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Chicago Rents Soar Despite 3,000 New Housing Units This Year

By Margaret Paulson in News on Aug 19, 2015 8:00PM

Tower Crane Chicago_08_19_15.jpg
CucombreLibre via Flickr

If you’ve been anywhere near Streeterville, the West Loop, and especially River North recently, you’ve probably noticed the rapid apartment construction, marked by tower cranes and bluish glass windows, taking over the area.

According to Crain’s, nearly 3,000 new units total have been or will be made available downtown by the end of 2015, and more than 3,200 will be added in 2016, as well as up to 4,500 more in 2017. (Crain’s has a handy map available in case you’re curious about locations.)

Developers are cashing in on super-low vacancy rates, which were just 3.5 percent at the end of the third quarter of 2014, the most recent data shows. When vacancy rates are low, there’s more demand and rent increases, which is what we’re currently seeing.

In case you’re wondering who these rentals are for, take a look at one brand new building’s site, called the Lofts at River East. Aren’t they fabulous? And fairly young-looking? Rents start at an incredible $2,500 for a 1 bedroom, 1 bathroom unit. Want a den with that? It’ll cost you upwards of $3,000. Or check out the brand-spanking-new Gateway West Loop. Rents are a little cheaper here, though the square footage is bordering crackerbox territory (studios are upwards of $1,600 a month for a paltry 399 square feet).

A new Zillow report saw the same underlying trend: First time homebuyers rent an average of six years before buying a home, up from just 2.6 years of renting in the '70s. Zillow economists also found that first-time homebuyers are older today, too; the median age is 33 today, compared to 30 for the previous generation. Also, when Americans do decide to purchase a home, they’re spending more relative to their incomes than ever before.

The trend in later home-buying is certainly related to recent trends in wage stagnation, student loan debt, increasing rents and the financially- and socially-related decisions to delay marriage and having children.

Chicago is also seeing many new luxury development proposals along Milwaukee and Logan Square, near various CTA train lines, and on the Clybourn Corridor. What does it all mean for "the rest of us?" Perhaps a move to the suburbs is in your near future. But I'll probably live with 17 roommates before I let that happen to me.