Rising tide washing over rentals

The rent is going up.

I don't know of a gentler way to put it. Apartment rents should increase 2 to 11.5 percent this spring, according to a survey by the Chicagoland Apartment Association, a trade group for landlords.

That's a huge range, reflecting the crazy-quilt nature of the local apartment scene.

"There are a lot of submarkets in the metro Chicago area," said Judith Roettig, executive director of the trade group, based in Schiller Park. "On the South Side, [the increase might be] something like 3 percent, but if you're in the central business district in a big high-rise, it would be more like 11 percent."

The housing boom has been a long, cold ride for landlords. At the height of the boom, even landlords had to admit that it just didn't make sense for some people to rent. Roettig said the balance in the market is returning to a state reminiscent of pre-2001 levels, which is when the buying boom began

"What was unique about that five- or six-year period was the purchase-to-rent differential," Roettig said. "If you looked at the gap between what your rent was and what your principal and interest were, it was sometimes close to the same. Depending on where you were living, it could have been less.

"It didn't occur so much on the coasts, but it certainly occurred in Chicago," she said.

While the buying extravaganza raged, however, landlords coped with rising expenses that Roettig called "the triple threat" -- real estate taxes, utilities and insurance.

Eventually, home prices reached a height where renting started to regain its luster. The subprime mortgage mess and subsequent tightening of lending standards further stemmed the flow from renter to owner. Occupancies in apartment buildings are on the rise again.

If you're a tenant, it's probably of little comfort to know that the rent is going up across the country. About the time the Chicago landlords' group was doing its study, the CompleteLandlord.com Web site was doing a nationwide one: It says that 57 percent of landlords have raised rents in the last year, and the majority of those say that rents will go up again in the coming year.

So the market is back, but some question marks linger. There's risk in pushing the rent increases too far, for one thing.

"And if interest rates come down, or with all of this for-sale product in the marketplace pushing [home] prices down, maybe we're right back where we were," Roettig said.

Uncomfortably empty nests

If there's a house in your neighborhood that's been for sale for a while, there's a good chance nobody's home.

That is, the number of unoccupied houses around the country has jumped sharply in the last year, according to government figures. For more than a decade, vacancy rates for so-called homeowner housing (as opposed to properties intended to be rentals), have held steady at about 1.7 percent, but in 2006 they crept up to 2.1 percent. They're at a record 2.8 percent of all such homes, according to a new report from the U.S. Census.

If you drill down further into the Census data (I'll do that and spare you), you'll see that the government separates out the vacant homes that are firmly known to be vacant and for sale. There were about 1.58 million a year ago. Now, there are about 2.18 million, a nearly 38 percent increase.

Some analysts blame the bloat on real estate speculators who bought in the boom but were unable to flip the houses for a profit, so the properties are sitting empty. Some of the analysts are optimistic, though, that sales are starting to pick up, and they expect the vacancy rate to improve in the next quarter.

The next 'it' space

Home builders eager to stand out from competitors are always looking for the next hot space -- the feature that will dazzle buyers who are no longer bowled over by a mere to-die-for kitchen or master bath spa. Realtor magazine predicts that the next "it" space will be the game room, which it says is moving up from the basement to the main floor. This tricked-out game room will be filled with technology and goodies, including huge flat-screen televisions and billiard or air-hockey tables.

Not into game rooms? The magazine says you might be drawn to the "scrapbook room," where you can embellish your memory book, or to a screened porch that has a heated floor, a fireplace and, yes, a flat-screen TV. -------------

Hear Mary Umberger on WBBM-AM 780 at 6:21 p.m. and 10:22 p.m.Thursdays and Fridays and 7:20 a.m.Saturdays and Sundays.

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