There have been several articles written recently that have talked about rental prices "slipping" in Chicago. While year over year prices are up at near double digit percentages, the month to month has slightly...."slipped." It amazes me how closely reporters follow the real estate market. They are so busy looking at the nuances of the market that they forget to monitor the overall trend of the market.
Recently I've run my own numbers on the state of the rental market, which will soon prompt me to write a blog with specific data which will address market price trends, market times, current inventory levels, etc. However, for now I just want to give my basic thoughts.
Traditionally the fall is always the start of the "slow season" for Realtors and Leasing Agents. October 1 marks the last big move day for Chicago until the Spring. We see less renters looking, but at the same time supply is decreased because less leases are coming due. However, psychology plays a roll in this market. This psychology says "I don't want my place to sit vacant in the winter." Ironically, these same people may not say that about summer, but the idea of a vacant home in the winter brings terrible thoughts to mind such as bursting pipes, snow removal, heating costs, etc. Therefore, landlords are typically more flexible on rent at this time of the year. It therefore only makes sense that month to month prices would slightly decline in this period. Just because prices have declined and occupancy levels have "slipped" by a sliver of a percent does not mean the rental market is in free fall.
Instead, what we need to do is compare year over year trends. For instance: it is expected for prices to decline from September compared to November. But, how much? We need to evaluate the decline from last year and compare it to the decline from this year. This could give us insight into how the market MAY be trending.
Journalists love to write articles with catchy headlines such as "Apartment Market Tumbles." The average reader will read the article whether it is correct or not. I always read them, even if they are frequently inaccurate because I'm curious. When I, however, write a blog I do not have the luxury of being grossly inaccurate the majority of the time. I write blogs like this because I want to obtain clients, therefore I need to earn their trust. I do that by being as correct as possible and not just write a blog with a "I gotta read this" headline.
My next blog will evaluate the rental market properly. You'll see the raw data from what I call a "leading indicator" in the rental market which are privately owned condos and homes. I will explain why I find these properties to be leading indicators of the rental market and where I think the rental market is going into the winter and into 2012.
Paul Blackburn is a licensed Realtor and Associate Broker with @ Properties. Paul specializes in leasing and sales of the Downtown, Near North and North Side neighborhoods of Chicago. Paul can be reached via e-mail at anytime of day: Paul@PKBlackburn.com