A tale of two luxury markets

by Jason Porterfield

What buyers want

Luxury homes themselves are undergoing some changes as tastes shift. Sleeker and more serene interiors are in favor among younger homebuyers, including those who are new to the luxury market. Anderson, whose company is currently developing the Kelmscott Park community in Lake Forest, sees buyers of new luxury construction gravitating toward homes where ample space has been made for entertaining, but without sacrificing finer craft details.

“A newer trend is the importance of amenities,” Anderson says regarding condo development. “Yoga studios, guest suites, car services, concierge-style doormen – luxury buildings offer so much more than just a pool and fitness studio. Focus’s latest luxury rental development in Vernon Hills – The Atworth at Mellody Farm – will feature a game room, yoga studio and a dog spa with an outdoor run.”

Professional Builder recently compiled a list of the 50 features that buyers in the luxury market find most desirable. The list covers everything from exterior touches to fixtures and trim. Finished basements with an open plan, pet accommodations, energy-efficient lighting and smart home technology are all major pluses in the luxury market. Luxury buyers also look for welcoming outdoor spaces, wireless compatibility in every room and a large number of electrical outlets.

Universal designs for bathrooms are popular with high-end buyers who wish to “age in place.” Space, water-conserving fixtures, custom showers and freestanding soaking tubs are all appealing for this type of buyer.

According to Professional Builder, storage areas are becoming more discreet as more buyers opt for closeted pantry areas instead of cabinets. Homebuyers are also looking for open shelving options, flexible spaces that can be used for a wide variety of purposes without creating clutter or compromising an open floor plan.

In terms of materials, quartz countertops – which offer a wider range of different colors at lower prices than granite – have proven popular among high-end homebuyers. Formal dining rooms, meanwhile, are declining in popularity, as buyers opt out of this traditional space in favor of a more open “breakfast room” where casual meals can be enjoyed.

New construction, new challenges

The high number of existing luxury homes available means sellers need to prepare themselves to face the realities of their market.

“It has less to do with what price a seller wants and everything to do with the market they are in,” O’Neill says. “It is about listening to their broker who is in that current market day after day, and is their trusted advisor. I think they [sellers] also need to be willing to put some dollars in to get their home showing ready in terms of painting, staging and decluttering, since how we live in a home is different from how we sell a home.”

On the buyer side, Baines says buyers are often unprepared for the process of purchasing luxury new construction. With existing properties, they can visualize how they will use the space and the changes they want to make. But when it comes to new construction, buyers are often purchasing a home based on drawings and floor plans.

“We have some new developments that have popped up in the Barrington market,” Baines says. “My clientele base has not been leaning toward that, but it’s out there now. For many years it wasn’t even a choice.”

She says there’s a sort of re-education involved in getting buyers used to shopping existing homes to go back to built-to-suit homes in new subdivisions. Adjusting to quicker transaction timelines is one element of that education. “It’s a whole different perspective, and I don’t think people have been interested in understanding that at this point. It’s just starting to be available for them.”

Blackburn, who is seeing families moving from Chicago to the North Shore driving his market, has found that the existing home inventory gives developers an impetus to provide real value.

“It’s difficult to compete with resale inventory, and this puts pressure on builders of spec homes to keep their costs down,” Blackburn says. “New construction claims a premium on a price per square foot basis.”

While would-be new construction buyers in the suburbs must contend with a scarcity of available units, the builders themselves are faced with finding land where they can put developments. Property is at a premium, and developers are challenged to find locations they can afford without sacrificing the high-end finishes that luxury homebuyers want.

“The cheaper the land acquisition costs are, the more value the builder can pass along to the buyer,” Blackburn says. “They still need to manage construction costs while delivering a product with the fixtures and finishes that will appeal to their target market.”

O’Neill says the supply of new construction in Lake Forest has not had a major impact on her market.

“If it is quality construction and brand new, it is selling well,” O’Neill says. “Since there is still a limited amount of new construction here, it hasn’t played a vital role in affecting our existing home sales. Further down the North Shore, there is more new construction in areas like Wilmette and Winnetka and that is competing more directly with their existing home sales.”

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