Within the past year to 18 months, many trying to sell their condos have faced a glut of competitive units when they sell. The Condo Market Sluggishness here in Chicago forced many owners to try to rent out their units, rather than leaving their unit vacant and unsold.
As reported by Chicago Tribune Real Estate Columnist Mary Umberger in Sunday's Trib, for traditional landlords - those owning larger apartment buildings - these new "landlords by default" create more competition, have driven down rents in many areas, and have forced many lessors to offer generous incentives, discounts, or even free rent in order to entice new tenants. Many are concerned about a "shadow market" of condo units for rent.
Although some Chicago Neighborhoods continue to have a vibrant rental market, according to Judith Roettig, Executive Vice President of the Chicagoland Apartment Association, vacancies in many others is running 8 to 10% - higher than the usual 4-5% vacancy.
What concerns her organization's members even more, however, is the high percentage of new tenants who have demanded considerable rental incentives or discounts for renting a particular unit. This creates a problem some of the larger landlords refer to as low "financial occupancy" - discounted tenants reducing the overall revenue of a rental building, versus what it could have been were the discounts not needed.
Landlords fear that as the Unemployment Rate in Chicago remains high - over 10% in the City of Chicago and across IL - the rate of vacant apartments will increase as well. Many younger buyers might elect to move home with their parents if they cannot find a suitable job. Others, to save money, will buddy up with a roommate.
The roommate scenario might offer a bit of a bonanza for those renting out two-bedroom or larger apartments, at the expense of lessors of smaller one-bedroom or studio units.
Please see our post today via BlogChicagoHomes.com.
DEAN & DEAN'S TEAM CHICAGO
Same thing going on here as far as more rentals and more people to rent them, as the short sales and foreclosures are driving them to end up in a rental situation. Our rents are good though, and not taking too long to find a good tenant. Although in years past it might have been a couple days, it's been a few weeks...who knows what the future brings.