Million-dollar-plus homes and condominiums sold at a fast clip in Chicago in early 2015, but the threat of higher mortgage interest rates hangs like a cloud over the housing market, experts say.
The RE/MAX Luxury Report on Metro Chicago Real Estate, a quarterly analysis of $1-million-plus home sales, shows the luxury housing market in Chicago enjoyed a strong January-through-March first quarter in 2015. However, prices for posh homes, townhomes and condos slipped a bit.
“We saw a slight decline in median sales prices in the luxury category during the first quarter, but in our view that isn’t a negative,” said Jim Merrion, regional director of the RE/MAX Northern Illinois real estate network. “Instead, it indicates that sales accelerated most rapidly in the $1 million to $1.5 million segment of the luxury market, which is what you would expect to see as consumer confidence rises.”
Transaction volume was 18 percent higher than in the same period of 2014, with 209 luxury homes and condos changing hands. The median sales price for all luxury units was $1,373,750, about 2 percent less than a year ago. Average market time fell by 10 days to 115 days.
Sales of $1-million-plus detached single-family homes increased to 105 units. That’s a gain of 30 percent over the first quarter of 2014. Detached homes had a median sales price of $1.411 million compared with $1.425 million a year earlier.
Unfortunately, news of strong first-quarter luxury home sales was tempered by an early May Freddie Mac report that said home-loan rates are beginning to rise.
Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed home loans rose on May 7 to an average of 3.80 percent from 3.68 percent a week earlier following a rise in 10-year Treasury yields. A year ago at this time, the 30-year fixed loans averaged 4.21 percent.
RE/MAX noted that three city neighborhoods showed particularly sharp gains in luxury detached home sales in the first three months of 2015:
• North Center. Luxury home sales skyrocketed 69 percent to 22 properties. The median luxury home price in North Center rose 10 percent to $1,387,000.
• Lake View. Twenty luxury homes were sold, an increase of 82 percent from the same period in 2014.
• West Town. The neighborhood recorded 13 luxury home sales in the first quarter, up 86 percent from the same period last year.
A similar scenario played out in the city market for attached homes, or condos and townhomes. Sales for the quarter rose 8 percent to 104 condo and townhome units.
However, the median sales price slipped 2 percent to $1,342,500. Market times for condos and townhomes shortened considerably, falling 28 days to an average of 112 days.
The RE/MAX report analyzes the sale of $1-million-plus homes in seven Chicago-area counties—Cook, DuPage, Kane, Kendall, Lake, McHenry and Will.
Luxury homes in all seven counties sold at a faster pace during the first quarter of 2015 than they did a year earlier in the seven-county metropolitan Chicago real estate market.
Transaction activity was 16 percent higher for the period, with luxury home sales totaling 378 units. Luxury properties sold during the quarter were also finding buyers more quickly, requiring an average of just 144 days, compared to 158 days during the same period last year, according to RE/MAX.
The median sales price for those homes was $1.35 million during the first quarter, down from $1,372,500 a year earlier.
Over the course of the last two years, luxury home sales in metro Chicago during the first quarter of the year have grown by 37 percent, and the lion’s share of that growth has been in Chicago, rather than in the suburbs. First-quarter city luxury sales rose 54 percent over that period, while suburban luxury sales gained 21 percent.
Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. For more information, visit www.escapingcondojail.com.