal circumstances, average homeowners are holding on to their property and hoping for the housing storm to pass. But what if you have to sell? You could be someone who is being transferred to another city or state by your employer. Or, you might be like one of a million owners who are in financial trouble and simply need to sell.

Sellers Might Want to Consider Renting

People are faced with a difficult decision: Do I try and sell, and hopefully suffer marginal losses and manage the debt associated with selling in a down market? Do I attempt a refinance to bring down my mortgage payment? Or do I hold on and try to weather the storm a bit longer in hopes that the market will turn around? Any way you look at it, these choices seem grim. However, there is another option. It may make sense to rent your unit out for a couple of years.

Today?s post will focus on the Lakeview neighborhood rental market. (Lakeview is defined as Irving Park Rd. to Diversey Pkwy, Damen to the Lake Michigan?map below.) In order for potential sellers to make an educated decision on even considering the option of renting their home, it is important to understand what is happening in the market.

My Thoughts On Lakeview?Flat Rents and Landlords a Bit Panicky

Post-gentrification rental numbers put Lakeview at the upper-middle spectrum of the Chicago rental market (in regards to price, size, and amenities).  With a diverse renter base and an eclectic mix of condos and apartment styles, Lakeview, in my opinion will always do well, no matter what.  From what I’ve seen over the last six months (particularly this winter), landlords have been a bit panicky and frantic to get their places rented in a timely fashion.  I have never been asked more often about price and marketability than I have been this year.  Like any other neighborhood in Chicago, Lakeview is 90% price driven.  What matters most to renters looking during the winter is price.  Consumers know there is a housing crunch and they will try everything they can to capitalize on that.  However, come the spring, it’s a different story all together.

We are right on the cusp of the “busy season” in the rental business.  While traffic is picking up, and there is in fact a flurry of activity, the real wave has yet to crash.  Expect to see a massive swell of renters for all unit types within the next two months.  Year-on-year, 2009 is projected to be an outstanding year for the industry.  Having said that, my advice to landlords out there is:

1. Make sure you get your renewals done at least 60 days before the lease end date.
2. If you want to experiment with rent increases, do it 30-45 days before your lease end date.
3. Advertise your available units as soon as possible- however you go about doing that.  The more traffic the better.

I project rental averages in Lakeview to remain flat because landlords are worried about what people are going to do.  As unemployment increases, insecurity on whether units will rent will become more prevalent in the summer.  That’s not to say that a landlord who delivers a good product has anything to worry about.  If a unit is priced right, looks good on paper, and shows well, landlords will have no problem getting their units rented in a timely manner.

Lakeview Rental Data From the MLS

Studios (condo quality)
Average rental price: $900 for 500 square feet usually no parking available.
Average market time: 2 months

1 Bedrooms (condo quality)
Average rental price: $1.350 for 800 square feet.
Parking typically costs $100-150 extra, however most landlords use parking as a bargaining chip depending on the strength of the applicant.
Average market time: 1 ½ months

2 Bedrooms / 1.5 baths (condo quality)
Average rental price: $1,950 for 1250 square feet.
Parking: Same cost and principal as 1 bedrooms
Average market time: 2 months

3 Bedrooms / 2 baths (condo quality/few single families)
Average rental price: $3,000 for 2000 square feet.
Parking: $100-200 extra
Average market time: 3 months

4 Bedrooms (single family caliber)
Average rental price: $4,000 for 2600 square feet.
Parking: Included
Average market time: 3 months

5 Bedrooms + (Single family caliber or new construction)
Average rental price: $8,500 for 4,650 square feet. This is an average based on 5.5 bedrooms and 4 bathrooms.
Parking: Included
Average market time: 5 months

Some Basic Advice to Landlords This Rental Season

These stats are based off of activity over the last year. My advice to anyone thinking of renting would be to make sure that when you do decide to put your unit on the market for rent, be certain that your place is priced as good as or better than anything else out there. Like buyers, renters are very savvy and tend to know a lot more about the market than they are given credit for. A lot of newer landlords feel the need to price their property based on their monthly housing payment (taxes, assessments and mortgage). The fact is, you might not be able to cover all of your costs. If you can cover your monthly payments or even have a little postive cash flow; consider it a bonus.

We would like to thank TurkeyChik for so generously sharing today’s photo via the Creative Commons License.

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