Rents increased 1.4 percent last year from the year before. The median rent for a two-bedroom apartment in Chicago is now $1,285, which is 7.8 percent higher than the national average.
17-Jan-20 The inevitability of higher apartment rents isnt the only threat on the horizon in 2020 for Chicagos renters.
In 2019, rents have increased a modest 1.4 percent year-over-year. Chicagos median two-bedroom rent now is $1,285, compared with the national average of $1,192, reports a new survey by Apartment List, a national apartment research firm.
However, tenants leasing in hot lakefront and downtown neighborhoods easily will pay $2,500 to $3,000 a month for a swank two-bedroom layout in a newer, amenity-filled high-rise.
Over the past year, rent increases have been occurring not just in the city of Chicago but the entire metro area. Nationwide, rents have risen in nine of the ten largest cities, according to the survey.
Some of the biggest increases were posted in the Southwest, where rents rose five percent in Mesa, Arizona, and nearly four percent in Phoenix. Rents in Nashville, Tennessee, rose three percent and nearly three percent in Charlotte, North Carolina.
In Chicago, the biggest cloud hanging over the lakefront and downtown apartment rental market is the forecast of hefty real estate tax hikes. In 2018, former Cook County Assessor Joseph Berrios raised the estimated fair market value of some properties from 30 percent to more than 140 percent in North Side and Northwest Side neighborhoods. Experts say Fritz Kaegi, the newly elected assessor, currently is revising the assessment system for commercial apartment buildings and other properties.
Nonetheless, few apartment owners expect real estate tax relief as long as the city struggles to meet the obligations of the accrued pension debt for police, firefighters, and schoolteachers. Struggling to stay ahead of Chicagos ever-increasing real estate tax burden, more and more landlords are turning to non-refundable rental fees and other monthly surcharges to boost cash flow. Experts say apartment renters who reside in Chicagos upscale neighborhoods should expect spring 2020 rent increases to reflect this trend.
New fees are replacing security deposits
Many professional apartment management companies have stopped taking refundable security deposits, mostly to avoid the massive bookkeeping work to compute the tenants tiny annual interest earnings of 0.01 percent as required by the Chicago Landlord Tenant Ordinance. The annual interest payment typically costs a landlord only a few cents a year per unit, but it is an accounting nightmare for major management firms. Imagine sending out 20 cent checks to thousands of tenants every year. The cost of the postage stamp would exceed the interest payment.
Significant application, move-in, and pet fees generally have replaced security deposits in the downtown rental apartment markets. Application fees range from about $80 to $100 per renter. Non-refundable move-in fees start at about $350 and go to $500. Some landlords also charge move-out fees.
Many management firms also are charging a non-refundable pet deposit of $250 per dog and $150 per cat, plus monthly pet rent of $25 per dog and $15 per cat.
Another creative cash-flow charge dreamed up by apartment management companies is the Communal Amenity Maintenance (CAM) fee. Sparked by the citys recent steep increases in water, sewer, and garbage utility fees, many landlords are now charging a flat $45 monthly pass-through fee for water and sewer usage, trash removal, hallway and general maintenance, and snow removal.
Faced with higher rents and all these rental fees, its no wonder apartment hunters currently living in Chicago are looking to move elsewhere. The 2020 Q1 Renter Migration Report, another new survey by Apartment List, reports that 42.6 percent of current renters are considering moving to another city, while 19.6 percent say they are searching for a place in the metro area outside Chicago. The survey found the most popular destinations are Indianapolis, Indiana (11 percent), Milwaukee, Wisconsin (4.5 percent), and Kansas City, Missouri (4.4 percent).