Chicago long has dangled the big-city experience without the New York or San Francisco price tag. That advantage is slipping away.
A new report from Zillow shows that rents are growing faster in Chicago than any other major metro.
Sure, our population isn’t booming, but that doesn’t mean demand isn’t high. Demonstrably, construction isn’t keeping up. The Chicago metro area is building fewer new residential units than other major metros.
In many other cities, construction has caught up with demand, meaning renters are getting a break on rent affordability. But that’s not the case in the Chicago area, where rents shot up 6% over the past year, according to Zillow data. Rents in some suburbs rose over 10%. Meanwhile, rents in Austin fell 3.3% — the largest drop among major cities — followed by declines of 2.1% in Denver and 1.1% in San Antonio.
A typical rental in Chicago now costs an eye-popping $2,213 a month, up roughly $138 from a year ago and up more than $680 from a decade ago. Zillow also found you need to earn about $88,500 to comfortably afford typical rent here.
Why? As with anything, a lot goes into this phenomenon, and Chicago remains a popular landing spot for recent college grads and other professionals.
But the stark reality at play is that it’s hard to build here, and we’re not doing enough of it. Supply and demand have taken care of the rest in the form of higher rents (which are also being driven up as property owners have to cover their ever-growing property tax bills).
To be sure, rent is still much less affordable in large metro areas such as New York, where housing costs take up 41% of household budgets compared with 27% in Chicago.
We won’t lose our reputation as a livable metro overnight. But that doesn’t mean we should disregard the trends. Potential new residents won’t.
“While Chicago has traditionally drawn many graduates from nearby universities, especially in the Big Ten, that’s not guaranteed to continue if these trends persist, especially now that remote work gives more people flexibility to live anywhere,” wrote Orphe Divounguy, senior economist at Zillow.
The bottom line? Chicago needs to build.
In 2024, Chicago-area municipalities issued just 4.6 housing permits per 1,000 existing homes — less than half the national rate of 10.1 and the lowest among major U.S. metros, according to Construction Coverage, an analytics service for builders and realtors. Divounguy noted that builders have been able to better keep up with demand — and keep affordability from deteriorating — in metro areas with fewer building regulations and less-stringent zoning rules.
Just look out West. Housing costs have been going up in Denver for years, with many priced out of this competitive market. Yet while rent is climbing higher in Chicago, it’s actually going down in Denver. It’s also worth noting that developers built about 20,000 new apartments in the Denver metro area last year, according to the Denver Post.
More Top Picks Best Premium Magnifiers For Low Vision Seniors
Turns out building lots of new apartments brings down rents.
We’d like to have that problem in Chicago.
Submit a letter, of no more than 400 words, to the editor here or email [email protected].