Chicago Real Estate Statistics: Extra Bedroom vs Extra Bathroom in Apartments
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.
Let me show you with a nice little chart.
The chart above shows the price increase as bedrooms are added. The zones used here are the same as I use for Rent Bacon. Zone 1 is the Downtown Chicago area up through Lincoln Park. Zone 2 is the Mid North, "name brand" neighborhoods like Wicker Park, Bucktown and Lakeview. Zone 3 is the "generic" and far north areas like Rogers Park, Albany Park, Uptown, Avondale, Humboldt Park, etc. As always, I've had to omit the south side as I don't know enough about it to do it justice.
What we see up there is an approximate 52% increase in rent for each extra bedroom in Zone 1, 42% per bedroom in Zone 2 and 28% per bedroom in Zone 3. The "chunks" increase in nice proportion, each one larger than its neighbor to the left. This is what we'd expect to see, it makes total sense.
Below is the chart for the rent price as bathrooms are added. Pay special attention to the order that the "chunks" appear. They are not out of order.
Analysis, Spock? Well first of all the 3 bed/1 baths are cheaper than the 2 bed/2 baths. By a LARGE amount.
People might pay 52% more across the board in rent downtown for an extra bedroom, but they'd probably pay 50% more just to have a second bathroom! (Note that this doesn't repeat itself when you add a 3rd bathroom. There's still a nice 26% boost, but it isn't nearly as impressive.)
In Zone 2, people will pay about 42% to add a bedroom, but they'll also pay about 40% for a second bath.
In Zone 3, the neighborhoods frequented by folks trying to save on cash, landlords will be in a tight spot to get more than a 28% lift in rent for an additional bedroom but they can get up to 40% more for a precious second "throne room".
I should note that the numbers are pretty consistent over the five year span that I surveyed. As always I used the MLS for my research.
So. Renters will pay almost as much, if not more, just to add a second bathroom as they will pay for a whole extra bedroom. It's an exorbitant luxury if you think about it. You can't really split that additional cost among two extra people like you could with an extra bedroom. You only use a bathroom for a few minutes a day. It won't mean that your cousin from Denver can suddenly stay with you, or that you can cancel that other lease for office space. Renters, I don't really think that it makes all that much sense from a financial standpoint to pay that much more for an extra bathroom, do you?
On the other hand, Landlords would be remiss to ignore this data when setting rent rates for their apartments. Pricing a 3 bed/1 bath higher than the local 2 bed/2 baths is asking for some very long market times.
I have my own theories as to why this might occur, but I'd love to hear yours in the comments.
Bathroom photo from Heritage Tile via ApartmentTherapy.com