Chicago’s coming property tax hike is going to sting homeowners bad. As a resident of the city, I find the hike to be highway robbery, but it’s either deal with it or move. So I really don’t have a choice, because I’m not moving out of the home I’ve lived in for the last 30 years.
The increase is going to hurt a lot of people, not just homeowners. The tax raise is going to trickle down to Chicago renters, whose landlords will receive big tax bills. They, in turn, will stick the raise to their tenants to help foot the bill. That means some people will leave the city and move elsewhere.
So I wondered about the cost of renting in the western suburbs. Will the property tax increase in Chicago have an effect on rents in places like Oak Park?
“I think higher taxes will put pressure to raise rents in Chicago and will increase the demand for rentals here in Oak Park,” said Michael Stewart, marketing director for theOak Park Regional Housing Center, which offers free services to housing seekers and housing providers, including free apartment referrals. “Oak Park attracts renters from all over the U.S. and the world, but many move here from the city of Chicago and from the far outer suburbs.”
There has been a larger increase in rents for newly-rehabbed apartment vacancies in the Oak Park area, Stewart said. But when building owners and managers ask him about rental increases to renewing current tenants, he advises them to keep the increased rent amount conservative.
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“For rent renewals for current tenants, many of the owners charge between 3 to 5 percent rental increases per month,” Stewart said. “Owners and managers want to keep good tenants and they know the high cost of rehabbing and prepping an apartment vacancy for the next tenant.”
Supply and demand also plays a part in rent increases, Stewart said. Typically, there’s a pretty even amount of apartment vacancies and demand from apartment seekers, but there’s been a slightly higher demand from apartment seekers this year over past years, he said.
Yet Oak Park still has some rentals that are reasonably priced, he said.
“Compared to the Chicago market and our competition further west, I would say that many of the rents in Oak Park are still affordable,” Stewart said. “This is especially true in the studio and one-bedroom categories. … Oak Park has some reasonable rents but we also have some very high-end rentals that have expensive price tags.”
Jonathan Zivojnovic is owner and managing broker at River Elm Properties in Elmwood Park; he also sits on the Elmwood Park Village Board and the Oak Park Board of Realtors. The rental market in Elmwood Park, Harwood Heights, Franklin Park and other areas in that neck of the woods is booming, Zivojnovic said.
“Right now, the rental market has been screaming,” Zivojnovic said. “We’ve been able to collect top-market rents, and turnover is the lowest in 10 years. The areas still provide all the amenities everybody needs.”
The building stock is in very decent shape in those areas, Zivojnovic said, and rents are still affordable because landlords don’t have the encumbrances that that the city does, such as harsh landlord ordinances and the upcoming tax increase.
“It’s so easy to deal with those areas,” Zivojnovic said. “You don’t have to go through City Hall.”
Chicagoans will “absolutely” be affected by the tax hike, he believes.
“The city tax hike is going to make it unaffordable to own a commercial or residential property,” Zivojnovic said. “Tenants might not be able to pay.”
He said rent prices between last year and this year in the west suburban area have increased 25 to 30 percent, while the overall Chicago metro area has seen just a 12 to 13 percent increase. But the west suburban numbers are skewed, Zivojnovic said, because they dipped so low during the economic crash. Now, they’re on the rebound.