Chicago Hipsters Helping Returns
The verdict's in: hipsters around the country are boosting multifamily yields and some Chicago zips have flown into the top 25 markets for rental returns.
RealtyTrac homed in on these hyper-local markets with strong fundamentals by focusing on a prevalence of hipster indicators, like age bracket (25 to 34), heavy walking and public transit use, a high amount of renters versus owners, and low vacancy, VP Daren Blomquist tells us. (They could also look at artisan latte consumption.) Chicago zips that made the list, ranked by gross rental yields: 60625 (5.18%), 60647 (4.69%), and 60642 (4.64%). The city stands out as one of the few non-coastal members of the list (like Iowa City), Daren says, but yields are significantly lower than in top flannel meccas like Saint Paul (13.98%) and Pittsburgh (10.84%).
While you're not getting as favorable a ratio of prices to rents in Chicago, the market's solid long-term and you have a larger pool of potential tenants who can actually afford the lower rents, Daren says. Like we've seen in areas such as Wicker Park and Logan Square, an influx of hipsters can very rapidly increase home values. So markets still on the fringe like Pilsen and Avondale would be the best bet for investors, where home prices haven't increased and the area's getting a lift from neighboring mustached 'hoods. As hipsters age and have families, Daren adds, you might see less migration to buying in the 'burbs (making for profitable condo conversions and sales in these zips). These craft beer drinkers are in it for the long haul.