‘We need to build more’: Why apartment rents here are rising faster than the national average

A few years ago, Milan Matijevic lived with two roommates in a four-bedroom house in Iowa City. He paid about $800 per month in rent, including utilities.

As accommodations go, it left something to be desired.

“It was not of high quality,” admits the 26-year-old, who upgraded his living arrangement in March 2025, when he and his girlfriend, Maggie McGhie, moved into their two-bedroom Schaumburg apartment.

“For location and space compared with cost, it was the best option we found,” said Matijevic, a student and personal trainer whose home is a quick commute to his job at The Exercise Coach in Schaumburg.

While the couple pays $1,865 per month in rent, they can consider themselves fortunate in a Chicago-area market where prices are rising faster than in most other big cities.

Among the nation’s 10 largest metropolitan areas, Chicago and the suburbs saw the largest increase in rent over the past year, according to the Illinois Policy Institute, a taxpayer advocacy group that cited ApartmentList.com data.

The metro area’s 3.1% year-over-year increase is almost double that of the New York metropolitan area’s 1.6% increase and nearly triple Philadelphia’s 1.1%, according to the report.

A report from Apartments.com shows what Matijevic and McGhie pay for two bedrooms is about the same as a one-bedroom in many other suburbs, and less than what renters pay for a one-bedroom in Elmhurst.

According to the report, a one-bedroom apartment in Elmhurst rents between $2,000 and $2,500 on average. Further out — in Lombard, Algonquin, Crystal Lake, Naperville, Aurora, Bensenville, Wood Dale and Cary — one-bedroom units are renting for between $1,500 and $2,000 on average. Less expensive communities, including McHenry and Addison, are seeing one-bedroom apartments rent for between $1,000 and $1,500 per month on average.

But the suburbs are a bargain compared to desirable Chicago neighborhoods such as River North, downtown, the South Loop, Lincoln Park and Wicker Park, where a one-bedroom apartment typically costs renters between $2,500 and $3,500 a month on average, according to the report.

Real estate consultant and market analytics expert Adrian Brizuela cites additional housing construction as one way to counter rising rents.

“The most logical way to moderate rents and make everything more affordable for the consumer is to build more,” said Brizuela, associate director of market analytics at CoStar Group, a digital platform for commercial real estate information, analytics and news. CoStar also owns Apartments.com.

Overall, Chicago-area rent outpaces the national market, with a typical one-bedroom apartment about 23.5% more expensive than the national average of about $1,666 monthly for a one-bedroom unit, according to Apartments.com.

After stalling during the COVID-19 pandemic, when some renters quarantined with relatives, the rental market exploded in 2021, according to Brizuela.

Pent-up demand fueled the surge, which saw renters migrate to the suburbs, specifically within a few miles of a train station, he said.

Renters who had to be in the office only one or two days a week figured that if they could catch an express train from Arlington Heights, Wheaton or Downers Grove and be downtown in about 35 minutes, they might as well move to the suburbs where they could get a little more space, Brizuela said.

Between 2022 and 2024, the suburbs outpaced the metro area overall for rent growth and apartment demand, he added.

Rent growth has since cooled, although the metro area still leads other big markets. Chicago-area rent growth has slowed from 3.5% to 5% annually during much of 2022 to 2024 to roughly 2.5% to 3% more recently, said Brizuela, who places suburban rent increases currently at about 2.5%.

“Over the last 12 months, approximately 70% of apartment units delivered across the Chicago metro area have been concentrated in the suburbs,” he said.

Location and new construction explain the difference in price, Brizuela said.

New construction accounts in part for higher rent in downtown Chicago, where landlords can charge “higher rents due to location, amenities and new finishes,” he said.

“Everybody loves a shiny new toy,” he added.

What drives up rents in the rest of the city is competition.

“They're not building much in the way of new, multifamily product,” Brizuela said, and the resulting competition raises prices.

By contrast, suburban rent increases over the last 18 months have been modest, he said.

“We need to build more,” Brizuela said. “Increasing supply can ease competition for existing units and help preserve more naturally occurring affordable housing over time.”

Brizuela cites as examples Sun Belt markets such as Austin, Texas, Phoenix and Nashville, Tennessee, where developers overbuilt between 2021 and 2023. As a result, property owners and landlords offered incentives — one to three months free rent, a flat-screen TV, an air fryer — to attract tenants, Brizuela said.

“Here concessions are much less common,” he said. “You're lucky to get a free parking space for a month if you sign a lease today.”

Matijevic and McGhie received no major concessions, although their landlord waived their security deposit. When their lease ends in May, they may consider moving to Arlington Heights or another community along a Metra line, which would make the commute to Chicago for concerts, sports and friend meetups easier.

At some point, they may want a home of their own, Matijevic said.

“That’s the dream, to buy a house and have a family,” he said. “It doesn't seem feasible anytime soon … maybe one day.”

bvitello@dailyherald.com