LOGAN SQUARE — After years of living on the East Coast, newlyweds Stacy Newman and Benjamin Rosenthal moved to Chicago this summer to start the next chapter of their lives.
The couple hoped to land a two- or three-bedroom place on the North Side for about $3,000 a month. But their real estate broker struggled to find suitable apartments because of a shortage of available places and climbing rents. The few places that met their needs were snapped up within hours of being posted online, they said.
Then came the bidding wars.
There were five competing offers for a West Town two-bedroom they wanted. They were rejected for a Lincoln Park townhome despite offering $200 a month over the asking rent, they said.
“We’d heard a lot of stories from friends in terms of purchasing homes and condos, but I had never heard of such a thing as a rental bidding war. We were very unpleasantly surprised,” Newman said.
The broker told them, “If you’re not willing to go $500 over list price, don’t even bother going inside,” Rosenthal said of the West Town apartment they wanted.
Chicago’s tight real estate market — transformed by the pandemic and rising inflation — is thrusting renters into bidding wars, a challenge more common among homebuyers.
Apartments in hot North Side neighborhoods such as Lakeview and West Town are renting for upwards of $500 over their listed rates, real estate experts and renters said.
The crowded market has left little room for preferences. Renters are pushing up their move-in dates, paying more money up front to beat out other applicants and settling for apartments they wouldn’t have otherwise rented, experts said.
Meanwhile, rents are climbing as landlords and property managers struggle to keep up with rising taxes and building costs amid the pandemic, experts said.
“You hear all of these horror stories about New York City … it really feels like that,” broker Maggie Bergin Balcarcel said.
‘A Supply And Demand Issue’
Apartment bidding wars have become the norm in major cities as rents surge throughout the country, experts said.
Demand for housing in Chicago sunk to record lows at the start of the pandemic, when some landlords offered prospective tenants concessions like two or three months free rent to fill empty buildings.
But now that the city has reopened and pandemic fears have lessened, more people are trying to rent apartments — but there aren’t enough to go around, real estate experts said. Those same landlords who struggled to get renters are now turning people away because they don’t have room for more tenants, experts said.
Apartment occupancy in Chicago is growing at its fastest rate in more than two decades, according to a recent report from real estate analytics company CoStar. The number of apartments rented over the past year is nearly three times more than the city’s average, according to the report.
“It’s a supply and demand issue; at the core, that’s the problem, but it’s a little more nuanced than that,” said Steven Rapoport, senior director of Chicago Real Estate Resources.
Supply is low in part because building costs are high during the pandemic, which has put a strain on developers and landlords, Rapoport said. But demand was outpacing development even as far back as the 2008 economic recession, he said.
“Lenders have been more conservative after the lessons we learned in the downturn,” Rapoport said.
Renters who got “amazing deals” on apartments at the start of the pandemic are also staying in their apartments longer, further limiting how many places hit the market, Bergin Balcarcel said.
More people working remotely has given people flexibility in where they live. Bergin Balcarcel said more than half of her clients this summer were relocating to Chicago.
“So many of my tours were virtual with people moving here from out of state,” she said. “They want to be in areas that [feel like] Chicago. They want to be by Wrigley Field, by the lake and Downtown.”
With too many people vying for too few apartments, cash has been the deciding factor, experts said.
“I have been having to warn any client that I get this season that they will likely have to put up a little more money, and that it’s going to be a journey,” Bergin Balcarcel said.
‘Likely The Bargaining Chip For Someone Else’
Bill S., who asked that his last name not be published, moved to Chicago from Florida during the pandemic to attend graduate school. He and his roommate tapped a broker to help them find an apartment on the North Side.
A two-bedroom apartment in Lakeview seemed perfect, but their real estate agent said there were other offers and they’d need to sweeten the deal to win the place. They settled on paying the first month’s rent up front, which wasn’t a “huge deal” because they both had money saved, Bill said.
The broker countered, asking them to pay two and then three months of rent in advance, Bill said.
It wasn’t ideal, but they agreed, thinking they’d landed the apartment, Bill said. Not long after they submitted their offer, the agent said the landlord had gone with someone else.
“It seemed like we were the frontrunner. It was a little bit of a gobsmack to wake up the next day feeling like you just got an apartment you enjoyed to find out you didn’t get it,” Bill said.
Bill and his roommate were left feeling like they were “likely the bargaining chip for someone else,” he said.
“It gets really stressful that basically the same sort of financial game you try to play when you’re purchasing a property is now being applied to when you’re just trying to find a place to live for the year,” he said.
Bidding wars aren’t exclusive to the North Side — and in many cases, landlords are naming their own terms, which can sometimes feel questionable, renters said.
A man who declined to be named said he and his fiancé tried to rent a $2,700-a-month single-family home in Bridgeport in July. The landlord said they’d have to compete with 40 inquiries and eight sets of prospective tenants offering $3,400 a month or more for the home.
The man and his fiancé, who are white, moved on after the landlord made racist comments about Asian people, he said.
“It made me think about an issue that’s cropped up in other cities — people getting into bidding wars and how much of that is traced back to discriminatory renting practices,” the man said.
‘You Start To Get Really Worried’
Chicago’s highly competitive rental market will likely cool off heading into the fall and winter, real estate experts said. But the demand seen over the summer is a strong indication Chicago is bouncing back from pandemic lows, they said.
“There are only so many major metropolitan cities that has what Chicago has to offer,” Rapoport said. “People need to live around cities, and the most central, most desirable neighborhoods in cities are only becoming more central and more desirable. … These core locations are set up to have rent growth outpacing inflation rates.”
Newman and Rosenthal pursued about 30 Chicago apartments while living out of state — and most of them were scooped up before they had a chance to tour them, Newman said.
After a months-long search, the couple rented a two-bedroom apartment in Lakeview. It has the balcony they wanted, but the building doesn’t have a pool, which was on their wish list.
“I think we’re happy,” Newman said. “If this was a normal situation, and this hasn’t happened, we probably would’ve looked at more places and been more discerning.”
Newman said they felt desperate by the last showing.
“Ben was laughing at me because I was like, ‘We love it! We’ll take it today!'” Newman said. “You start to get really worried. We had to be out of our lease in Connecticut. We needed somewhere to live.”
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