Tag Archives: graphs

Chicago Renters and Owners: A Snapshot

I’ll be off on Friday for the Thanksgiving Holiday, so I thought today we’d do a chart-based photo essay. As I promised at the end of Monday’s article counting Chicago apartments, I went back into the American Housing Survey from 2009 and dug up some more results. There’s a little something for everyone in the following charts and graphs. Take home a few select morsels to argue with Uncle Bob about at the dinner table.

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The Post-Season Apartment Hunting Blues

It’s all over for Chicago. Again.

Something very strange happens in Chicago on October 2nd every year. Not the end of the baseball season. Not the return of Oktoberfest beers. Not the announcement of the Oscar host. It’s the end of the rental season, and it’s arrival is both sudden and predictable. Don’t believe me? Check out the Google Insights for people searching for “apartments” and “rentals” over the past 8 years.

Now check out the seasonal rental activity for a few select Chicago neighborhoods in the MLS going back to 2007, when rental listings were first added to the system:

Neighborhoods: Lincoln Park, Portage Park, Hyde Park and West Town chosen to show consistency across city neighborhoods. Click to enlarge.

You see those annual dips towards the end of the year? That’s what I’m talking about. The most very basic law of economics – supply & demand – has caused the Chicago rental market to evolve into a very unbalanced annual cycle. This is not a chicken/egg paradox – lower demand definitely leads to lower supply and not the other way around. Personally I would think that this is due to many leases starting on the first of the month. Let’s look at what happens on the first of the month in Chicago after October 1:

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Why Credit Scores are False Prophets for Tenant Reliability

A credit score, according to the Fair Isaac Corporation, is calculated based on a weighted average as indicated below.

Source: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

This may come as a shock to landlords. See, landlords generally look at credit scores in hopes that it will give them an easy, quantifiable way of comparing one tenant’s reliability against another, without dipping into criteria that could put the landlord at risk of a fair housing suit. Unfortunately it doesn’t work that way.

Credit scores are a pay to play racket. They get higher only if you borrow and pay back assorted lenders repeatedly. In the modern economy it’s just shy of entrapment. The best tenant is one who doesn’t engage in risky borrowing beyond their means, and is likely to have a very thin credit history. Saying that you want only tenants with high credit scores in your apartment is like saying you only want high rolling gamblers handling your stock portfolio.

Looking at that chart above, and bearing in mind that the average tenant is younger, less experienced and less wealthy than a homeowner, a large portion of the chart can be ruled out while the info that the landlord really wants is only counting towards a third of the score. (more…)

Chicago Real Estate Statistics: Extra Bedroom vs Extra Bathroom in Apartments

Photo of a Chicago Bathroom (via Apartmenttherapy.com/Bungalowtile.com)

The most expensive room in the house?

One of the awesome things about writing a real estate blog is that I have an excuse to look up all kinds of awesome statistics and play around with charting software. You guys seem to like it too – my surveys of Bedroom sizes in Chicago Apartments and Pet Rent Rates in Chicago Apartments  are the most popular posts in this blog to date.

Towards the end of last year I was getting a lot of questions from landlords about how to best renovate their rental properties to maximize their income. So I did a bunch of research. (They didn’t have to twist my arm too hard.) I’ve expanded the results for you here.

The difference in price when you add a bedroom was – pretty much as expected – rent went up at a consistent rate for each additional bedroom.

It was when I went to investigate the difference in price for extra bathrooms that my jaw hit the floor. (more…)

10 Things That People Used to Own, but Now Rent

Logo from "RENT" the musical

This image was totally borrowed from the creators of "RENT."

Following up on “Occupy Everything” from last week, here’s a list of 10 things that have seen a shift from owning to arrangements that are a lot more like renting.

10. People
Yup, I went there. For the greater part of history it was considered okay for people to own other people. In fact, slavery was not abolished worldwide until 1981, when Mauritania finally got with the program.

And let me say right here: I do not think it is a good idea for people to be able to own other people. I do not endorse slavery at all.

We have, globally, become a culture where “renting” people is the only acceptable option. We pay them in wages or in trade for their skill and labor. While the system of working for pay is hated by many, it is certainly better than the alternative.

This is a case where owning has been orphaned from all of the good feelings and thoughts that normally come with it. The mental image of the slave owner in many of our minds is still unfortunately that of someone with power and wealth, but the impression we get is very negative, especially when compared to our more cheery views of a home owner, a business owner or a patent owner.

So, not every transition from owner culture to renter culture is bad. No matter how crazy it may seem for society to discard an entire type of ownership, it has happened before and therefore could certainly happen again.

9. Empty space
Rented self-storage came about in the 1960’s, and really took off starting in the year 2000 or so. Before that time, people simply did not have as much stuff. People stored items in attics, barns, warehouses, sheds and cellars across a landscape predominantly occupied by single family homes and apartments or tenements. These days, states have written entire new sections of legal code to deal with this new kind of rental, which now serves one in ten American households. (Source) (more…)

Chicago Real Estate Statistics: The rent vs buy contest according to Google

I think this might be my favorite chart ever.

This is the Google Insights graph comparing the use of the search term "apartments" vs the search term "real estate" in the Chicago Metro area over the past two years. While it will update over time, what I want you to look at is the divider between 2010 and 2011. Do you see what happened? Apartments completely overtook real estate and never looked back. (If you're reading the archives in 2013 or later and you can't see that date anymore, drop me a comment and I'll update the chart.

Do I need to explain further? I think not, but let me know in the comments if you don't get it.

Hype Dodger: Zillow rent report provokes mass media faux-analysis

New Rent Report Suggests Possible Bubble – CNBC.

That article up there? It’s written with one purpose – to make you panic and buy stuff.  Courtesy of CNBC.com comes some hype about the rental market. Apparently a new report from Zillow shows rents rising in almost perfect proportion to home sale price falling nationwide. They specifically talk about the high year-over-year rent growth for Chicago, as shown in this month’s Rent Bacon.

Investing in the rental market requires a level head that can stay above the hype. If you feel like you’re running to catch up with the investment market, stop and take control of yourself.

Of course, the media will take any statistics on the housing market they can get and turn them into hype. If they don’t provoke your emotions, you might use your logic to make a decision, and that never works out well for them nor for their advertisers. But they are trying to manipulate investors in the rental market by using the same tactics as those that worked to make home buyers and sellers all crazy and depressed.

They’re doing it wrong. (more…)