Sales remain hot while landlords experience a cooldown
Buyer and Seller activity continues to be a perfect storm of activity. While our sellers fetch top dollar for their listings, our buyers are getting an amazing deal on their financing. In the leasing world, things have cooled down, and Chicago is experiencing it’s first downward trend in rent prices in 7 years. There are ways to survive as a landlord if you can be nimble, and as a renter there are some record breaking deals out there!
Sales Market Remains Hot
The trends that we have been discussing in our last couple of articles have continued: Low overall supply, low interest rates, and strong buyer demand have overall kept prices high, and the best places are getting snatched up quickly. This has continued to create a true win-win environment where both buyers and sellers are simultaneously at their own advantage.
We expect inventory to continue to climb, and for the sales market to continue to remain strong. What will be interesting is, if we start to see prices on homes slip, will this motivate a rush for sellers to bring their places to market? And then, will the potential of increased supply further decrease price due to simply supply & demand economics? While we aren’t sure, we are definitely enjoying working with and helping both our buyers and sellers get a great deal while this market lasts!
Landlords are feeling a cooldown
On the leasing side of our business things are looking a little bit different. For the first time in 7 years, rents are trending downwards, and the top of the market has been compressed by concessions. COVID-19 and its economic impacts have the typical renter now looking for options to economize not upgrade. We are seeing a rise in vacancy, and owners are offering rental concessions that we are not used to seeing.
How to we track leasing velocity? The main two things we look at are the number of leads we receive, and the number of applications. While the number of applications we are receiving on our properties has remained steady going into this week, it doesn’t tell the whole story. Our application pipeline is built up over a 1-4-week span and results are typically in direct proportion to our overall lead volume.
Our overall lead traffic reached its peak in June, at around 11k leads across our portfolio. Lead velocity in June 2020 was comparable, if not better than 2019. In July we ended up with about half as many leads as June, and now that we’ve wrapped up August, we saw that traffic again cut in half. In August 2019 our lead volume was about double August 2020. So, with the typical cycle of lead volume leading to applications, we do expect the slowdown to continue.
For our owners we have a few recommendations:
- You must be nimble in challenging times. Making adjustments quickly, responding to offers quickly, and being sensitive to change is important now more than ever.
- Pay attention to your lease expiration matrix. The leases you sign today will either set you up for future success, or future challenges if you aren’t thinking long term.
- Study your renewal process. Make it as easy as possible to keep tenants. Don’t assume that the ways you’ve done things in the past will continue to work as well without some adjustment.
- If you are an owner looking for help or advice, please reach out to us!
Great deals out there for renters
Want 3 months free? Today in many of Chicago’s larger buildings this is the kind of concessions renters can find. We are seeing prospects shop around heavily looking for the best deals, and this is causing owners to offer more and more to secure a lease. We are seeing this especially within our more downtown inventory. The neighborhoods seem to be fairing a bit better, and it may be more difficult to find a deal if you are looking somewhere like Logan Square, Wicker Park, or Bucktown.
Once you move out of downtown you can find apartments with more square feet for your dollar. And there is typically a greater chance of finding a space that offers private outdoor space, which has become a coveted feature.
Looking for a new place with that perfect outdoor space? Let us help you find it!