In Chicago, listings priced $500,000 and higher are in extremely high demand. New construction has been slow to deliver, and inventory of homes in that price range is falling rapidly. That has caused luxury clients and their agents to aggressively pursue homes not yet on the market. Competition is fierce, and even more inter-agent networking and research is necessary to put clients in the right homes.
“We are seeing much shorter market times and lower inventory levels. Those pieces run together,” Trace says. “One interesting thing occurring in our market is that younger buyers tend to want newer construction, but we have so many beautiful older homes and estates available. I definitely think that the market has been challenged by these younger buyers.”
Colagiovanni also sees the luxury market in Chicago as a seller’s market, but notes that his clients have tampered their expectations based on that reality.
“They realize that they are looking at the best places in the best locations with the best views,” he says. “They accept the fact that the great properties always go first and they are not the only ones looking at those great properties.”
While it may take longer for buyers to find their perfect home, those trends signal that a real rebound in the luxury real estate market is on the way. That is anchored by economic optimism. According to April’s Fannie Mae National Housing Survey:
•Respondents expect home prices to increase 2.9 percent in the next 12 months, which is an increase in expectations from the previous survey.
•The share of respondents who say home prices will go up in the next 12 months increased slightly to 50 percent, and the share who say home prices will go down held steady at 5 percent, the all-time survey low.
•The share of respondents who say mortgage rates will go up in the next 12 months decreased to 52 percent, and those who said they will go down increased to 7 percent.
•Those who say it is a good time to buy a house held steady at 69 percent, and those who say it is a good time to sell a house increased 4 percentage points from last month to 42 percent, an all-time survey high.
•The share of respondents who say the economy is on the right track increased 2 percentage points from last month to 35 percent.
•The percentage of respondents who expect their personal financial situation to stay the same over the next 12 months decreased 4 percentage points to 41 percent.
•The share of respondents who say their household income is slightly lower than it was 12 months ago decreased 2 percentage points to 12 percent, tying the all-time survey low.
“We are starting to see prices increase,” Trace confirms. “Nothing dramatic, but there is certainly some appreciation. We have also had some home sales in the $3 million range, which has been a huge shift from the prior year. We are pretty excited about seeing that type of activity.”
Things are improving in Greenberg’s region of business, as well, with more and more of her Northwest Side listings selling before they officially hit the market.
“The inventory is so low that you have to know a lot of agents to know what’s coming onto the market before it does. If [a home] is great and priced right, it won’t make the market,” she says. “Buyers are working a little faster.”