Suburban Chicago Soars in Rental Rankings, Second Only to Miami

Suburban Chicago is challenging Miami, climbing to the second-most competitive rental market due to the rising "hipsturbia" trend.

Jordan B.
June 23, 2024

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RENTAL MARKET

Hipsturbia Boom Drives Suburban Chicago in Rental Rankings Second Only to Miami

Miami has retained its status as the nation’s most competitive rental market in the US. However, Suburban Chicago is closing in quickly, making a remarkable jump from 10th place, influenced by the growing trend of “hipsturbia.”

The suburban shift: With urban real estate prices soaring, many millennials are gravitating towards suburban areas. Miami-Dade County is leading this trend, again crowned the most competitive rental market by a RentCafe report. This report evaluated 137 US rental markets based on vacancy rates, days on the market, competition per home, lease renewals, and new constructions.

A new contender: Following Miami-Dade was suburban Chicago. Yes, you read that correctly. Suburban Chicago now ranks as the second-most competitive rental market for early 2024, a huge leap from 10th place last year. With an RCI score of 83.6, trendy suburbs like Naperville, Joliet, and Evanston are luring Millennials searching for better housing amid the "hipsturbia" boom.

Source: RentCafe

Growing competition: Other Midwestern markets, such as North New Jersey, Grand Rapids, Michigan, and Milwaukee, also ranked among the top five. The competition is fueled by a significant housing shortfall in the US, estimated at 4.5 million homes, coupled with high interest rates hampering homeownership and downsizing.

Zoom in: Pandemic-driven remote work trends have pushed Millennials from cities to suburbs and spurred a nationwide migration to Sun Belt states like Florida. Despite high housing costs, many renters continue leasing rather than buying homes, with a national lease renewal rate of 62.4%. In Miami-Dade, the renewal rate is even higher at 73.6%.

Zoom out: As the summer moving season heats up, rental competition intensifies, causing shifts in the most competitive markets. Rising demand is also seen in the Twin Cities, Memphis, and NYC boroughs. Lehigh Valley, PA, is the hottest small market due to its popular college towns.

➥ THE TAKEAWAY

Big picture: RentCafe.com analyzed 137 U.S. markets to identify these trends. The report finds US rental markets "moderately competitive," with a Rental Competitiveness Index score of 73.4 out of 100, thanks in part to a construction surge that has helped temper rent growth.

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The pandemic knocked down high-flying areas like the San Francisco Bay Area and accelerated markets like Austin, TX. Yet that’s not the whole story. An otherwise great market can have poor-performing submarkets. That’s happening…

⏪ Weekend Wrap-Up

Catch up on the most clickworthy stories of the week.

Cutting back: May was another lackluster month for consumer spending as softening economic conditions took a toll on American households.
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Offering axed: Veris Residential (VRE) cancels its planned 10.5M share public offering for a 348-unit residential property acquisition in New Jersey.
Debt spikes: Difficult refinancings and delayed payoffs led to a rise in outstanding US commercial and multifamily debt in Q1 despite fewer new originations.
Builder blues: Builder sentiment in single-family homes hit a 7-month low in June, with NAHB's Housing Market Index dropping to 43.
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Debt dilemma: A recent Moody's report highlights higher default risks in CMBS due to $27B in subordinate debt from 2014 to 2023.
Washed away: A new developer hopes to revive a stalled SF apartment project on a shuttered car wash site with a larger housing proposal.
Retail retreat: Major box stores and pharmacies are scaling back as medical office investment drops sharply.
Real estate rumble: Blackstone Real Estate and rivals raise their bids for Mexican industrial real estate fund Terrafina after recent election results.

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