A tale of two luxury markets

by Jason Porterfield

The state of the city

Is that the case in the city? Kipp Blackburn sees year-over-year growth in the region as steady, though there is room for improvement. Blackburn notes that in the city, contracts are down 15 percent and closings are down 20 percent due to supply being up 22 percent over March of 2016. Even so, the median sales price is stable and growth in several suburban areas looks promising.
Illinois Realtors reports that home sales in Chicago increased by more than 15 percent year-over-year in March and that the median prices was $295,000, up 9.7 percent from the $269,000 median price during the same period in 2016.

Luxury building continues in the city at a breakneck pace, though some neighborhoods have become saturated with high-end property. In a March 2017 article for Crain’s, Lincoln Park, Lakeview and Lincoln Square were all identified as neighborhoods experiencing “luxury home logjams” with so many luxury listings that prices are beginning to fall.

Tenuous growth

The RE/MAX Luxury Report on Metro Chicago Real Estate also shows that the luxury market grew through 2016, though the growth was somewhat modest. According to the report, 2,423 luxury units were sold in the Chicago area last year, good for a 3 percent increase over 2015. The report, which tallies sales of homes priced at $1 million and more in Cook, DuPage, Kane, Kendall, Lake, McHenry and Will counties, also indicates that these properties are spending more time on the market and that prices are down somewhat.

“After what we saw in 2013, 2014 and 2015, I think 2016 was a bit of a disappointment to most people,” Baines says. “Our overall sales statistics were very good, but it definitely wasn’t peak or what we anticipated. We had goals that were much higher than we probably could have accomplished for 2016. I think the election had a big influence on that. People were very unsure and just waiting to see what would happen.”

The overall inventory of homes in Chicagoland priced at $1 million and more grew by 23 percent, leading buyers to take more time to make decisions and properties staying on the market longer. The length of time it took sellers to find a buyer grew by 22 percent from 2015 to 2016, increasing from 135 to 165 days.

Blackburn, who works out of CONLON/Christie’s Winnetka office but has listings in the city and throughout the region, says that activity is robust in the $1 million to $2 million range and that sellers are consistently getting 90 percent to 95 percent of their list price, even as those homes take longer to sell.

“The average market time is up significantly over March of 2016 at around 6 months,” Blackburn says. “It’s stable regionally and down by about 11 percent in Winnetka.”

Who’s shopping for luxury homes in the suburbs? Many of the homebuyers Baines sees are either upper-level executives who are transferring into the area for work and settling into a home, or members of the Generation X demographic who have finally decided to move out of the city. The area’s high inventory gives them the time they need to choose the sort of living situation they want.

“For the most part they’ve been in condos down in the city and they’ve held on for a very long time because they like that lifestyle,” Baines says. “We’re seeing about 50 percent of them going to the Village area because they can still have something of that lifestyle, while the other 50 percent are ready to make the move to a bigger property with more acreage or a lifestyle community with amenities.”

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