Rental Market Data
The Chicago apartment market is at historic strength and shows no signs of letting up. As you can see from the charts below, Chicago vacancy rates are now below 4% and the average effective rent rate is at a new high and accelerating.
Vacancy Rate
Source: REIS Reports, Inc, 3rd Qtr 2012
Rental Rate
Source: REIS Reports, Inc, 3rd Qtr 2012
There are many factors that account for the positive trend in the rental market. The primary reason is that demographic trends are improving. Demand for housing is driven by the number of households. Chicago has steadily increased its number of households throughout the recession and up to the present. The graph below shows the increase of approximately 80,000 households from 2007 to third quarter 2012.
Source: REIS Reports, Inc, 3rd Qtr 2012
Source: REIS Reports, Inc, 3rd Qtr 2012
Employment is a strong indicator of how the Chicago apartment market is doing. With households and average household income both increasing in the slow-growth economy one would expect the cause to be increased employment (rather than a higher rates of pay). The graph on the right shows how during the recent recession Chicago lost almost 300,000 jobs from the 2007 peak to the 2009 nadir. It also shows that employment has made steady gains since 2009, making up about one third of the lost jobs. Slow growth in employment favors an improving rental market whereas rapid growth would tend to favor home purchases due to increased consumer confidence.
