Rents in Chicago have been on a downward trend since reaching a peak of $1,694 in September 2014, according to the Zillow Rent Index. As of Jan 2015, average rent in the city was $1,605, a decline of 0.5%.
The declining rents can be attributed to an oversupply of apartments and rental properties that came online to meet the growing demand for rental housing as a result of the financial crisis forcing millions of Americans to become renters.
Still, the U.S. Census Bureau reports that U.S. home ownership rates continues to decline. As of December 2014 the home ownership rate was pegged at 64.0%, the lowest level since 2005 when it topped 69.1%. Locally, the home ownership rate in the Chicago Metropolitan Area was 63.6% in 2013, down 1.9 percentage points from the previous three years.
The combination of declining home ownership and rental rates is a strong indication that renters are moving to lower priced units within the region. While Millennials are expected to move towards homeownership, many are still seeking rental units at least in the near term.
New mortgage rules expected to go into effect in July 2015 should make it easier for millions of Americans to qualify for a mortgage which could exert more pressure on local rent prices. But the Chicago housing market is tight and home prices in many parts of the city continue to rise. The median home price in Chicago is $245,000.
The lower rents in Chicago can result in more potential business for residential leasing agents in the area. The increased rental supply offers greater flexibility and options for helping clients meet their housing needs. There is also an increased sales opportunity for Realtors® as more renters start buying homes and condos again and landlords begin selling single family rentals. Home sales are expected to rise in 2015.