I don't have a lot of first hand knowledge of the Chicago rental market because I pretty much focus on home sales and purchases. However, from what I do know about the rental market it sure looks like the Chicago market is hot - for landlords.
First there's the data. There have been many articles lately that suggest that Chicago's rental market is taking off. Last week a Trulia blog post told the tale of rents marching upward in the city. The blog included this table:
Just yesterday Crain's reported on the sizzling downtown apartment market. Data provided by Appraisal Research Counselors shows rents rising 9.2% in the last year for class A apartments and 8.5% for class B apartments, though some of that increase may be coming from the introduction of nicer and newer units hitting the market.
However, Crain's goes on to note that there are a lot of new apartments being planned over the next few years - 7200 by the end of 2014 - so that should soak up a lot of the excess demand. You can click on the image to the left for a closer look at Crain's analysis.
Then there's the anecdotal evidence. I hear lots of stories of people having trouble finding a decent rental property and people are clearly more interested in renting vs. buying these days. You have a lot of people whose credit has been destroyed so they have to rent and then you have the people who are so afraid that prices will continue downward that they would actually pay a premium to rent in order to avoid the downside risk.
Case in point: we had a 3 bedroom condo in the loop that we couldn't sell at a price the owner was comfortable with. It was priced a bit below the equivalent rental rate, which was about 5% higher than the previous year. Finally the owner decided to rent it out again at the higher rental rate. Whereas we had very low purchase interest in the unit we were immediately overwhelmed with rental interest - to the point that we had multiple offers within days. We finally stopped showing it but still got calls from realtors with interested renters. Here is the gist of one voicemail I received just this weekend: "I want to get 3 young professionals in to see it. We keep losing everything of course....willing to put this into a bidding war". Boy, that sure sounds like a hot rental market doesn't it?
Crain's also ran a story in March about how rising rents have flipped the rent vs. buy economics in Chicago, which is why I finally bought a home after renting for 12 years. If you click on the graphic to the left you will see Crain's analysis that shows rental costs now 40% higher than buying. In addition, those economics place Chicago at one of the most expensive cities to rent compared to buying.
Eventually, as people repair their credit and get tired of paying more to rent a place than to buy an equivalent space, these renters will become buyers and the pendulum will swing back.