Rent prices down in Chicago during 2020

Several sources suggest rent dropped in Chicago during this past year:

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And she’s not alone; in Chicago, rents dropped by almost 12% in December compared to December 2019, according to a new report from Apartment List, a website for apartment rentals. Average rent was $1,355 in Chicago a year ago; it fell to $1,193 in December.

Zillow data, too, marked the starkest plunge in year-over-year rental prices in the Chicago metropolitan area since it began analyzing national rents in 2014, with a decline starting in July and continuing through the latter half of the year.

Zillow reported a 2.2% decline in Chicago-area rents in November compared to a year earlier. When including the suburbs, Apartment List’s figures — which the service claims is more closely aligned to U.S. Census Bureau data — showed a similar decline of 6%, suggesting the suburban markets have not been as hard hit as the city.

Chicago was among the most severely impacted cities when it came to falling rents, said Rob Warnock, who co-authored the Apartment List study. Due to the pandemic, more expensive cities with competitive job markets saw rent decline — many for the first time in a decade.

It is good to see more data on the effects of COVID-19 on housing. As the article suggests, even a small drop in rents could be helpful for people in more uncertain economic times. This is not a big drop percentage-wise in Chicago, particularly compared to larger drops in Manhattan or San Francisco, but the Chicago market as not as overheated as some locations.

At the same time, it would be fascinating to see more detailed data addressing:

  1. Within cities and metropolitan regions, where have rents dropped, stayed about the same, or risen? And how does this line up with other social patterns?
  2. How much longer can renters and landlords continue on this path? How might this matter by location, different kinds of housing, and different landlords?
  3. Does this do anything to help address long-standing affordable housing issues in Chicago or is it a slight blip?

Some of these will take time to resolve as will the question of whether rents will go back at some point. In the meantime, many people in many communities are affected by these changes.

Slight uptick as nearly half of Americans say they would prefer to live in a small town or a rural area

New data from Gallup suggests a slight shift among Americans toward a preference for moving away from suburbs and cities:

About half of Americans (48%) at the end of 2020 said that, if able to live anywhere they wished, they would choose a town (17%) or rural area (31%) rather than a city or suburb. This is a shift from 2018, when 39% thought a town or rural area would be ideal.

The recent increase in Americans’ penchant for country living — those choosing a town or rural area — has been accompanied by a decline in those preferring to live in a suburb, down six percentage points to 25%. The percentage favoring cities has been steadier, with 27% today — close to the 29% in 2018 — saying they would prefer living in a big (11%) or small (16%) city.

Current attitudes are similar to those recorded in October 2001, the only other time Gallup has asked Americans this question. That reading, like today’s but unlike the 2018 one, was taken during a time of great national upheaval — shortly after the 9/11 terrorist attacks, when the public was still on edge about the potential for more terrorism occurring in densely populated areas…

The preference for cities is greatest among non-White Americans (34%), adults 18 to 34 (33%), residents of the West (32%) and Democrats (36%).

There is a lot to consider here and it is too bad Gallup has only asked this three times. Here are some thoughts as someone who studies suburbs, cities, and places:

  1. The shift from 2018 to 2020 is very interesting to consider in light of the shift in preferences away from small towns and rural locations between 2001 and 2018. What happened between 2018 and 2020? The analysis concludes by citing COVID-19 which likely plays a role. But, there could be other forces at work here including police brutality, protests, and depictions of particular locations or different factors could be at work with different groups who had larger shifts between 2018 and 2020.
  2. One reminder: this is about preferences, not about where people choose to live when they have options.
  3. Related to #2, Americans like the idea of small towns and there is a romantic ideal attached to such places. In contrast, there is a long history of anti-urbanism in the United States. But, people may not necessarily move to smaller communities when they have the opportunity.
  4. The distinction in the categories in the question – big city, small city, suburb of a big city, suburb of a small city, town, or rural area – may not be as clear-cut as implied. From a researcher’s point of view, these are mutually exclusive categories of places. On the ground, some of these might blend together, particularly the distinction between suburbs and small towns. More toward the edge of metropolitan regions, do people think they live in the suburbs or a small town? Or, how many residents and leaders describe their suburb as a small town or as having small town charm (I have heard this in a suburb of over 140,000 people)? Can a small but exclusive suburb with big lots and quiet streets (say less than 5,000 people and median household incomes over $120,000) think of itself as a small town rather than a suburb? I say more about this in a 2016 article looking at how surveys involving religion measure place and a July 2020 post looking at responses when people were asked what kind of community they lived in.

The most popular posts of 2020

With the start of 2021, here on thoughts on the top five posts of 2020 on LegallySociable:

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  1. Demolish a vacant mall anchor store, build new apartments. This post about possible changes to the Fox Valley Mall in Aurora, Illinois had the most views. The local aspect of the story hints at the local dimensions of this list: #1, #4, and #5 had specific mentions of nearby suburbs.
  2. New York City, Los Angeles on different COVID-19 trajectories. With much written about COVID-19’s effect on cities, this post from March 2020 hints at the different ways COVID-19 played out in different communities. This is still a story to watch in 2021.
  3. Designing your own Peytonville, Part 1. The Peytonville commercials started in Fall 2019 and I wrote five posts about specific aspects of the ads. The first one was the most popular.
  4. When protests make it to the wealthier suburbs, this means… The protests of 2020 took place in many communities, including suburbs. This post discusses the implications of protests moving to wealthier suburbs that are not used to protests.
  5. How garbage is moved out of suburbs. Posted just a few days ago, this one looked at the garbage infrastructure in suburban areas but likely received a lot of views due to local disagreement about the possible waste transfer station.

All of these popular posts had something to do with place. This is a primary focus of this blog with a particular emphasis on western suburbs of the Chicago region. The top five posts either involved suburbs or cities. Even as 2020 renewed focus on both locales – with effects from COVID-19 and its effects, police violence and protests, and national and local politics – I would argue that place and communities still do not receive enough attention. My published research attempts to tackle several of these dimensions. It is hard to predict what exactly will be worth posting about in 2021 but I do know I will continue to focus on places.

Companies moving out of California – yet continuing offices and operations in California

I have read several news stories discussing the move of companies out of California. Such news feeds chatter about companies and residents leaving places because of politics, taxes, discontent, etc. But, the details in this one story suggest some companies are shifting some workers and activity while retaining operations in California.

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“Oracle is implementing a more flexible employee work location policy and has changed its corporate headquarters from Redwood City, California to Austin, Texas,” the filing said. “We believe these moves best position Oracle for growth and provide our personnel with more flexibility about where and how they work.”

The company already has a significant presence in Austin, opening a five-story, 560,000 square-feet campus overlooking Lady Bird Lake. It also has employment hubs in Redwood City, Santa Monica, Seattle, Denver, Orlando and Burlington…

Oracle follows a handful of similar moves by California companies and high-profile business leaders leaving the state. Tesla CEO Elon Musk announced he had moved to Austin last week at The Wall Street Journal’s CEO Council summit. His exodus followed months of bashing California for its handling of the pandemic. The billionaire CEO said he is maintaining company operations in California, but also has significant operations for Tesla and SpaceX in Texas…

HP Enterprise also announced its decision to relocate its headquarters from San Jose to the Houston suburb of Spring earlier this month. Palantir Technologies relocated from Palo Alto as well this year, landing in Denver. Tech giants Google and Apple have also been expanding their presence in Austin over the last several years.

Headquarters are important, particularly for cities. Attracting the headquarters of a major company is a big status symbol for any big city. See the interest in trying to attract Amazon’s second headquarters. The implication is that the new location has a favorable business climate and is on the rise (with the opposite assumed of the previous location).

But, headquarters are just part of a company. They may be the nerve center and the physical home of company executives. Yet, large companies today can have offices and plants all over the place connected to a headquarters elsewhere.

Another way to read the moves out of California above is to suggest that these companies are hedging their bets by being located in numerous advantageous locales. Having multiple locations can help take advantage of local tax breaks for particular purposes, build on local work forces, maintain their place in local social networks, and provide points to pivot around when conditions change. The headquarters may have moved but they may move again and the companies still see some value in keeping operations going in California (even if some of this is simply due to inertia).

This suggests a different future reality than one where cities serve as anchors for major corporations. Instead, major multinational corporations keep offices and facilities all over the place, ready to move when needed or when an opportunity arises. Austin and Houston might be attractive now, Miami or Denver in a few years (just sticking to US locations). And as cities continue to look for an edge over their competition, attracting another big company is important…even as that company is actually rooted in multiple locations.

Using old technology to get around twenty-first century cities

Tom Vanderbilt considers how innovation in transportation affects urban life:

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And yet, there was something else that struck me about that scene in New York. For all its feeling of novelty, just about every one of those ways that people were getting around were technologies that dated back to the 19th century. The subway? It officially opened in 1904, but its basic technology was first demonstrated in 1869—the year Jesse James robbed his first bank. The car? Karl Benz sold his first in 1885. The bicycle? 1860. Ferries have gotten a revival in New York City in the past decade, but they have been around since the Dutch. Even e-scooters, which could be read as some Millennials-led plot on boomer NIMBYs, were piloting New York City streets—albeit powered by gas—more than a century ago…

It raises the question: Why hasn’t there been more innovation in transportation? Why is the 21st-century street still being trod by 19th-century vehicles? The pandemic gave the world a pause, the sort capable of disrupting entrenched habits—Zoom changed our notions of social connectivity almost overnight. Had a similar glitch in the matrix allowed us the temporary means to envision better—safer, cleaner, quieter, more efficient—ways to move around?

Transportation tends to resist rapid innovation. There’s the simple physical bounds of being human; as of yet, we can’t be zapped through the ether. The form of cities, built up over centuries, also makes wholesale change difficult. Transportation, too, must account for the way people actually want to move around: It needs to go to where people want to go and get them there reasonably quickly; it needs to be stored and then be available when you want it. Proposed innovations like Personal Rapid Transit (little pods that run on elevated rails), or the “Travelator” (moving sidewalks) have largely failed, outside of places like airports, either because there’s no room (or money) to build them or because they don’t carry enough passengers to where they actually want to go. The Hyperloop, for all its promise, can’t get around the idea it might take longer to get to a terminal in either San Francisco or Los Angeles than it would to travel between them…

But, he argues, we don’t challenge the image’s key assumption: “Why, in this coming world of wonder, are we still getting around in cars?” The passenger car so dominates our thinking that we find it neither desirable, nor possible, to easily imagine alternatives. “Even in our wildest dreams,” Townsend writes, “we can’t free ourselves from the status quo.”

Three quick thoughts:

  1. One way to look at this would be that the cities of today are still addressing the problems of the past few centuries. With the rapid urbanization of many major cities within the last century or two, how could any city coherently address transportation? The growth – often celebrated
  2. Transportation is not community destiny. And yet, changes in transportation technologies shaped numerous communities at key moments. The stretch from roughly the 1820s to the 1950s brought trains, streetcars, subways, bicycles, and automobiles/trucks (and not including airplanes and changes in ships that enabled more and faster travel between cities). This brought unprecedented speed to humans. It enabled commuting. As prices dropped, the modes became accessible to millions.
  3. I wonder if the true innovation with transportation technology in the future would involve new communities or cities developing around new technologies. Retrofitting the cities of today to new technologies limits options, is costly, and will require lots of time. If we are locked into streets and transportation grids once designed for cars, we can only do so much. But, if whole new places can arise, more opportunities might emerge.

What it means if a 20% rent price drop in Manhattan may be enough to reverse the market

With rents in Manhattan and San Francisco declining, how much will prices drop before demand increases? Perhaps 20% in Manhattan:

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A big drop in rental prices appears to be luring new, younger renters back to the city, even as office workers and wealthy New Yorkers remain in the suburbs and more rural resort towns. New leases in Manhattan increased 33% in October, making it the best October in 12 years, according to a report from Douglas Elliman and Miller Samuel.

The typical rent paid for apartments including discounts, or the median net effective rent, fell 19% from a year ago to $2,868 — a record decline. Smaller apartments, which cater to younger renters, fell the most. The price of studio apartments was down 21%, and one-bedroom apartment prices dropped 19%.

“I think we’re at a tipping point where the consumer starts coming back to the city,” said Jonathan Miller, CEO of Miller Samuel. “Sellers are slowly recalibrating what the values are, and the lower pricing is beginning to bring more people in.”…

And with the average rental price for a one-bedroom apartment still over $3,200 — more than twice the national average — Manhattan is still far from affordable for many young renters. Still, experts say the October increases could begin a long, slow recovery for the nation’s largest real estate market.

Manhattan is an important real estate market. It is part of the leading city in the United States and one of the most important global cities in the world. Housing is desirable there for multiple reasons.

But, Manhattan’s prices are unusual. There is a limited amount of land. Few other places in the United States have a similar local economy and cultural scene. Prices will remain high because they have been high for a while. There is a lot of capital tied up in buildings and land.

Thus, it is hard to know what to do with an article like this in regards to housing. The suggestion is a 20% price drop may be enough to attract new renters who are interested in Manhattan and have the resources to move in. Most people, and perhaps even most residents of the New York City region, do not have the interest or the resources. At the least, this is a reminder that real estate is a very local affair.

But, at the same time, housing is a city-wide, region-wide, and a national concern. The Manhattan market has unique traits but many people face housing challenges, particularly during COVID-19. Manhattan may be a bellwether or it could be more of a curiosity of how a small slice of people think about housing. The bigger question from a story like this could be: have housing costs dropped elsewhere in the United States? Since few markets are like Manhattan, perhaps not. How does this affect people? What are the long-term housing price prospects across different kinds of markets and for more typical residents?

Getting the categories right in continued urban/rural-plus-suburbs-and-exurbs-in-the-middle divide

Numerous outlets have commented on the continued presence of an urban/rural divide in 2020 voting. Here is another example:

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Rather than flipping more Obama-Trump counties, Biden instead exceeded previous Democratic win margins in Wisconsin’s two biggest cities, Milwaukee and Madison.

That pattern extended to Michigan and other battleground states, with Biden building upon Democrats’ dominance in urban and suburban jurisdictions but Trump leaving most of exurban and rural America awash in red.

The urban-rural divide illustrates the pronounced polarization evident in preliminary 2020 election results. The split underscores fundamental disagreements among Americans about how to control the coronavirus pandemic or whether to even try; how to revitalize the economy and restore jobs; how to combat climate change or whether it is an emergency at all; and the roles of morality, empathy and the rule of law in the body politic.

Four thoughts in reaction to this.

  1. The urban/rural divide is described in an interesting way above: it is cities and suburbs for Democrats and exurbs and rural areas for Republicans. This matches the patterns of this and recent elections. However, is separating the suburbs and exurbs worthwhile? Here is where county level analysis may not be fine-grained enough to see the patterns. Another way to put it might be this: there is a gradient in voting by party as the distance from the big city increases. Does it shade over to Republicans only in exurbs – which are suburbs on the outer edges? Is the 50/50 split a little before exurbs? A concentric circles approach could help though there still could be pockets that break with the overall pattern.
  2. Suburbs might just be too broad of a term to be useful in such analysis. The exurb/suburb split it one way to put it. Might it help to also think of different types of suburbs (wealthier bedroom communities, ethnoburbs/majority-minority communities, working-class suburbs, industrial suburbs, etc.)?
  3. Explaining the differences as urban/rural has a nice short ring to it and it fits the data. Introducing more categories in the middle is interesting to campaigns, pundits, and researchers but is harder to quickly describe. Perhaps the urban/suburban versus exurban/rural divide?
  4. Is the urban/rural divide one of the most fundamental aspects of polarization? Or, is it a symptom? In this story, the divide leads off the discussion of polarization on a number of fronts. But, what leads to these spatial patterns in the first place? While the geography is helpful to think about, are the real issues behind the urban/rural divide about race/ethnicity and class? Given residential segregation patterns in the United States, using the spatial patterns as an explanation covers up a lot of important social forces that led to those patterns in the first place.

First exit poll I have seen on suburban voters

In reporting exit polls yesterday, the New York Times included votes for Biden or Trump by location:

https://www.nytimes.com/interactive/2020/11/03/us/elections/exit-polls-president.html

The 2020 election, according to many pundits, was going to be decided by suburban voters.

The data above appears to follow the patterns from the last few elections. Cities go for Democrats. Rural areas and exurbs go for Republicans. The suburbs are contested ground. The splits are bigger in the table above: 9% advantage for Trump in small city or rural areas, 23% advantage for Biden in cities. And the suburbs are close with just a 3% gap.

Going even further, the suburbs of the true battleground states may be home to the truly important voters. In this election, the residents outside Atlanta, Charlotte, Raleigh-Durham, Cleveland, Columbus, Cincinnati, Pittsburgh, Philadelphia, Detroit, Grand Rapids, Milwaukee, Minneapolis, Phoenix and more might have just decided the election. That national 3% difference might not seem like much but it could matter a lot when state races are tight.

I am sure there will be more fine-grained analysis of the suburban vote by itself as well in comparisons to other demographic factors that influenced vote totals. But, this early data seems to suggest suburban voters will continue to be important in coming elections.

Example of rent drop in San Francisco: one bedroom down from $4,300 to $3,150

After hearing of rent drops in Manhattan, I read about one example of rent dropping in San Francisco:

Until the pandemic hit, the city’s housing market was so tight that would-be renters lined up for viewings and arrived with thousands of dollars in cash, ready to sign a lease on the spot.

But now landlords are hard-up for tenants and some are offering several months free, said Coldwell Banker realtor Nick Chen, who recently rented out a one-bedroom for $3,150 that before would have easily gone for $4,300.

“San Francisco rents have been really inflated over the past couple years,” Chen said. “It will come back, but I think the question is: Will it come back to the level it was at previously? Maybe not.”

This is a sizable drop in rent, roughly 25% in a short time frame. Yet, that is still a price that few Americans across the country could meet. Even with significant changes in social life in cities like San Francisco and New York, this does not mean these places are now accessible to many.

Presumably, there is a bottom floor below which rents will not drop. The person who owns the property has their own bills to pay. Some people will see this as an opportunity to get a place in San Francisco at a lower rent and jump at lower prices.

Or, does COVID-19 shift housing prices in high-priced markets for a longer time? If businesses decide to continue work from home and employees are skittish about being around a lot of people in a dense city, do rents drop even further? Is there an opportunity for developers, buildings owners, housing groups, and local governments to jump in and acquire and/or offer cheaper housing? I would not guess expensive housing markets like San Francisco, Seattle, or Manhattan will soon become reasonable but perhaps there will be some opportunities for more people in the region to take advantage.

So you want to live in an affordable big city – that is a suburb

Looking to live a big suburb that is affordable? Zillow and Yelp have you covered:

https://www.zillow.com/research/zillow-yelp-suburbs-cities-2020-28058/

Increased opportunities to work remotely are pushing more Americans to rethink how and where they want to live. But even if there’s less of a need to live as close to urban job centers, traditional urban amenities — think restaurants, nightlife, museums and sports venues — remain a big draw and demand for city living remains high. As a result, many buyers may seek places that balance the space and affordability of the suburbs, while still maintaining that big-city feel.

A new “Cityness Index” created by Zillow and Yelp Inc. helps identify the U.S. suburbs that best strike that balance. Key metrics include housing affordability compared to the nearest big cities and to the country at large, housing availability, the mix and diversity of businesses — including restaurants, nightlife and the arts — and consumer reviews and check-ins…

There were four individual Yelp indicators evaluated for each suburb to determine its cityness.

1. A mix of businesses similar to major cities

2. A diversity of restaurant and nightlife businesses

3. A diversity of arts businesses

4. A high level of consumer activity

This is an interesting suburban niche to highlight: communities for those who do not want to live in a big city but want more affordable housing and want to have some urban amenities. Of course, people could find this in less affordable suburbs or suburbs near the big city or other suburbs that have these more urban amenities. Is there something inherently more appealing in being in one of these big suburbs?

The reason I ask is that many Americans equate suburbs with small town life. The appeal of suburbs for Americans involves features often associated with smaller communities including lots of single-family homes (as opposed to denser concentrations of residences) and local control. Big suburbs often have a lot of jobs and can be significant jobs centers within a region. Furthermore, they could offer a mix of more dense housing as well as single-family homes. But, these big suburbs are also close in size to legitimate small big cities including Providence, Rhode Island, Chattanooga, Tennessee, or Akron, Ohio.

Perhaps if you live in a large metropolitan area, it matters less if you live in a particular suburb and more if you live near your work and desirable amenities within a certain budget. If this is the case, perhaps living in a suburb of over 150,000 people does not matter much. It is still more suburban than the big city but you are not at the edges of sprawl and the price is right.