Tag Archives: rent bacon

Rent Bacon: March 2013

No Foolin’.

The Rent Bacon index number is an indicator of how a district is performing compared to the HUD Fair Market Rents. Landlords can use it to figure out how much more to charge this year. Tenants can figure out how much more it will cost to move.

The Rent Bacon index number is an indicator of how a district is performing compared to the HUD Fair Market Rents. Landlords can use it to figure out how much more to charge this year. Tenants can figure out how much more it will cost to move.

New month, new Rent Bacon. Rent Bacon gauges the change in actual value of apartments in Chicago on a quarterly basis using rental data from the local MLS. The index takes into account the rent rates, market times, and ratio of rented units compared to listed units. This month we’re looking at 2 bedroom, 2 bathroom apartments throughout the city. For more info on how the index is calculated, check out this explanatory post.

Observation #1: Better value

Now this is not something obvious from the chart above, but it is quite clear if you compare it against last month’s results for 3 bedroom, 2 bathroom apartments. The index value for 2 beds is considerably higher, peaking over 300 for the smaller units. Does this mean that they’re actually a better value? Yes, absolutely. (more…)

Rent Bacon: February 2013

Let’s talk about 3 bedroom apartments.

The Rent Bacon index number is an indicator of how a district is performing compared to the HUD Fair Market Rents. Landlords can use it to figure out how much more to charge this year. Tenants can figure out how much more it will cost to move.

The Rent Bacon index number is an indicator of how a district is performing compared to the HUD Fair Market Rents. Landlords can use it to figure out how much more to charge this year. Tenants can figure out how much more it will cost to move.

It’s March. That means it’s time to see how the Chicago rental market performed over the past three months in that fancy statistical analysis we like to call Rent Bacon. As a reminder, we changed formats last month to make this monthly feature more useful. In the process we created a rent index which can be used as a means of comparing value between neighborhoods and gauging how much rent could go up or down over the next year. If you want to read more about what the numbers mean, check this explanatory post about the new Rent Bacon.

This month we’re talking about 3 bedroom / 2 bathroom apartments, and investigating how they’ve performed over the past three months. This is the first time we’ve really looked at 3 beds, which are pretty much the top end in terms of size as Chicago apartments go. You might be able to find something larger in a single family home for rent, but they’re few and far between.

Observation #1: The Gap

In a previous installment of Rent Bacon, I remarked that I saw indicators of people flowing from very expensive Zone 1 to moderately priced Zone 2 when rents got really high downtown. However, that movement didn’t continue from Zone 2 to the even lower-priced Zone 3. My surmise was that the folks who live in Zone 3 – the outskirts of the city – are more likely to move up in size in their same area instead of moving further inwards when their situations changed.

Today in reviewing the index prices we see another potential reason – the gap between Zone 3 housing costs and the inner districts is massive, especially when it comes to apartments large enough to house a big family. Look at the chart above. Look at the gap between the bottom two lines. The average 3 bedroom apartment in Zone 3 is fully 33% cheaper than anywhere else in the city. This is not just a matter of people on the city outskirts loving their neighborhoods. The price gap may be completely insurmountable. A family would have to be earning $84k per year to meet the “affordable housing” limits in Zone 1 or 2. Unless you’ve got a white collar breadwinner or two blue collar/no collar working adults in the family, that just isn’t going to happen.

Observation #2: The winter really blows for 3 beds.

Winter is a tough time to move for the families that tend to occupy 3 beds. It means uprooting the kids from school and packing up a massive amount of stuff during the worst possible weather of the year. The rental market in Chicago generally slows way down in the winter, but for 3 beds it’s a bit more extreme than we see with smaller apartments. All three of the zones saw major drops in the 4th quarter every year going back to 2010. This year has been particularly nasty.

Zone 3’s values took a major hit, falling 11 points since the same time last year and 78 points since the 3rd quarter of 2012. Rent rates actually improved, so the change in value is largely attributable to a glut of extra units coming on the market. As I discussed in an earlier article, January is always a big month for relationships to fall apart and one bedroom rentals spike upwards accordingly. The improving economy has allowed large groups of roommates to split up, which may be resulting in more large units on the market.

Zones 1 and 2 are sitting pretty and showing growth compared to last year. However, the growth is drastically slowed. Last summer the downtown index peaked at 295.65 and the Zone 2 index at 292.99, so we’ve fallen off a bit from those lofty heights. However, when compared with last winter, an equally slow season, the inner districts actually gained 10-14 points.

Zone 1 is seeing static rents and steadily increasing market times. However, this trend should reverse itself once the spring market hits, so don’t count on it being a trend that we’ll see through the year. Meanwhile, Zone 2’s market times are stable, but the rent rates have relaxed a bit and is suffering from a slight inventory glut that’s hurting it’s rent-to-list ratios. Again, this should be remedied by the spring market when a large number of renters suddenly hit the scene all at once to snap up the leftovers from a slow winter season.

Observation #3: That Chart is Too Steep to Sustain

That’s a pretty nasty slope on that chart. Zone 3’s values at their peak last year had inflated to reach downtown’s 2010 values. That kind of growth is far too rapid for renters – traditionally the poorer members of society – to sustain on an ongoing basis. While the rents in Zone 3 have remained largely stable, the rental pace and market demand out there have made it very difficult for someone working 50+ hours a week to find anything good. Meanwhile, in Zones 1 and 2 average rents have increased by between $400-500 for a 3 bed in just 3 years. This means that the average 3 bedroom renter has to be earning between $14k and $18k more in 2013 than they were in 2010. I somehow don’t think that’s realistic.

Chicago has earned the envy of other northern US cities for a long time when it comes to our roomy apartments and comparatively low rents. When you stack downtown Chicago rents against New York ($6000 for a 3 bed) or San Francisco ($4500) prices we’re still pretty cheap. Even so, 18% growth in rents over 3 years is about twice the pace that an average renter can handle. There must be a slowdown. I see it happening within the next 2 years.

everything is going to be alright

The Numbers

Table indicates values for 1 bedroom/1 bathroom rentals based on MLS data.

Average RentAverage Market TimeUnits Rented | ListedIndex
Zone 1
Dec 2011-Feb 2012$252359 days60 | 107261.19
Dec 2012-Feb 2013$254748 days64 | 98271.08
Zone 2
Dec 2011-Feb 2012$218843 days95 | 123226.78
Dec 2012-Feb 2013$233742 days75 | 102241.59
Zone 3
Dec 2011-Feb 2012$149553 days38 | 6760.52
Dec 2012-Feb 2013$157460 days22 | 4749.41

The Zones

The Chicago neighborhood zones remain consistent between this version and the last.

Zone 1 covers central Chicago from South Loop through Lincoln Park. (Actual coordinates: 2000 South to 2000 North, from Western Ave to the Lake).

Zone 2 covers the near North side of Chicago, including Lakeview, Bucktown, Uptown, Lincoln Square, Roscoe Village and NorthCenter. (Actual coordinates: 2000 North to 5200 North, from Western Ave to the Lake.)

Zone 3 covers the Far North and Near South side of Chicago, including Edgewater, Andersonville, Rogers Park, West Ridge, Chinatown, Bridgeport and Douglas. (Actual coordinates: 5200-7600 North plus 2000-4500 South, from Western Ave to the Lake.)


 

I’ll be back on Wednesday with some advice for a renter who got a nasty surprise this month. See you then!

Rent Bacon, January 2013 – New Format!

New. Improved. Actually Useful.

Rent Bacon, January 2013: 1 bed/1 bath rentals Chicago

The Rent Bacon index number is an indicator of how a district is performing compared to the HUD Fair Market Rents. Landlords can use it to figure out how much more to charge this year. Tenants can figure out how much more it will cost to move.

Welcome to the new Rent Bacon. As I explained last month, I’ve redesigned the Rent Bacon concept to be more comprehensive and more recent. I’ve spent quite some time over the past month thinking about the goals for this monthly series and I’ve got some really exciting results for you.

First of all, we will be rotating monthly through 1 bed/1 bath apartments, 2 bed/2 bath apartments, and 3 bed/2 bath apartments so that we hit all three of the most popular apartment sizes at least once a quarter.

Secondly, we will be looking at 3 month averages instead of one month averages in order to get a decent sample size in each of our zones.

Thirdly, and this is most exciting, the index is actually useful. The new Rent Bacon Index is a rough estimate for how much more the same apartment is worth this year over last year. This means that if you’re a landlord, you can use it to figure out how much to increase rents this year. If you’re a tenant, you can figure out how much more or less you can expect to pay to move to the same size apartment in the same area.

About The Graphic (more…)

Rent Bacon: November AND December 2012

This is the end of Rent Bacon as we know it.

Today I’m posting the Rent Bacon data for two months: November and December 2012. It is the last time you’ll see it in this format. Next month we’re going to repurpose Rent Bacon in three ways.

More timely.

One of my pet peeves with the Chicago rental industry is the tendency of Realtors to leave their listings active for just a little too long. I’ve discussed this concern over leaving listings active for too long at length before. However, I took this matter into consideration when I started doing Rent Bacon last year. In order to make sure all of the leases for a given month are included in the stats, I’ve been waiting an entire extra month and therefore running 2 months behind with the data by the time it’s printed here.

November Rent Bacon.

November Rent Bacon.

We aren’t going to do that anymore. (more…)

Rent Bacon: October 2012

The Offseason is Upon Us!

As I’ve discussed before, the rental market slows down in Chicago once October 1 passes. Rent Bacon is a year-over-year analysis, and as the quickie image shows, the market is still up as compared to where it was this time last year, but compared with the activity and prices of two months ago we’ve slowed down considerably. This is to be expected. However, the average rent for a 2 bed/2 bath rental downtown remains firmly stationed above $2500 per month and for the near north area it’s sitting pretty over $2000.

Detailed Analysis

(more…)

Rent Bacon: September 2012

Zone 3? What are you doing?! Zone 3! Stop!

Ladies and Gentlemen, It’s the Offseason!

Remember last month when I said that the August rental stats would probably be the last reliable analysis we get on the Chicago market until spring? Well, the September stats are here, and I was correct to a certain extent. They are definitely all higgledy-piggledy. However, there is some amount of information we can wring out of the numbers if we look closely.

Zone 1 – big slowdown

The rents in the downtown area (Zone 1) once again showed improvement, both over where we were 12 months ago and where we were one month ago. However, the market times, while better than they were last year, are a little longer than we saw in August. After all of my talk about how the market slows down in the late summer you’d think we’d see those rent rates drop, but instead we see the change in the number of units rented. Yes, the rents went up, but fewer of them filled, leaving more to coast into October. In August we saw 215 units rent, and in September of 2011 it was pretty close to that same number at 212.

So for Zone 1, this means the agents probably were hoping that the standard seasonal downturn would be offset by the extremely hot rental market that we’ve seen over the pat 12 months and did not lower their prices in anticipation of the annual 50% drop in demand that occurs as September ends. I’m thinking based on these numbers that the average Zone 1 asking rent on a two bedroom apartment needs to come down by about 10-15%. My bet is that next month we see a much higher market time as many of the units will have remained on the market into October.

Zone 2 – Slight slowdown

Moving out of the luxury market into neighborhoods with trendy names and smaller architecture, the Zone 2 results show a more gradual relaxation but there is no doubt even here that the end of season had an effect on the September numbers. While rents were higher than they were in 2011 by about 3.5% and market times were two days shorter, they actually fell 2.8% from where they were just a month ago in August of 2012.

Market times were consistent, so it looks like the Zone 2 agents have a better ability to anticipate the end of the rental season. I think that downtown/Zone 1 is seeing some Realtors dabbling in rentals when they normally handle sales only. The Zone 1 market has for years been the near-exclusive province of the property management companies with in-house leasing staff. It’s only in the past two years that the condo-to-rental market has necessitated that downtown Realtors sidestep into leasing. Many of them probably started doing rentals sometime this year and couldn’t predict what was coming as the weather turned colder. By contrast Zone 2 agents (and Zone 3 agents as we’ll see) are more practiced in the apartment market and were able to warn their clients. As a result, while the total number of units rented was still a 23% drop over last month, it was pretty consistent with the 2011 performance. Well done, Zone 2!

Zone 3 – Ouch.

Oh my goodness what the heck happened in Zone 3? 5.6% lower rents and almost 50% longer market times compared with 2011. A 10% drop in rents since August. The lowest attained rents since January. What happened? The answer lies in what happened at other sizes. Remember, Rent Bacon is a snapshot of 2 bedroom, 2 bath apartments only. Our drop in Zone 3 was absorbed by the larger 3 bedroom, 2 bath apartments.

Renting at an average price of $1615 this year, 3 bedroom apartments in Zone 3 are far more affordable than a 2 bed in any other zone, and not terribly much more expensive than a two bedroom. Renters have noticed this. They only rented eight 3 beds in September of 2011, but this year they rented 21 of them. Almost 300% growth in demand. Coupled with the standard price drops and increased market times of the off-season, this shift in popularity is what caused such disastrous numbers for Zone 3 two bedroom apartments.

The Numbers

Average RentAverage Market TimeTotal Rented
Zone 1
September 2011$245233 days212
September 2012$255826 days163
Zone 2
September 2011$196323 days87
September 2012$203121 days80
Zone 3
September 2011$140529 days26
September 2012$132746 days24

Stats reflect pricing and activity for 2 bedroom, 2 bathroom apartments listed in ConnectMLS as with rented dates during the month of April. Analysis of specific areas is available upon request.

What is Rent Bacon?

Rent Bacon is a quick visual summary of what’s happening in the rental market this month compared with this time last year. It breaks the city down into three zones. For each zone, it takes the change in average rent rates and the change in average market times as percentages, and then averages the two percentages together.

Zone 1 covers central Chicago from South Loop through Lincoln Park. (Actual coordinates: 2000 South to 2000 North, from Western Ave to the Lake).

Zone 2 covers the near North side of Chicago, including Lakeview, Bucktown, Uptown, Lincoln Square, Roscoe Village and NorthCenter. (Actual coordinates: 2000 North to 5200 North, from Western Ave to the Lake.)

Zone 3 covers the Far North and Near South side of Chicago, including Edgewater, Andersonville, Rogers Park, West Ridge, Chinatown, Bridgeport and Douglas. (Actual coordinates: 5200-7600 North plus 2000-4500 South, from Western Ave to the Lake.)

Want more Rent Bacon? Here’s all of them on one page!

 

 

Rent Bacon: August 2012

Color Me Surprised. Kind of.

After several months in a row of the numbers telling me that Chicago’s apartment market is peaking, today’s installment of Rent Bacon is kind of surprising. While the downtown market remains pushed to its absolute limit, the outlying neighborhoods showed very strong growth just when I thought they were at the breaking point.

However, this sudden surge should not be mistaken for a permanent effect. August 2012 was now fully 2 months ago and encompassed the traditionally strong September 1 rental market. (Unfortunately I cannot really run Rent Bacon until at least a month has passed, as Realtors can be sluggish in marking their listings as rented.) More telling are last week’s quarter over quarter stats, which showed an overall slowing of the pace across the board. If Chicago continues to show upward motion in next month’s installment I may change my tune, but for now I’m still thinking we’re maxed out citywide. Even 4.9% growth – the lowest seen for any zone in August – is far in excess of standard inflation and not sustainable in the long term, especially in a slow economy.

Points of note

Zone 3’s market times have dropped from a 2012 peak of 62 days to 25 days, putting them right on track with the rest of the neighborhoods we’ve tracked. Remember that an average market time of 25 days means an actual market time of less than a week for the best units, given that the time to get from “off the market” to “rented” artificially increases the market time by about a week.

Zone 3 landlords are more reluctant to bump up their prices, showing consistently smaller increases year over year than their downtown and near north neighbors. While this has improved cash flow for these landlords by an incredible amount by shortening market times, it has also had the side benefit of keeping at least one section of Chicago affordable.

The total number of units on the market in all zones has remained remarkably consistent from year to year, rarely varying by more than 10 units rented. This tells me that the MLS has largely stopped adding new “accidental landlord” inventory and is instead recycling the same listings year after year. However, I would be remiss to not mention that all three zones saw a very slight decrease in total rental inventory compared with last year. Some units have sold out of the rental market. Other buildings are at their limit. A few landlords probably chose to go it alone without agent assistance this year.

The average price for a 2 bedroom, 2 bathroom rental downtown is nearly $2500. It’s easy when looking at these numbers to get caught up in the trends and ignore the face value numbers. The minimum was $1000, the maximum was $5000. If all of those tenants stay for 12 months, the downtown area generated $6,436,260 in rent just for 2 bed, 2 bath units in one month, just from the MLS alone!

The Numbers

Average RentAverage Market TimeTotal Rented
Zone 1
August 2011$230922 days225
August 2012$249423 days215
Zone 2
August 2011$194826 days113
August 2012$208920 days104
Zone 3
August 2011$144538 days35
August 2012$147125 days33

Stats reflect pricing and activity for 2 bedroom, 2 bathroom apartments listed in ConnectMLS as with rented dates during the month of July. Analysis of specific areas is available upon request.

What is Rent Bacon?

Rent Bacon is a quick visual summary of what’s happening in the rental market this month compared with this time last year. It breaks the city down into three zones. For each zone, it takes the change in average rent rates and the change in average market times as percentages, and then averages the two percentages together on a 3 to 1 weighted basis.

Zone 1 covers central Chicago from South Loop through Lincoln Park. (Actual coordinates: 2000 South to 2000 North, from Western Ave to the Lake).

Zone 2 covers the near North side of Chicago, including Lakeview, Bucktown, Uptown, Lincoln Square, Roscoe Village and NorthCenter. (Actual coordinates: 2000 North to 5200 North, from Western Ave to the Lake.)

Zone 3 covers the Far North and Near South side of Chicago, including Edgewater, Andersonville, Rogers Park, West Ridge, Chinatown, Bridgeport and Douglas. (Actual coordinates: 5200-7600 North plus 2000-4500 South, from Western Ave to the Lake.)

Want more Bacon? Here’s last month’s update.

Rent Bacon, July 2012

Zone 1 saw much slower growth, Zone 2 saw a slight relaxation in pricing. Zone 3, on the other hand…

First Friday means we’re frying up another heap of Rent Bacon. This strangely named monthly series offers the most compact, flavorful summary possible of the Chicago rental market in a bacon-shaped chart. <<< That’s the chart. My analysis is below.

My suspicions from last month’s report were confirmed by July’s numbers. The innermost zones both showed dramatically slowed growth compared to the astronomical increases we saw in the first two quarters of 2012. Zone 2, the near-to-mid north area, saw both lower rents and longer market times compared to July of 2011. However, Zone 3, consisting of the far-north and near south neighborhoods, saw a repeat of June’s massive improvement over 2011.

Has it Peaked?

Downtown may well have peaked. With only 3.3% rent growth and no change to the number of rentals on the market I think we may have reached our limit. Rents are still increasing but I do not think we will see a return to the heady 10-14% year over year increases that we saw in the 2nd quarter.

However, the 2 bed/2 bath constraint on downtown may be limiting our numbers. I’ve taken this to be my benchmark for a “normal” rental, but with rents increasing the first thing people will do is to downsize. This made me wonder if there was some absorption in the 2 bed/1 bath market downtown of those who cannot keep up with the spiraling costs. A quick glance at the numbers for 2 bed/1 baths confirms it – rents for these lesser units increased by 8.9% and the rented inventory increased by 10.7%.

I do think that the downtown market has reached an event horizon. Market time averages simply cannot go much lower without resulting in a disturbing number of the best listings staying online for less than an hour. $2410 per month for a 2 bed means that the average tenant needs to be earning at least $86.4k per year. A repeat of the 13.7% year over year increases that we saw in April would push it very close to the brink of requiring a six figure income for an average apartment. The 3.3% y-o-y rent increase that actually occurred is bad enough for this weak economy’s tenant pool.

But what about Zone 2?

This is not the first time in 2012 that Zone 2’s bacon strip has been in the red. However, two outside factors should be borne in mind, and here I go again with my typical style of giving you stats and then telling you to ignore them.

July of 2011 was the first time that the average cost of a 2 bed/2 bath exceeded $2000 in Zone 2. In fact, Zone 2 saw a 4.8% increase month over month between June and July of 2011. That’s pretty major. The other thing to remember is that the negative showing results entirely from a market time that’s only one day longer in 2012 than it was in 2011. Percentages are funny creatures that way.

Besides, while I think a lot of the Zone 1 folks overflowed down a notch into the 2 bed/1 bath units, I think the Zone 3 folks migrated outwards to Zone 3.

Pushed Out

Zone 3 rents have increased 16% this year, going from $1292 in January for a 2 bed/2 bath to $1500 in July. That’s bad news for an area that normally caters to the least affluent members of the Chicago north side population. July 2012 saw a 10.7% increase in rents over July 2011, and a massive 35.1% improvement in market time. At the beginning of the year someone earning $46.5k per year could afford to comfortably rent up there. Now they have to be clearing $54k, or $27 per hour, full time, year round. Your average Chicago housekeeper earns about $11 an hour.[1] A couple of them would not be able to comfortably afford an average 2 bed/2 bath rental in an area like Rogers Park.

The Numbers

Average RentAverage Market TimeTotal Rented
Zone 1
July 2011$233424 days246
July 2012$241022 days246
Zone 2
July 2011$205625 days106
July 2012$207026 days94
Zone 3
July 2011$135557 days26
July 2012$150037 days21

Stats reflect pricing and activity for 2 bedroom, 2 bathroom apartments listed in ConnectMLS as with rented dates during the month of July. Analysis of specific areas is available upon request.

What is Rent Bacon?

Rent Bacon is a quick visual summary of what’s happening in the rental market this month compared with this time last year. It breaks the city down into three zones. For each zone, it takes the change in average rent rates and the change in average market times as percentages, and then averages the two percentages together on a 3 to 1 weighted basis.

Zone 1 covers central Chicago from South Loop through Lincoln Park. (Actual coordinates: 2000 South to 2000 North, from Western Ave to the Lake).

Zone 2 covers the near North side of Chicago, including Lakeview, Bucktown, Uptown, Lincoln Square, Roscoe Village and NorthCenter. (Actual coordinates: 2000 North to 5200 North, from Western Ave to the Lake.)

Zone 3 covers the Far North and Near South side of Chicago, including Edgewater, Andersonville, Rogers Park, West Ridge, Chinatown, Bridgeport and Douglas. (Actual coordinates: 5200-7600 North plus 2000-4500 South, from Western Ave to the Lake.)

Want more Bacon? Here’s last month’s update.

 

  1. [1]Indeed.com

Rent Bacon, June 2012

In every area we considered, the rents this year are higher than the rents from 2011 in Chicago.

It’s the first Friday of August, so that means it’s again time for a snapshot of the Chicago rental market in tasty bacon strip format. Comparing rent rates and market times between June 2012 against June 2011, we’re seeing increases again in all three of the zones tracked by StrawStickStone.

As you may recall, last month saw a shift in how Rent Bacon was calculated. Both rent rates and market times are considered in a 3:1 weighted average. This month we hit our six-month mark, and the news continues to be grim for renters and rosy for landlords.

Analysis, Mr. Spock?

Inventory was actually down in June compared with May, but only by a small amount. Both Downtown (Zone 1) and the Far North/Northwest regions saw lowered activity on the 2 bed/2 bath sector that we use as our benchmark, although the Zone 2 trendy areas saw an increase that more than offsets the losses seen in the other two zones.

Market times, however, improved in Zones 1 & 3, albeit only slightly, and saw almost no change at all in Zone 2. What this indicates to me is that by June of 2011 we were already in a rapidly accelerating market. The pace can’t get any faster. The 23-29 day market times seen both years in Zones 1 & 2 mean that the rentals are actually going under contract after one weekend on the market, given how long it takes for a rental to go from off-market to leased. With market times at their absolute limit, the only margin that can move is rent rates.

Zone 1 has seen the average price of a 2 bed/2 bath go fro;m the $2200-2300 range in 2011 to the $2350-2600 range consistently in every month this year. The average increase seen across the six months that I’ve been running Rent Bacon is 8.6%. Guys, 8.6% is just over one month’s rent over the course of a year. Zones 2 & 3 aren’t quite so awful, seeing an average increase of 4.5 to 5% across the board compared to last year, but considering that the populations in these areas are far less likely to see pay increases or even employment at all, it’s still an awful burden on the average renter. Zone 2’s average rent for a 2 bed/2 bath just passed $2000 for the first time. Zone 3’s averages are the highest they’ve been all year.

The Numbers

Average RentAverage Market TimeTotal Rented
Zone 1
June 2011$233329 days268
June 2012$249623 days212
Zone 2
June 2011$196024 days116
June 2012$210025 days109
Zone 3
June 2011$141547 days33
June 2012$145546 days20

Stats reflect pricing and activity for 2 bedroom, 2 bathroom apartments listed in ConnectMLS as with rented dates during the month of April. Analysis of specific areas is available upon request.

What is Rent Bacon?

Rent Bacon is a quick visual summary of what’s happening in the rental market this month compared with this time last year. It breaks the city down into three zones. For each zone, it takes the change in average rent rates and the change in average market times as percentages, and then averages the two percentages together on a 3 to 1 weighted basis.

Zone 1 covers central Chicago from South Loop through Lincoln Park. (Actual coordinates: 2000 South to 2000 North, from Western Ave to the Lake).

Zone 2 covers the near North side of Chicago, including Lakeview, Bucktown, Uptown, Lincoln Square, Roscoe Village and NorthCenter. (Actual coordinates: 2000 North to 5200 North, from Western Ave to the Lake.)

Zone 3 covers the Far North and Near South side of Chicago, including Edgewater, Andersonville, Rogers Park, West Ridge, Chinatown, Bridgeport and Douglas. (Actual coordinates: 5200-7600 North plus 2000-4500 South, from Western Ave to the Lake.)

Want more Bacon? Here’s last month’s update.

Rent rates were elevated by about 7% in Zones 1 & 2, and by about 2.8% in Zone 3.

Rent Bacon: May 2012

A new weighted average has changed the numbers but not the direction of the trends. We’re slowing down, guys.

Moving the Goalposts

I’ve been giving some thought as to how Rent Bacon is calculated, and have made some adjustments. Previously I had been weighting rent and market time equally. To some extent when considering rentals this is valid, especially given that an extra few days at the tipping point between, say, 28 days on the market and 32 days on the market can mean the difference of an entire month’s rent. However, the overall weight of market times as a way of judging the Chicago rental market is truly less important than the rent rates obtained. As such I’ve stopped weighting them equally.

Going forward rents changes will be weighted 3 times more than market time changes when calculating Rent Bacon, but don’t fear! I’ve gone back and adjusted the previous months’ charts to reflect this new weighting of the averages.

Details for May 2012

Well, it was bound to happen. Due to a combination of factors we’ve started to slow our year over year rent growth here in Chicago. For the first time this year we’re seeing rent rates lower than last year in Zone 2 and Zone 3, and only a minimal 3.1% rent increase in Zone 1 – Downtown. Only the shrinking market times are continuing to buoy up Zones 1 and 3 to the point where they are showing positive overall movement. (more…)

Rent Bacon: April 2012

Rents once again increased over last year, and market times decreased in 2 out of 3 zones. (corrected July 2012)

Details for April 2012

The downtown mid-north side zones continued their patterns of serious rent increases and shortened market times in April. However, it is interesting to note that in both Zone 1 and Zone 2 the number of MLS-listed 2 bedroom apartments actually decreased slightly year-over-year. This makes sense in a strong landlord’s market, as landlords are finding success in renting on their own this year.

Also of note – this is the first time that we’ve seen the average market time in any zone fall below the 1 month mark. In this case, it was Zone 2, with an average market time of 31 days. When dealing with rentals, paid in one month increments, the difference between a 31 day market time and a 32 day market time has a major impact on cash flow and therefore on relative value.

While Rent Bacon normally looks at year-over-year data, this month it’s also worth looking at the month-over-month growth when compared with the rent rates for March. Zone 1 saw a 10.4% month-over-month increase in rents, Zone 2 up by 1.7% and Zone 3 up by 3.8%. The zone 3 increases are particularly worrisome considering that Zone 3 neighborhoods are usually the least expensive options available to lower-income tenants. Some of the rent growth can be attributed to April being the first “on-season” month in the Chicago rental market, but not all.

Average RentAverage Market TimeTotal Rented
Zone 1
April 2011$230744 days229
April 2012$262232 days202
Zone 2
April 2011$186242 days97
April 2012$197631 days84
Zone 3
April 2011$130052 days20
April 2012$141354 days24

As always, stats reflect pricing and activity for 2 bedroom, 2 bathroom apartments listed in ConnectMLS as with rented dates during the month of April. Analysis of specific areas is available upon request.

What is Rent Bacon?

Rent Bacon is a quick visual summary of what’s happening in the rental market this month compared with this time last year. It breaks the city down into three zones. For each zone, it takes the change in average rent rates and the change in average market times as percentages, and then averages the two percentages together.

Zone 1 covers central Chicago from South Loop through Lincoln Park. (Actual coordinates: 2000 South to 2000 North, from Western Ave to the Lake).

Zone 2 covers the near North side of Chicago, including Lakeview, Bucktown, Uptown, Lincoln Square, Roscoe Village and NorthCenter. (Actual coordinates: 2000 North to 5200 North, from Western Ave to the Lake.)

Zone 3 covers the Far North and Near South side of Chicago, including Edgewater, Andersonville, Rogers Park, West Ridge, Chinatown, Bridgeport and Douglas. (Actual coordinates: 5200-7600 North plus 2000-4500 South, from Western Ave to the Lake.)

Want more Bacon? Here’s last month’s update.