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This week an article came out in Block Club Chicago (link here) with the title “NYC-Style Apartment Bidding Wars Hit Chicago Renters: ‘If You’re Not Willing To Go $500 Over List Price, Don’t Even Bother.’” If you’ve tried to rent an apartment this summer, you are probably reading this headline and finally feeling seen and heard. But why? How did Chicago, the cleaner, more affordable NYC, turn such a corner? And so quickly?
It’s a perfect storm, and your real estate friends have been predicting it for years.
Let’s start with March18, 2020. The Covid Lockdown changed the world completely. Working from home became a norm, and more interestingly, so did studying. We all know parents learned to help smaller children with their course work during the day, but what about the college students?? I’ve been lovingly calling them “the basement children” since the summer of 2020. High School students graduated and never left for college, college students moved back in with their parents and the students that graduated college in the summer of 2020, made homes in their parent’s basements as they started new jobs and waited for the world to heal.
Meanwhile, downtown Chicago struggled. Young city renters moved back to their parent’s homes, with yards and fresh air, for an easier lockdown experience. New college graduates never moved into the inventory of Chicago rentals and so the market slowed and slowed quickly. Rental prices fell, drastically. Landlords were giving out units at such heavy discounts, I was shocked. But landlords needed to pay their mortgages and taxes and some money was better than none at all. The savvy renters that didn’t have a basement to move into, scooped these units up for CHEAP.
Now let’s fast forward to Summer 2022. The basement children are ready to leave their basements (this is nearly 2+ years of renters hitting the market at once), the class of 2022 college graduates are coming to a fully open and vibrant city looking to start their adult lives in new rentals, work from home is here to stay and now living in a city of your choice is possible without having to work there (remember – we’re the cleaner, cheaper NYC). MOST IMPORTANTLY, those smarties that got their heavily discounted city rentals are not moving out. We have an age-old problem. An enormous flow of demand, with absolutely no supply. Welcome to the rental bidding wars of 2022.
What’s the solution – there isn’t one, at least not any time soon. Chicago has an inventory issue and has had one for years on both the rental and for sale side of real estate. The pandemic made it even worse. Rent control won’t fix it (this is a rant for another time).
It’s best to go into the market with your eyes wide open and your business head on. The days of slowly thinking about an apartment and if you could fall in love with it are over. Finding a rental apartment now is like finding comfy walking shoes. Sure, it would be great if they were perfect, but the goal now is only for them to fit and be comfortable. In a few years, with a few extra dollars in your pocket, you may be able to go into the market a little pickier and get the comfy and pretty apartment/walking shoe. For now, strap in for a bumpy ride. And for God's sake, call your realtor. That’s ME! You need someone to negotiate on your behalf in this zoo we call a summer rental market. Godspeed and happy apartment hunting!