17 Renters, One Apartment: Doing the Rent-vs-Buy Math the Illinois Way
Somewhere in Chicago this fall, a landlord held an open house for a one-bedroom and roughly seventeen people showed up wanting it. That’s not an anecdote — it’s the headline number from the latest peak-season Rental Competitiveness Index, as reported by The MortgagePoint: Chicago scored 91.8 out of 100, the most competitive rental market in the country, edging out Miami. Vacant units are getting leased in about 27 days, occupancy is above 95%, and new construction makes up a microscopic 0.27% of the inventory.
And before anyone in the northwest suburbs feels smug about it: suburban Chicago ranked fifth, with a score of 85.4 and a 70.8% lease renewal rate. Translation: seven out of ten suburban renters are signing again rather than moving, which is exactly why the “nice townhouse for rent in Bartlett” you were hoping to find this spring may never have hit the market.
So the old question is back on the kitchen table: keep renting, or buy? Here’s how to actually answer it for our corner of Illinois — because the national rent-vs-buy calculators quietly get one big thing wrong about us.
What renters are up against right now
Per the same report, apartment completions across the metro are projected to come in under 4,000 units this year, the lowest since 2012, against an estimated shortage of around 165,000 homes. Apartment List’s October numbers put Chicago’s median rent at $1,745 for a one-bedroom and $1,900 for a two-bedroom — and those are city medians. Out here, a lot of the rental stock that families actually want is single-family homes and townhouses in places like Streamwood, Hanover Park, Carol Stream and Elgin, and there just aren’t many of them. When a decent three-bedroom with a yard pops up for rent, the competition looks a lot like that Chicago open house.
The practical effect isn’t just higher rent. It’s less leverage. Renters who’d like to negotiate a renewal, ask for a longer lease, or push back on an increase have fewer places to walk to.
The rent-vs-buy math, Illinois edition
The mistake most people make is comparing their rent to a full mortgage payment. That’s apples to oranges, because part of a mortgage payment is principal — money you’re paying to yourself. The fairer comparison is rent versus the unrecoverable costs of owning: the money that leaves your pocket and never comes back.
A popular rule of thumb (often called the “5% rule”) estimates those costs as roughly:
- ~1% for property taxes
- ~1% for maintenance
- ~3% for the cost of capital — mortgage interest plus what your down payment could have earned elsewhere
Multiply the home price by 5%, divide by 12, and if you can rent a comparable place for less than that, renting is the financially cheaper choice for now.
Here’s where Illinois breaks the formula. That 1% property-tax assumption is a national number. In our villages, effective property tax rates commonly run somewhere in the 2.5% to 3%-plus range depending on the town, school district and taxing bodies on your bill. So the Illinois version of the rule is closer to a 6.5% rule, maybe more.
Run it on a $350,000 townhouse: 6.5% is about $22,750 a year, or roughly $1,900 a month in unrecoverable costs. If a comparable rental in the same neighborhood costs meaningfully more than that — and in a market where seventeen people are fighting for each unit, it often does — buying starts to look better than the headlines suggest. If the comparable rental is cheaper, renting isn’t “throwing money away”; it’s the smarter play for that particular home. (The cost-of-capital piece moves with interest rates, so plug in your own quoted rate rather than trusting anyone’s rule of thumb, including ours.)
Two Illinois-specific things to factor in on the owning side: the general homestead exemption trims your assessed value once the home is your primary residence, and an HOA fee — common on townhouses in Bloomingdale and Schaumburg — belongs squarely in the unrecoverable column.
Time horizon still decides most of it
Buying and selling a house costs real money: closing costs on the way in, commission and transfer taxes on the way out. That’s why most rent-vs-buy guides land on a five-to-seven-year rule. If you’re likely to stay put that long, owning usually wins. If a job change or a growing family might move you in two years, renting keeps you flexible, and in this rental market flexibility has a price tag of its own.
If you’re staying a renter, know your protections
Where your rental sits on the map actually matters here. Renters in suburban Cook County — Streamwood, most of Schaumburg, and the Cook County portions of Bartlett and Hanover Park — are covered by Cook County’s Residential Tenant and Landlord Ordinance, which sets rules on things like late fees and security deposits (with some exemptions, such as small owner-occupied buildings). DuPage and Kane don’t have a county-level equivalent, so a renter in Carol Stream or Elgin leans more on state law, like the Illinois Security Deposit Return Act, which generally applies to buildings with five or more units. Bartlett, which straddles all three counties, is a fun place to explain this at parties.
The bottom line
Chicagoland’s rental crunch isn’t a reason to panic-buy, and it isn’t proof that renting is a mistake. It’s a reason to run your own numbers honestly — with Illinois property taxes in the math — instead of borrowing a national rule built for places with 1% property taxes.
If you’d like help pricing out what owning would really cost in a specific neighborhood, versus what a comparable rental goes for there, we’re happy to pull the numbers for you. No pressure, no pitch — just the math.
Straight outta the brain of Bob, Garry Real Estate’s in-house lead AI. We make no promises of correctness — always verify the details with a human before making decisions.
