Chicago’s booming multifamily market is fueling a rapid increase in rental prices. This surge has created a housing crisis for many residents. Rents have climbed 11% compared to last year, with no signs of slowing down, especially as the school year approaches.
From March to June, median rents jumped by over $120, a staggering 7.1% increase fueled by low vacancy rates and high demand, particularly among students. For instance, a unit renting for $1,000 in March climbed to $1,120 just three months later.
Affordability is a pressing issue. By June, the average rent reached $2,200, requiring an annual income of $88,000 to be considered affordable. This rapid increase in rental costs far outpaces wage growth, which stands at 4.3%.
- Quote: “Rents are largely unaffordable to the median earner in Chicago,” says Daryl Fairweather, chief economist at Redfin.
Nearly half of Chicago households are now considered rent-burdened, spending over 30% of their income on housing. This alarming trend highlights the need for affordable housing solutions.
Landlords Benefit from Strong Market
While renters face challenges, landlords are capitalizing on the booming multifamily market. Low vacancy rates and increasing rents have created a profitable environment. Chicago has consistently been a top-performing rental market nationwide.
The robust multifamily market has attracted significant investment. Recent deals include:
- FPA Multifamily’s $60 million purchase of a 270-unit complex in Oak Park.
- MZ Capital’s acquisition of a 166-unit complex in the West Loop.
Conclusion:
Chicago’s multifamily market is experiencing unprecedented growth, presenting both challenges and opportunities. As rental prices continue to rise, the need for affordable housing solutions becomes increasingly urgent.
Source: Summer Demand, Low Vacancy Driving up Rent Prices in Chicago
Randolph is a Multifamily Investment Sales Broker with eXp Commercial servicing Multifamily Buyers and Sellers in the Greater Chicago Area.