Chicago Apartment Market In Flux Because Of Pandemic
A year ago, before the pandemic, Chicago renters were flocking to luxury downtown high-rise towers because apartment dwellers yearned to live in the urban heart of the city close to jobs, great restaurants, entertainment and high-end retail shops.
However, when the COVID-19 pandemic upended urban living last March, hundreds of restaurants, shops, bars and theaters shut down. At the same time, major corporations stressed a work-from-home business model, reducing the number of employees working from downtown offices during the day.
Realtors say there still is strong demand for rental units in walk-up buildings with outdoor space, especially in lakefront neighborhoods such as Old Town, Lincoln Park, Lakeview, Edgewater and Rogers Park.
In addition, more young renters also are opting for renting in the suburbs, searching for the wide-open spaces that make social distancing and quarantining easier, rental experts say.
Demand for apartment living has declined more in urban areas like downtown Chicago which relies heavily on mass transit, noted multi-family lender Mike Dury, president and chief executive office at Merchants Capital, which makes apartment loans in Chicago, Indiana, Minnesota and New York City.
“Not everyone will want to work from home permanently, Dury told Midwest Real Estate News. “People will want to live close by their jobs again.” However, the return to downtown rentals will be slow to return to normal, especially in Chicago, he said.
Demand is high for the suburban rental environment for apartment dwellers who can afford to make the move and who have kept their jobs during the pandemic, Dury noted.
Help from Uncle Sam
A whopping 10 million apartment dwellers fell behind on monthly rent payments as of January, 2021, reported the National Apartment Association.
However, help is on the way via the $1.9 trillion American Rescue Plan which recently passed Congress and was signed into law by President Joe Biden.
The plan includes a range of measures which will have a major impact on both renters and landlords. These components include $27.4 billion in rental housing assistance, an additional $300 per week in unemployment assistance through September 6, 2021 and one-time payments of $1,400 to those earning less than $75,000, and to couples earning below a $150,000 threshold.
The question is how long will it take to get those bucks into the cash-strapped hands of the nation’s apartment renters?
Home loan rates rising
On March 18th, 30-year fixed loans averaged 3.09% nationwide, up from 3.05% a week earlier. A year ago, 30-year fixed mortgages averaged 3.65% Meanwhile, 15-year fixed home loans averaged 2.40%, up from 2.38% a week earlier. A year ago, the 15-year fixed mortgage averaged 3.06%.
The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit.