Last modified on May 1st, 2018
By Elizabeth Millar
Judging overall rental property trends by the three largest metro areas in the United States actually gives a fairly accurate description of the overall climate within the industry. The three largest metro areas – New York, Los Angeles, and Chicago – represent the eastern coastline, the western coastline, and the Heartland, respectively.
All trends point to rental property on the coastlines leveling out at record high rates, dealing with housing shortages and spilling over some of that excess into the rest of the country, including Chicago.
Falling Rent in New York
Median rent actually fell for the first time in years in Manhattan, Brooklyn, and Queens. Manhattan rent, however, is still quite exclusive at an average of $3,330 per month for a one bedroom.
On the upper crust of New York, rents are actually still going up. Outside of the entry level of any high rent location, demand is usually lower than supply. However, it is the entry level rent that usually dictates the overall level of demand, and thus prices, in an area.
Rent Plateaus in Los Angeles
Apartment List reports the same phenomenon occurring across the country in Los Angeles. The median rent hit a plateau in September and currently stands at around $1,350 for a one-bedroom apartment. Median rents are more of an art than a science – an Abodo report lists the number at $2,112 for a one-bedroom rental in Los Angeles. However, both reports agree that the number is down when they use their own statistics to compare to their current findings.
Because both New York and Los Angeles are full of college students who require housing as well, the influx of “entry level renters” will remain about the same. Rent for the rest of the city will rise and fall based on this metric, many experts agree.
Is Chicago the Place to Be?
The people who will eventually find their way to other cities such as Chicago will probably be those looking to improve their lifestyles without necessarily moving up in income. Jobs above entry level are hard to come by in the modern economy. The alternative is to find a location that your dollar stretches farther in. Many people from the coastlines believe they can still get an international urban lifestyle for less money in Chicago. Is it true?
In 2017 and 2018, the answer is yes and no. December 2017 numbers put the average rent of a one bedroom in Chicago at $1,712. If you believe the lowball number in LA, then you are not necessarily coming out ahead there, although you are beating New York prices.
The statistic to watch here is the percentage gain or loss year over year. That $1,712 represents a nearly 15% decrease from last year. The numbers in LA and New York represent a fall of around 0.5% and 0.6%, respectively.
If you get in on the Chicago rental market now, you may be in place to take advantage of a market that is falling faster than in LA and New York. Many people are picking up on this trend, which is probably why the coastlines have hit a plateau. Next up for young movers and shakers – Chicago.