Apartment Rents On Rise As Landlords Prepare For Tax Hikes
Squeezed by ever higher real estate taxes and operating costs, most Chicago landlords are planning rent increases this spring.
The median apartment rent in the city of Chicago rose 5.5% since January of 2022 to $1,375 a month, reports Apartment List, a national analyst of the rental market, in its January Rent Report. One-bedroom units in the Windy City now rent for a median of $1,277, while two-bedroom layouts go for a median of $1,386.
Rent increases actually eased a bit in 2022 as the pandemic slowed. Between January and December of 2021, Chicago rents rose a whopping 15.6%, Apartment List reported.
Last year, rent increases generally averaged 4.5% in North Side walk-up buildings. However, pandemic “catch up hikes” of up to 20% have occurred in posh downtown high-rises, experts say.
North Side landlords are nervous because the first installment of the 2022 real estate tax bill is due on April 3, 2023, only three months after the second installment of the 2021 bill was paid on December 30.
The first installment of the 2022 real estate tax bill will be 55% of the second installment of the 2021 bill. So, if the December bill was $10,000, the April, 2023 bill will be $10,500.
Both bills reflect extremely hefty reassessment numbers in the city of Chicago passed on by Cook County Assessor Fritz Kaegi. Reassessment increases ranged from 38% to 55% in Lincoln Park and Old Town. Hefty rent hikes likely will follow in spring and summer of 2023 when new leases are drafted.
Median rents in Chicago are 2.3% higher than the national average of $1,344 a month. However, Windy City rents still are a relative bargain. Chicago rents rank 56th among the most expensive top 100 large U.S. cities, reports Apartment List. Renters in ritzy Irvine, Calif., pay a median rent of $3,067.
Compared with the city, rents actually are more expensive in Chicago’s northwest suburbs. Apartment dwellers in Arlington Heights, which was hit with an 11.8% rent increase over the past year, now pay median rent of $1,451 on a 1-bedroom unit, and $1,802 for a 2-bedroom layout. In Schaumburg, rents rose 9% over the past year. Renters now pay a median of $1,514 for 1-bedroom units and $1,845 for 2-bedroom layouts.
Rental experts say apartment dwellers generally should budget 30% of gross income for rent. However, the Bureau of Labor Statistics reported that average hourly wages nationwide have grown 23% over the past five years, while rents have climbed 37%. The typical full-time U.S. employee worked nearly 63 hours in October of 2022 just to pay the average rent of $2,040, Zillow reported. Therefore, 36% of the average workers gross income was spent on rent.
The Home Front column found the following assortment of available rentals in lakefront neighborhoods on Apartment List:
Near North Side. Some 2,003 apartments currently are listed for rent on the Gold Coast, Streeterville, and Near North Side. Twenty-nine units are available at The Sinclair, 1201 N. LaSalle St. Studios with 505 square feet go for $2,129. One-bedroom floor plans with 654 square feet rent for $2,528. Two-bedroom layouts with 1,185 square feet are priced at $4,420.
Lincoln Park. There are 1,321 units currently listed for rent in the neighborhood. At the Belden Stratford, 2300 N. Lincoln Park West, renters can choose from 127 available units in the renovated former hotel. Studios with 552 square feet go for $2,510. One-bedroom units with 560 square feet rent for $2,610. Deluxe 2-bedroom layouts with 1,043 square feet lease for $5,163 a month. At Eugenie Terrace, a high-rise overlooking Lincoln Park at 1730 N. Clark St., prospective renters can choose from 41 available apartments. Studios with 511 square feet go for $1,848. One-bedroom units with 961 square feet rent for $2,415. Two-bedroom layouts with 1,175 square feet lease for $3,695 a month.
Lakeview. Some 538 apartments currently are listed for rent in the neighborhood. Wave Lakeview, 420 W. Belmont Ave. near Belmont Harbor, currently has nine available units. Studios with 565 square feet go for $1,941. One-bedroom units with 532 square feet rent for $1,926. Two-bedroom layouts with 1,145 square feet lease for $3,561 a month.
For renters who can’t afford luxury apartments downtown, or in lakefront neighborhoods such as Old Town, Lincoln Park, Lakeview and Edgewater, some nice units are located in the first ring of neighborhoods outside downtown, noted Ron DeVries, senior managing director of Integra Realty Resources, a consulting and appraisal firm.
In some cases, rents in outlying neighborhoods, such as West Town, Logan Square and Avondale, are 20% lower than downtown and the lakefront, he said.
However, 2021 real estate tax bills in many small walk-up buildings in Avondale jumped 24% in 2022, so those bargains may be evaporating soon.