Chicago rents fell 12% in 2020. For renters, it ‘restores your faith in humanity.’ For landlords, ‘it’s a huge hit.’
This summer, Marianna Harrison, 41, saw something unexpected on her lease renewal form.
Rather than the annual hike in rent she’d received over the past 12 years for her one-bedroom apartment in Bucktown, her rent for 2021 went down by $50.
“That doesn’t seem like a lot, but honestly, to me, that is a lot,” Harrison said. “It adds up.”
After the COVID-19 pandemic pummeled the film industry, Harrison lost work as a script supervisor. The decrease in rent will save her $600 in 2021, bringing her previous monthly rent of $1,200 to $1,150.
And she’s not alone; in Chicago, rents dropped by almost 12% in December compared to December 2019, according to a new report from Apartment List, a website for apartment rentals. Average rent was $1,355 in Chicago a year ago; it fell to $1,193 in December.
Zillow data, too, marked the starkest plunge in year-over-year rental prices in the Chicago metropolitan area since it began analyzing national rents in 2014, with a decline starting in July and continuing through the latter half of the year.
Zillow reported a 2.2% decline in Chicago-area rents in November compared to a year earlier. When including the suburbs, Apartment List’s figures — which the service claims is more closely aligned to U.S. Census Bureau data — showed a similar decline of 6%, suggesting the suburban markets have not been as hard hit as the city.
Chicago was among the most severely impacted cities when it came to falling rents, said Rob Warnock, who co-authored the Apartment List study. Due to the pandemic, more expensive cities with competitive job markets saw rent decline — many for the first time in a decade.
“It’s really a lot of these denser, really strong job centers across the country — Chicago, San Francisco, Seattle, Boston — where we saw the rent prices really collapse the most dramatically in 2020,” he said.
Chicago was ninth in the nation for the steepest drops in rental prices since the pandemic began in March. Nationally, rent fell by 1.5% at the end of 2020 compared to 2019 after at least three years of increases, according to the Apartment List report.
San Francisco was hit the hardest, with rents dropping 26.7% since March. New York City; Washington, D.C.; and Minneapolis were also in the top 10. But midsize cities like Boise, Idaho; Toledo, Ohio; and Greensboro, North Carolina saw rents grow up to 9.7% in the same timeframe, offsetting the national average.
Apartment List also found that suburban rents stayed mostly stable after a brief summer dip, while cities bore the brunt of the decrease.
The market typically experiences a winter drop in prices, as fewer people move during cold weather. Rents are then higher during summer, as college students and recent graduates look for housing at the start of the school year.
“It was really just those three or four months, where Americans were being told that they needed to stay where they were and cancel big travel plans,” Warnock said. “And it just flipped the market on its head.”
As vacancies rise, landlords around Chicago are doing everything they can to keep tenants in the building, and that includes cutting rent. Some landlords are offering up to five months of free rent for new leasees, said Ericka Rios, cofounder of Downtown Apartment Company, a real estate brokerage that works with 200 buildings in the city’s epicenter.
Others are reducing application fees, offering free parking or cleaning services and cash incentives for those who sign fast, Rios said.
As a small-scale landlord who rents out four homes in Wicker Park, West Town and Avondale, Sean Harper wants to do what he can to keep his tenants — and, if needed, attract new ones.
“I think renters in Chicago are savvy and realize they have options,” Harper said, noting how many new luxury apartment buildings in Chicago offer free rent incentives to attract new tenants. “Small-time landlords need to be just as aggressive.”
He said his tenants have not expressed hardship during the pandemic or asked for a break on their rent. But with leases expiring in the spring, Harper said he’s ready to be honest with himself about the market’s condition, and that other landlords should be, too.
“While I’m hopeful it won’t be necessary, I’m definitely prepared to reduce rental fees or get creative with some kind of renewal discount,” he said.
Some landlords are cutting expenses wherever they can, said Mark Durakovic, principal of Kass Management Inc., a third-party residential property management company that oversees 10,000 residences in the Chicagoland area. And those cuts include his company’s services.
“In some cases, landlords are being left with that decision to lower the rent just to be able to generate some income, which is better than no income,” he said.
For landlords concerned about keeping up with mortgage payments and other expenses, Durakovic said the government needs to create accessible programs that will help replace the loss of rents so property owners can maintain both their rentals and their personal homes.
As founder of Live Here Rental Group, Carolyn Anavi has helped landlords list and rent their properties since 2008, with another decade of experience as an agent prior.
Her company, recently acquired by Berkshire Hathaway HomeServices Chicago, has had landlords ask about selling their buildings entirely to get out of the business over the past year. Many live in other states, or have full-time jobs while managing a property.
“It’s just becoming the last straw,” Anavi said. “When you’re losing month after month of income, it’s a huge hit to your family.”
For some tenants, cutting the rent is being taken as a much-appreciated act of compassion during a tough financial year.
Danny Rockett, a musician and writer who has lived in his Uptown apartment for five years, said his landlord has lowered monthly rent by $60 for everyone in his building for all of 2021.
He already felt his apartment was reasonably priced at $1,250 per month in 2020. This year, his rent dropped to $1,190, saving him $720.
“To see that she was taking $60 off just kind of restores your faith in humanity,” he said of his landlord, a woman in her 80s. “She didn’t have to do that, and she did it anyway. It was kind of a surprise she would be so thoughtful about all of our situations.”
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