You’d think that the recent reports of a strengthening housing market would be bad news for Chicago’s landlords — more buyers means fewer renters, right?
Not necessarily. The glut of homes for sale in the past year created a “shadow market” of rentals, particularly of condos, whose sometimes-desperate owners were offering hard-to-resist deals to tenants who would cover the mortgage until a sale.
And landlords — full-time landlords, that is — want those rentals to go away.
“Our challenge remains the competition being offered by condos for rent,” said Judith Roettig, executive vice president of the Chicagoland Apartment Association.
“We were kind of happy to see that things are beginning to sell.”
Although some submarkets within the Chicago metro area report slight improvement in the rental picture, occupancies continue to be widespread, with 8 percent to 10 percent of units vacant, Roettig said. “Normal” is 95 percent to 96 percent occupied.
But that, in the jargon of the apartment business, is “physical occupancy,” she said. What matters more to big-complex landlords that dominate her organization’s membership is “financial occupancy,” which basically means being able to draw the full rent, without concessions and sweeteners to tenants.
“I don’t have that number,” she said, but she expects that most big landlords will be offering concessions for some time to come.
Concessions still are routine in larger apartment communities, particularly in suburban complexes. They usually take the form of reduced rents, effectively throwing in a month or two for free. Some landlords also are seeking smaller deposits from tenants, she said.
As long as unemployment stays high — 10.4 percent in Illinois in July — the apartment vacancy rate will, too, she said. Renters, particularly younger ones, the bread-and-butter of the business, tend to go home to the folks when they lose their jobs. Or they double up with roommates to cut costs, Roettig said.
The latter scenario puts its own spin on the rental picture in Chicago, she said.
“With a lot of renters banding together, that has created stronger demand for two-bedroom apartments,” Roettig said.
That’s good for landlords, isn’t it? Well, sure, she said, but it also means that one-bedrooms are harder to rent out.
Hint to consumers: There may be deals to be had in those flats.
Tick … tock
Real estate agents say they’re seeing a surge of first-time home buyers looking to take advantage of the federal government’s offer of an $8,000 tax credit if they close by Nov. 30.
But maybe you ought to move up that closing date. Mortgage broker and prolific blogger Dan Green points out that “there may not be a worse day in 2009 on which to try to close on a home.”
How’s that? Well, Green reasons that not only will a veritable horde be aiming to close on that date, but other factors also suggest you ought to consider the November calendar: Nov. 30 is the Monday after Thanksgiving weekend; Nov. 28 and 29 are weekend days (no closings); Nov. 27 is the Friday after Thanksgiving (an unofficial holiday for many); Nov. 26 is Thanksgiving (no closings); Nov. 25 tends also to be an unofficial holiday, or, at least, a lot of offices turn into ghost towns by afternoon.
He suggests Nov. 24 may be a more practical deadline day, but if something goes wrong at the closing table (an unfortunate fact of life), you might have a heck of a time rescheduling by Nov. 30. So he suggests trying to close during the week of Nov. 16.
Further adding to your stress levels: Working backwards on the usual closing process, he reckons that if you want to close by Nov. 16 and are applying for a loan, you ought to be under contract to buy by Sept. 17.
Unless, of course, Congress extends the deadline, something many in the housing industry are pushing for. But if they extend it merely a month, to the end of December, good luck trying to close then too.
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Hear Mary Umberger at 12:49 and 11:15 p.m. Tuesday and Thursday and at 10:30 a.m. Saturday and Sunday on WGN-AM 720. Write to her at Money & Real Estate, Chicago Tribune, 435 N. Michigan Ave., 4th Floor, Chicago, IL 60611 or send e-mail to housingnews@comcast.net.
