-- Connecting the dots between our economy, government and business --
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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How can rents be increasing with so much supply from all the people moving out of the city? Landlords must be raising the rents and just leaving them all vacant. Lol
Property taxes get passed through, for one thing.
They can only get passed through if there are enough people that want to rent. How do you explain all the renters lining up to pay this new higher rent if the population is declining? I get that this doesn’t line up with your narrative but this is economics 101.
Wrong. Many, many factors go into “all the renters lining up” beyond population change.
Without demand Mark it doesn’t matter how much your costs go up. Vacancy rates would increase and cause landlords to offer more incentives to chase too few renters. That’s not what we’ve been seeing.
Demand has been strong which doesn’t jive with the doom and gloom of population loss. You can say “wrong” all you want but that doesn’t explain rental rate increases.
You are being far too simplistic about an issue that turns on many issues of demand and supply. I suggest you fully think through and try to answer your own question, which was “How can rents be increasing with so much supply from all the people moving out of the city?” Be aware that the net in-out migration is not a big part of that answer.
Hysterical Mark. So you can’t offer up an explanation of why the demand exists even though we have massive population loss. There is a disconnect. You can’t offer up a cogent argument other than it’s complicated there are many factors. lol
At least debtsor makes the argument that demand is propped up by illegal immigrants. You’ve offered nothing other than taxes went up so prices also went up with no explanation around demand.
Rents in the Windy City increased by 20.8 percent year-over-year in November
Illegal immigration disrupting primarily the lower end of the market which is the demand part. Costs go into the equation too, with higher taxes, the punitive new Cook County RLTO and eviction moratorium (which only ended in October 2021 and basically factors into the November 2022 YOY increase) creates a toxic mix of higher rents, making the Chicago region an even more undesirable place to live. It’s not a good thing to have 20% growth YOY in a region that is universally recognized as troubled.
I believe factors (since cost of capital just doubled) are exigency and timing; Exigency: as fewer potential buyers compete for property purchase, more potential short term renters compete for the commodity (residential or commercial space) on different terms of “time-value purchase”. Rental represents lower risk due to lower up-front capital requirements than purchase. Timing: (using game theory: players will optimize personal position): a renter will ‘stay’ with his hand until and unless A) a better hand comes along or B) ‘staying’ represents a certain loss. A renter may have no other options than to ‘stay’. A renter may be subsidized… Read more »
It’s very easy to understand actually using econ 101. The first, like Mark says, costs such as taxes have gone up, along with the damage that eviction moratorium caused; and factor in the onerous legal requirements in the new Cook county-wide Residential Landlord Tenant Ordinance, and landlords are charging higher rents to compensate for the increased risk. Secondly, no one in the politically correct world wants to admit this, but the flood of illegal immigrants to Chicago and suburbs has significantly increased demand for low income apartments. The demand at the lowest end of the market causes a disruption all… Read more »
“costs such as taxes have gone up” Costs going up will definitely drive total prices to increase but that doesn’t mean there is sufficient demand. Prices can go up and without enough customers then inventory will increase or in this case vacancy rate. If so many people are leaving without enough people to replace those losses then less demand will have downward price pressures. “flood of illegal immigrants to Chicago and suburbs has significantly increased demand for low income apartment” No argument from me. My point is that without sufficient demand rent would decline. The population isn’t plummeting otherwise demand… Read more »
“Perhaps those population estimates that show yearly losses are under counting illegal immigrants?”
This is entirely possible. However, IL does appear to be losing population but just not necessarily in the Chicago area, with a lot of loss concentrated throughout the state.
It does seem to the average person in Chicago like we are losing population because all of our friends and family leave while our former hometowns turn into 3rd immigrant no-go zones, with vacant strip malls, 100% immigrant apartment complexes, and low income everything. You have nothing in common with the newest arrivals and they are practically uncountable.
That dam will burst during the next downturn. I expect Chicago rental properties to eventually become a hot potato that nobody will want to get stuck with…..
Funny how that is: Rent increased most in cities with years long eviction moratoriums combined with one-sided tenant protection law.
The spin is ‘rental growth!’ When the reality is that landlords are raising rents to cover for risk. There’s really no sane reason why the rest of the country – which is booming compared to NY/Chicago/Boston – had rent increases only 3.4% while Chicago jumped 20%.
It ain’t gentrification in Chicago causing rent increases!