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Going, Going, Going Up...Rents Trend Higher

There is new talk of nationwide increases in rent, according to an article by Kelli B. Grant in Wall Street Journal's Smart Money magazine. recently announced that the average rate for apartment and home rentals is up 6.7% from June 2010.  Prices for studio apartments are up 14.3%, and five-bedroom homes are up 12.1%, One- and two-bedrooms are seeing average increases of 2.3% and 2%, respectively. According to, tenants will see the bulk of the rent increases as the year progresses.  further predicts another 3%  in 2012 when current leases come up for renewal.

Christina Aragon, a spokeswoman for, indicated that “Landlords have the power right now.”  This is the result of decreasing vacancy rates from about 8% to 6.2% nationwide over the past year.  There are a couple concurrent trends driving this reduction in vacancy, namely, pent-up demand from people who been packing in roommates, people who have stayed with family during the recession, people who could not find employment upon completing college, as well as people who were homeowners and incurred foreclose.

According to Chris Frey, rental agent with Fulton Grace Realty, "Good apartments are gone in a matter of a couple days, if renters don't have a solid understanding of the market and a ability to work with experienced rental agents, they are likely to end up disappointed."

What does all of this mean for Chicago real estate investors?  The next two years are forecasted to continue these trends which will produce higher gross rental income on existing assets and lure investors and rehabbers to provide more housing options for the growing demand of renters.  All in all, provided no further wave of distressed properties gets dumped into the market unexpectedly, there should be upward price pressure on investment real estate and foreclosure investing.

Michael Hobbs   July 7, 2011

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