It’s as if the clouds have parted 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 social distance are now returning, and they’re looking for lakefront properties.
Cabin fever, time to rethink priorities and the money saved during lockdown have given those in the luxury market increased buying power, as well as new priorities about the lifestyle they want to lead. No longer willing to remodel, they want turnkey, or they will immediately search elsewhere, according to agents working this sector of the market. Sellers must now make their properties move-in ready or risk playing the waiting game.
Chicago Agent recently spoke to luxury brokers about what’s trending in the marketplace, millennial and boomer preferences, the shift back to the city, which neighborhoods are the most desirable and how long they expect the market to stay hot.
Despite the 2020 exodus from the city, buyers are coming back, according to Anne Rossley, a Realtor with Baird & Warner. In Chicago, sales in the $1 million-plus category were up 56% in 2021, and the trend continues today, Rossley noted. Interestingly, ultra-luxury is outpacing luxury in general: 31 properties over $5 million sold last year in Chicago versus nine homes in 2020 — an increase of 244%. Rossley attributes it to households saving more money now than they did pre-pandemic and choosing real estate as a safer investment than the stock market.
“Economist Marci Rossell said the average American, pre-pandemic, was saving about 8% of their income; post-pandemic they’re saving 12% of their income,” Rossley noted. “People have more equity today … They’re putting money in hard assets, particularly now that we’re seeing inflation. To have a home is a good inflation hedge.”
While she sees many buyers make cash purchases, she said it’s still possible to obtain a good rate on a jumbo mortgage — mid-March, the average rate was 4.9%.
Lifestyle OVER price
“Luxury today is an experience,” said Nancy Nugent, senior vice president at Jameson Sotheby’s International Realty. “People want to surround themselves in beauty right away and live, whether it’s a penthouse high-rise in the city or a magnificent Lake Forest estate. It gets harder to find unless sellers have kept up with design trends.”
Whether Nugent is assisting buyers in the market for a $500,000 home or a $5 million property, she said they all desire the same thing: “Buyers need to feel the value proposition. It might be the view, the location and certainly the finishes. If they don’t feel those things going into a property, they’re going to move on.”
No question, luxury is a subjective experience; it means something different to each person, according to agents Michelle Browne and Naja Morris of the MB Team at @properties | Christie’s International Real Estate. It can be amenities and features, or it can also mean new construction. Most often, it’s some sort of hybrid of the two, Browne and Morris explained. Lately, buyers want the same features and amenities in their new-construction homes that are available in high-rise condos: harder-working kitchens, more built-ins, warming drawers — a thing of the past that has returned — convection ovens, separate areas for coffee stations and wine and cheese bars, and multifunctional appliances. Morris’ personal favorite: a wine refrigerator with a three-bottle wine dispenser that keeps an open bottle of wine fresh for three months.
Browne and Morris said buyers also want green homes outfitted with geothermal heating systems, technology to control lights and curtains with a press of a button and biophilic designs that bring the outdoors inside via floor-to-ceiling NanaWalls. Formal dining rooms have made a comeback, and dual home offices, white and airy kitchens with sleek lines, hidden refrigerators and countertops made of soapstone and quartzite — not granite — are in demand as well.
The suite life of luxury buyers
Service goes along with luxury. In high-rise new-construction buildings, buyers want a concierge to handle everything from making dinner reservations to buying theater tickets.
“It’s almost like a hotel concept,” Browne and Morris explained. “You’re really talking about service as a part of luxury. All of the amenities that once were, are taken up a notch. For the last 10 years, outdoor spaces with pools were nothing new, but now there’s fire pits, individual pods so more than one family can be outside grilling at the same time with surround sound speakers. Even the rooms you rent out have full-service private 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 running errands.
Fairly new extravagances Browne and Morris commonly see are air-filtration systems, circadian lighting that eases the lights on in the morning and slowly winds them down at night, indoor play areas for small children, golf simulators, movie rooms, lounges, and game rooms for teens and adults.
Repositioning high-rise amenities in homes
“A lot of people who traditionally would want a luxury downtown condo are wanting a luxury single-family home for more space,” Morris said. “We’re seeing less suburban flight; people want to stay in the city, but they want more space.”
In single-family new-construction homes, yards are important, Morris noted. Rooftop decks, outdoor kitchens and wine rooms have become almost standard. Beautifully landscaped lawns, brick paver patterns, seating areas, water features, lush gardens and heated garages connected to the house through a lower level (so homeowners don’t get wet or cold when coming in from the outside) are also popular with buyers.
When Nugent sells a luxury home on sprawling acreage, buyers tend to build a sports court, apart from their homes, on the property.
“It used to be a basketball court, but now people want to build pools, tennis courts and golf simulators,” she explained. “Instead of going to a spa, they want vendors to come to them for massages and workouts.”
Shift back to the city
Nugent just sold a Georgian home in Glencoe for an 82-year-old couple moving to Water Tower Place, to be closer to their kids and take advantage of museums and culture. She also had eight different buyers come from the suburbs and more remote parts of the city — all wanting to move downtown by the lakefront. “It gives me a sense of renewal for that return to the city,” she said.
What’s hot, what’s not
Luxury homes in Lincoln Park and Near North neighborhoods are outpacing luxury sales in other parts of the city because of location, Rossley explained. The median single-family home price in Lincoln Park is about $1.7 million; a couple of years ago, it was $1.2 million.
Inventory is still a challenge, and demand remains high. Based on the current rate of sales in downtown Chicago, Rossley said there’s only five months of inventory to sell that’s priced at $3 million-plus. In December 2020, there were seven to 27 months’ worth of properties to sell. On April 1, she said there were 11 homes under contract for $5 million-plus; last year at the same time, there were only nine — a sign that inventory is slowly increasing.
Millennials and boomers want different things
To boomers, privacy is important; they don’t want to share space, whereas millennials don’t mind, Nugent said.
“Boomers want their own gym, their own private outdoor space,” she explained. “In several cases, if they have room, they are putting massage rooms in their homes. They don’t want to go to a spa. They want vendors to come to their homes.” It was this way prior to COVID, but the pandemic accelerated the trend. On the flip side, millennials want a beautiful rooftop deck with grills and a bar, and they don’t mind sharing it with neighbors.
“Boomers are more likely to forego outdoor space and millennials lead with it,” Browne said. “Many high-rises didn’t have outdoor space when boomers were purchasing. They don’t miss what they never had.”
Barometer of the luxury condo market
Sales are slow to come back to River North, because it’s saturated with a large number of high-rises and condos, Browne said. Still, you can find really good deals in the Gold Coast and Streeterville. The West Loop and South Loop are very strong, appreciating month after month, noted both Browne and Morris. The West Loop, in particular, will remain desirable because of walkability to restaurants and shops. Of course, Lincoln Park is still hot. Further out in the city, Bucktown, Wicker Park and Bronzeville have been popular for a while and remain that way.
Morris is passionate about Bronzeville for its easy access to public transportation and close 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.
“It has the most opportunity [for new-construction homes] because it has a lot of undeveloped lots,” Browne said of Bronzeville, noting that teardowns aren’t necessary in the area. “You also have a new school, Bronzeville Classical School, getting a lot of praise and attention across the city.”
She anticipates Bronzeville will experience a substantial amount of commercial infill in the next few years. She also said that “Woodlawn is the next hot ticket,” with the University of Chicago still heavily investing in the neighborhood, the groundbreaking of the Obama Presidential Center and a Tiger Woods golf course in the works nearby.
Michelle Browne, Broker, MB Team, @properties | Christie’s International Real Estate
Naja Morris, Broker, MB Team,
@properties | Christie’s International Real Estate
Nancy Nugent, Senior Vice President, Jameson Sotheby’s International Realty
Realtor, Baird & Warner