Faye Porter’s heat frequently doesn’t work, leaving icicles inside her windows during Chicago’s brutal winters. Her building’s stairwells and hallways weren’t cleaned sometimes for months over the past year, she said. Faulty wiring nearly started a fire in her kitchen not long ago. Yet, despite all this, her landlord recently raised her rent by $70.
“They say that the cost of living continues to rise, but then never provide additional amenities,” said Porter, who lives in Hyde Park, a diverse neighborhood on the city’s South Side. “They remain the same or are less.”
Porter could be the poster child of the rental housing market over the past year: rent hikes on lower-quality housing, generally occupied by the most financially insecure tenants, and steep discounts on luxury apartments catering to the rich.
Much has been written about the two-track, or “K-shaped,” economic recovery, in which higher-income households have generally been doing well financially, while lower- and moderate-income ones are foundering. High-wage employment has recovered to roughly where it was pre-pandemic; the number of low-wage jobs, on the other hand, is still deeply in the hole. But that’s not the only way that the poor have gotten a raw deal. Low-income households are getting squeezed from both directions — less income and higher prices for what is usually their biggest single monthly expense: rent.
For well-off tenants, bargains abound. In most major metro areas, rents for high-end residential housing have plummeted, according to data from CoStar, a real-estate analytics company.
High-end residential
rents dropped
Year-over-year change from the final quarter of 2019 to the final quarter of 2020.
Lower quality (Rated 1 & 2 stars)
Medium range (3 stars)
High-end rentals (4 & 5 stars)
U.S.
avg.
Houston
Dallas-
Fort Worth
L.A.
+5%
0
-5%
N.Y.C.
Chicago
D.C.
San
Francisco
+5%
0
-5
-10
-15
-20%
Source: CoStar.
The Washington Post
High-end residential rents dropped
Year-over-year change from the final quarter of 2019 to the final quarter of 2020.
Lower quality
Rated 1 & 2 stars
Medium range
3 stars
High-end rentals
4 & 5 stars
U.S.
average
Houston
Dallas-
Fort Worth
Los
Angeles
+5%
0
-5%
New York
Chicago
Washington,
D.C.
San
Francisco
+5%
0
-5
-10
-15
-20%
Source: CoStar.
The Washington Post
High-end residential rents dropped
Year-over-year change from the final quarter of 2019 to the final quarter of 2020.
Lower quality
Rated 1 & 2 stars
Medium range
3 stars
High-end rentals
4 & 5 stars
U.S. average
Houston
Dallas-
Fort Worth
Los Angeles
+5%
No change
-5%
New York
Chicago
Washington, D.C.
San Francisco
+5%
No change
-5
-10
-25%
-15
-20%
Source: CoStar.
The Washington Post
High-end residential rents dropped
Year-over-year change from the final quarter of 2019 to the final quarter of 2020.
Lower quality
Rated 1 & 2 stars
Medium range
3 stars
High-end rentals
4 & 5 stars
U.S. average
Houston
Dallas-
Fort Worth
Los Angeles
+5%
No change
-5%
New York
Chicago
Washington, D.C.
San Francisco
+5%
No change
-5
-10
-15
-20%
-25%
Source: CoStar.
The Washington Post
High-end residential rents dropped
Year-over-year change from the final quarter of 2019 to the final quarter of 2020.
Lower quality
Rated 1 & 2 stars
Medium range
3 stars
High-end rentals
4 & 5 stars
U.S. avg.
Houston
Dallas-
Fort Worth
Los Angeles
New York
Chicago
Washington,
D.C.
San Francisco
+5%
No change
-5
-10
-15
-20%
Source: CoStar.
The Washington Post
The amount varies by city. In Dallas-Fort Worth, rents for apartments at the top end of CoStar’s quality scale were 1 percent cheaper in the last quarter of 2020 compared with a year earlier; in Chicago, they were down 7.6 percent. Meanwhile, rents for lower-end apartments — older or lower-quality structures, with fewer amenities — have held steady or increased, depending on the area. In Dallas-Forth Worth and Chicago, they’re up about 2 and 1 percent, respectively.
And some unlucky tenants have endured much bigger hikes. Porter, whose contract job at a nonprofit recently ended, is paying a nearly 5 percent increase, bringing the monthly price of her two-bedroom apartment to $1,500. (Porter, who has epilepsy, receives disability payments and vouchers that help cover the bills.) Andrea Ospina, who lives on the outskirts of Dallas-Fort Worth, said her rent rose last summer from $900 to $1,250 — or nearly 40 percent. This was shortly after her husband was laid off from his truck-driving job.
So what’s going on? Why are higher-income people getting a break they don’t need, and lower-income people facing rent hikes when they’re more at risk of losing their jobs?
The dynamics at the high end of the market are clearer. With covid-19 largely shutting down the perks of city life, many tenants who had the means to leave did so. Higher-wage workers who were juggling remote work and virtual school sought out more space, often purchasing a house in the ’burbs.
“A lot of renters who were already the marginal home buyer — who have stronger credit, have assets, higher income — decided to make the transition to homeownership,” said Jenny Schuetz, a senior fellow at the Brookings Institution. Sales prices for houses in the suburbs of New York, Washington, Chicago and other cities spiked last year, as high-income city residents fled.
That placed downward pressure on rents in the luxe, urban buildings these new homeowners had vacated. Rents were also kept down by a surge in supply, because a lot of newly built, luxury housing happened to come on the market last year. “This inventory hit at the same time as weak demand,” said Andrew Rybczynski, managing consultant at CoStar Advisory Services.
The story at the low end of the rental market is more complicated.
One likely explanation, Schuetz and others say, is that when the economic crisis hit, more people decided to move down the housing ladder to save money. There was already a shortage of affordable units, though. So, this surge in demand for lower-price-point homes ended up bidding those rents higher.
Take the case of Robin J. Schwartz, a health and lifestyle coach who had been living in a high-rise in Chicago’s tony South Loop neighborhood. She caught the coronavirus last spring, and her body took a beating she still hasn’t recovered from. Same goes for her work: Thanks to the recession, her paying clients dried up. “It was a bloody nightmare,” she said.
Robin Schwartz in the studio apartment she rented after being out-priced in her old one-bedroom unit. (Taylor Glascock/For the Washington Post) A few months later, her landlord requested a 10 percent rent increase. Schwartz balked. She scrambled to find someplace cheaper but had difficulty locating anywhere that would accept a new tenant in her financial circumstances. She negotiated a short extension of her existing lease.
Eventually she found an apartment in Hyde Park. The apartment is a 450-square-foot studio, much smaller than her previous 780-square-foot one-bedroom. It lacks the dishwasher, in-unit washer/dryer, balcony and other amenities she’d become accustomed to. But she now pays about half of her previous rent, a tremendous relief. “There was a point there where I thought I’d end up without a home,” she said.
Schwartz recently looked up the rent at the South Loop apartment she moved out of last November; it is still vacant, listed at a steep discount from her previous lease.
This pattern is evident across the Chicago metro area. Neighborhoods that began last year with high rents are offering sharp discounts; those that started out at lower price points — and are often home to majority-non-White populations — have generally had increases. The relationship is almost linear, as the chart below shows.
In Chicago, cheaper places
became more expensive
Year-over-year change in 74 neighborhoods and suburbs of Chicago, from Feb. 2020 to Feb. 2021.
Rents increased in most areas where the median rent was less than $1,500 pre-pandemic in the past year.
Rents in Feb. 2020
0.5k
1k
$1.5k
2k
2.5k
3k
Washington
Park
+4.3%
+10%
5
% increase
Englewood
+3.1%
0
% drop
-5
Old Town
- 9.7%
-10
Rents dropped
in more expensive
areas
River
North
- 11.3%
-15
-20%
0.5k
1k
$1.5k
2k
2.5k
3k
Rents in Feb. 2020
Source: CoStar.
The Washington Post
In Chicago, cheaper places became
more expensive
Year-over-year change in 74 neighborhoods and suburbs of Chicago, from Feb. 2020 to Feb. 2021.
Rents increased in most areas where the median rent was less than $1,500 pre-pandemic in the past year.
Rents in Feb. 2020
$0.5k
$1k
$1.5k
$2k
$2.5k
$3k
Washington
Park
+4.3%
+10%
5
% increase
Englewood
+3.1%
0
% drop
-5
Old Town
- 9.7%
-10
Rents dropped
in more expensive
areas
River North
- 11.3%
-15
-20%
$0.5k
$1k
$1.5k
$2k
$2.5k
$3k
Rents in Feb. 2020
Source: CoStar.
The Washington Post
In Chicago, cheaper places became more expensive
Year-over-year change in 74 neighborhoods and suburbs of Chicago, from Feb. 2020 to Feb. 2021.
Rents increased in most areas where the median rent was less than $1,500 pre-pandemic in the past year.
+10%
Washington Park
+4.3%
5
% increase
Englewood
+3.1%
0
% drop
-5
Old Town
- 9.7%
-10
-15
River North
- 11.3%
Rents dropped
in more expensive
areas
-20%
-25%
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Rents in Feb. 2020
Source: CoStar.
The Washington Post
In Chicago, cheaper places became more expensive
Year-over-year change in 74 neighborhoods and suburbs of Chicago, from Feb. 2020 to Feb. 2021.
Rents increased in most areas where the median rent was less than $1,500 pre-pandemic in the past year.
+10%
Washington Park
+4.3%
5
% increase
Englewood
+3.1%
0
% drop
-5
Old Town
- 9.7%
-10
-15
River North
- 11.3%
Rents dropped
in more expensive
areas
-20%
-25%
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Rents in Feb. 2020
Source: CoStar.
The Washington Post
In Chicago, cheaper places became more expensive
Year-over-year change in 74 neighborhoods and suburbs of Chicago, from Feb. 2020 to Feb. 2021.
Rents increased in most areas where the median rent was less than $1,500 pre-pandemic in the past year.
+10%
Washington Park
+4.3%
5
% increase
Englewood
+3.1%
0
% drop
-5
Old Town
- 9.7%
-10
-15
River North
- 11.3%
Rents dropped
in more expensive
areas
-20%
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Rents in Feb. 2020
Source: CoStar.
The Washington Post
Housing experts say other factors may be at play, too. Some lower-income areas were gentrifying even before the pandemic, leading to higher rents.
Rent increases at the bottom of the market might also be an unintended consequence of the federal eviction moratorium imposed last year. The moratorium, scheduled to expire this month, shields struggling tenants from displacement and possible homelessness. As of late February, about a quarter of adults in low-income tenant households were behind on their rent, according to the Census Bureau’s Household Pulse Survey. Landlords stuck with tenants who can’t pay may try to offset these losses by raising rents on everyone else. Rents in lower-end units tend to already be close to operating costs, Schuetz noted, so landlords may have slim profit margins.
Poorer tenants are also often reluctant to push back on rent hikes, given the complication and expenses of moving — particularly mid-pandemic.
“They don’t have money to move elsewhere, and landlords know they have them over a barrel,” said Sandy Rollins, executive director of the Texas Tenants’ Union. “They can say, ‘Here this is the price, this is what you have to pay, you can go to the food bank if you need to save money.’ ”
For many lower- and even moderate-income tenants, this dynamic predates the pandemic. Thanks to chronic shortages of affordable housing, most of these renters spent at least a third of their incomes on housing well before covid. The pandemic simply made things worse. President Biden’s American Rescue Plan appropriates more money for emergency rental assistance and vouchers, which will help some tenants. But alleviating rent pressure, both during the current crisis and after, will ultimately require expanding the supply of affordable housing.
That’s challenging for many reasons. Developers usually expect more limited returns for lower-end units. Subsidies to entice developers can be politically volatile or poorly targeted. Even when developers and municipalities are on board, other red tape or NIMBYism can stall projects.
But popular support for pandemic-related government assistance, coupled with covid-driven shifts in prices and migration patterns, may present an unusual opportunity to overcome these challenges. Some areas have begun converting motels or other buildings into additional housing; engaging in zoning and permitting reform; and debating changes to their development subsidies and requirements.
Without a greater supply of affordable housing, the two-track pattern is likely to continue. And without more housing options, Porter and her fellow tenants have little leverage to push back on rising rents and deteriorating living conditions. Though, as a volunteer tenant organizer, she still tries.
“The one thing that I do know is that I deserve to be warm and I deserve to be safe and I deserve to be clean,” she said. “Those things, they’re not negotiable.”
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