Chicago’s Luxury Market Booms – Chicago Agent Magazine Cover Story
It’s as if the clouds have lifted and the sun is shining on the luxury market. With mask mandates lifted, vaccines readily available, and life slowly returning to “normal,” city dwellers who headed to the North Shore to socially distance are now coming back, and they are seeking lakefront properties.
Cabin fever, time to rethink priorities and money saved during lockdown have given players in the luxury market increased purchasing power, as well as new priorities regarding the lifestyle they want to lead. Not wanting to redevelop anymore, they want turnkey, or they will immediately look elsewhere, according to agents working in this sector of the market. Sellers must now prepare their properties to move in or risk playing the waiting game.
The Chicago agent recently spoke to luxury brokers about market trends, millennial and baby boomer preferences, returning to the city, the most desirable neighborhoods and how long they expect it to be. that the market remains hot.
Despite the exodus from the city in 2020, buyers are coming back, according to Anne Rossley, realtor at Baird & Warner. In Chicago, sales in the million-plus category increased 56% in 2021, and the trend continues today, Rossley noted. Interestingly, ultra-luxury exceeds luxury in general: 31 properties over $5 million sold last year in Chicago compared to nine homes in 2020, an increase of 244%. Rossley attributes it to households saving more money now than they did before the pandemic and choosing real estate as a safer investment than the stock market.
“Economist Marci Rossell said the average American, before the pandemic, saved about 8% of their income; after the pandemic, they save 12% of their income,” Rossley noted. “People have more equity today…They’re putting money into durable assets, especially now that we’re seeing inflation. Having a house is a good hedge against inflation.
While she sees many buyers making cash purchases, she says it’s still possible to get a good rate on a jumbo mortgage — in mid-March the average rate was 4.9%.
“Luxury today is an experience,” said Nancy Nugent, senior vice president of Jameson Sotheby’s International Realty. “People want to immediately surround themselves with beauty and live, whether it’s a high-rise penthouse in the city or a beautiful estate in Lake Forest. It becomes harder to find unless sellers have followed design trends.
Whether Nugent assists buyers in the market for a $500,000 home or a $5 million property, she said they all want the same thing: “Buyers need to feel the value proposition. It could be the view, the location and certainly the finishes. If they don’t feel these things entering a property, they will move on.
Undoubtedly, luxury is a subjective experience; it means something different to each person, according to agents Michelle Browne and Naja Morris of @properties’ MB team | Christie’s International Real Estate. It can be equipment and features, or it can also mean new construction. More often than not, it’s sort of a hybrid of the two, Browne and Morris explained. Lately, buyers want the same features and conveniences in their new construction homes that are available in high-rise condos: more efficient kitchens, more built-ins, warming drawers – a thing of the past that has returned – convection ovens , separation zones for coffee stations and wine and cheese bars, and multifunctional appliances. Morris’ personal favorite: a wine fridge with a three-bottle wine dispenser that keeps an opened bottle of wine cool for three months.
Browne and Morris said buyers also want green homes with geothermal heating systems, technology to control lights and curtains at the push of a button, and biophilic designs that bring the outdoors inside. via floor-to-ceiling NanaWalls. Formal dining rooms have made a comeback, and double home offices, airy white kitchens with clean lines, hidden refrigerators, and soapstone and quartzite countertops — not granite — are also in demand.
The Suite Life of Luxury Buyers
Service goes hand in hand with luxury. In new high-rise buildings, buyers want a concierge to handle everything from booking dinners to purchasing theater tickets.
“It’s almost like a hotel concept,” Browne and Morris explained. “You really talk about service as part of luxury. All the conveniences that once existed are taken up a notch. Over the past 10 years outdoor spaces with pools were nothing new, but now there are fire pits, individual pods so more than one family can grill outside at the same time with speakers surround. Even the rooms you rent have private full-service kitchens and a dining room table for 12 so you can host a private dinner party.
Other unique amenities include individual wine and cigar storage in common areas, dog walkers, dog runs, pet grooming, and club cars for shopping.
The fairly new extravaganzas that Browne and Morris commonly see are air filtration systems, circadian lighting that dims the lights in the morning and slowly turns them off at night, indoor play areas for young children, golf, movie theatres, lounges and game rooms. for teenagers and adults.
Repositioning high-rise equipment in homes
“A lot of people who would traditionally want a luxury downtown condo want a luxury single-family home for more space,” Morris said. “We are seeing fewer suburban flights; people want to stay in town, but they want more space.
In new-build single-family homes, yards matter, Morris noted. Rooftop terraces, outdoor kitchens and wine cellars have become almost the norm. Beautifully landscaped lawns, brick paving patterns, seating areas, water features, lush gardens, and heated garages connected to the house by a lower level (so homeowners won’t get wet or cold when ‘they come from outside) are also popular with buyers.
When Nugent sells a luxury home on sprawling land, buyers tend to build a sports field, outside of their homes, on the property.
“It used to be a basketball court, but now people want to build swimming pools, tennis courts and golf simulators,” she explained. “Instead of going to a spa, they want salespeople to come to them for massages and workouts.”
Back to town
Nugent has just sold a Georgian house in Glencoe for an 82-year-old couple moving to Water Tower Place, to be closer to their children and enjoy museums and culture. She also had eight different buyers from the suburbs and more remote areas of the city – all wanting to move downtown to the lakeside. “It gives me a sense of renewal for this return to town,” she said.
What’s hot, what’s not
Luxury homes in the Lincoln Park and Near North neighborhoods are outpacing luxury sales in other parts of the city due to their location, Rossley said. The median price of a single-family home in Lincoln Park is around $1.7 million; a few years ago it was $1.2 million.
Inventory is still a challenge and demand remains high. Based on the current sale rate in downtown Chicago, Rossley said there was only five months of inventory for sale priced at more than $3 million. In December 2020, there were between 7 and 27 months of properties for sale. On April 1, she said there were 11 homes under contract for over $5 million; last year at this time there were only nine, a sign that stocks are slowly increasing.
Millennials and baby boomers want different things
For baby boomers, privacy is important; they don’t want to share space, while millennials don’t care, Nugent said.
“Boomers want their own gym, their own private outdoor space,” she explained. “In many cases, if they have space, they set up massage rooms in their homes. They don’t want to go to a spa. They want sellers to come to them. It was like that before COVID, but the pandemic has accelerated the trend. On the other hand, millennials want a nice rooftop terrace with grills and a bar, and they don’t mind sharing it with neighbors.
“Baby boomers are more likely to give up on outdoor space, and millennials are leading the way,” Browne said. “Many skyscrapers didn’t have outdoor space when baby boomers were buying. They don’t miss what they never had.
Barometer of the luxury condominium market
Sales are slow to return to River North because it’s saturated with a large number of high-rises and condos, Browne said. Still, you can find some really good deals on the Gold Coast and Streeterville. The West Loop and South Loop are very strong, appreciating month after month, Browne and Morris noted. The West Loop, in particular, will remain desirable due to easy access to restaurants and shopping. Of course, Lincoln Park is still hot. Further out in town, Bucktown, Wicker Park and Bronzeville have been popular for some time and remain so.
Morris is passionate about Bronzeville for its easy access to public transportation and its proximity to Lake Shore Drive and downtown. Plus, it’s sandwiched between two commercial districts, the South Loop and Hyde Park, giving it a quiet neighborhood feel in a bustling city.
“He has the most opportunities [for new-construction homes] because there’s a lot of undeveloped land,” Browne said of Bronzeville, noting that teardowns aren’t necessary in the area. “You also have a new school, Bronzeville Classical School, which is getting a lot of praise and attention all over town.”
She predicts that Bronzeville will experience a significant amount of commercial infill over the next few years. She also said that “Woodlawn is the next hot ticket,” with the University of Chicago still investing heavily in the neighborhood, the grand opening of the Obama Presidential Center, and a Tiger Woods golf course being built nearby.
Michelle Browne, Broker, MB Team, @properties | Christie’s Real Estate International
Naja Morris, Broker, MB Team,
@properties | Christie’s Real Estate International
Nancy Nugent, Senior Vice President, Jameson Sotheby’s International Realty
Realtor, Baird & Warner