Chicago’s average rent rises to $2,200, up 46% in 10 years
Rent is unaffordable for half of Chicagoans, averaging $2,200 a month. The key to affordable housing is to build more housing, but that won’t happen until city government reduces its role.
Chicago rent now averages $2,200 a month, up 46% in a decade and driving a housing crisis.
The average rent for a two-bedroom apartment is over $2,400 per month and families looking for three- to four-bedroom apartments pay over $3,000 per month, according to Zillow data.
Higher prices hurt residents. Roughly half of Chicago renters pay more than 30% of their income for shelter, exceeding the federal limit for affordability. The city’s most vulnerable residents are even worse off: almost 90% of low-income households pay more than that 30% threshold.
If anything, citywide data understates the magnitude of the problem. Very low prices on the South and West sides of the city mask much higher prices in safer and more affluent areas. Neighborhood specific data shows just how wide the disparity is.
Recent citywide data is even more concerning. Rent went up 1.4% in June, and rent has gone up 6.2% in the first six months of 2024.
Like any market, housing prices are governed by supply and demand. New housing lowers prices, while a lack of housing and new construction raises prices. Chicago rents are reaching record highs as new construction slows.
This outlook is bad for residents but good for existing landlords. Business analysts are predicting 5-8% rent growth next year, significantly outpacing inflation and wage growth.
Normally, market mechanisms help keep prices in check by increasing supply, which in turn puts downward pressure on prices. This breaks down when burdensome government regulations get in the way of new construction, pushing rent prices higher and higher. Policies such as restrictive zoning, expensive and time-consuming permitting, costly requirements for construction and aesthetics among others contribute a significant percentage to building costs.
Full deregulation would lower housing prices by as much as 50%. Even moderate reforms such as Minneapolis’ 2040 plan have been hugely successful.
Fortunately for Chicago, there is growing political consensus around common-sense solutions. A new report, “Regulatory reform can make housing more affordable for Illinois families,” outlines promising changes. Chicago Mayor Brandon Johnson is also committed to building faster, building everywhere and building together as part of his “Cut the Tape” reforms.
Affordable housing is achievable without imposing new taxes, but it requires government backing off rather than being the solution to every problem.