With luxury-home sales softening in early 2019 due to economic factors, wealthy home buyers in Chicago should have many choices this spring, experts say.
Only 380 properties sold for $1 million or more in the first quarter of 2019, according to the quarterly RE/MAX Premier Luxury Housing Report from RE/MAX Premier of Chicago.
That’s a hefty decline of 22.3% in total luxury units compared with the first quarter of 2018. Luxury-home sales slumped 10.2% in the last quarter of 2018. However, luxury-home sales registered a gain of 1.4% for all of 2018.
Despite slower first-quarter sales, the median sales price gained 1.1%, rising to $1.365 million and the time needed for one of those homes to sell slipped to an average of 190 days from 209 days one year earlier.
Despite those relatively weak numbers, there are some amazing new luxury properties on the market.
Take the 8,800-square-foot penthouse at 840 N. Lake Shore Drive that recently hit the market at a listing price of $13.5 million.
This pad, with an unobstructed view of Lake Michigan, pretty much has everything. Six bedrooms, eight baths, several living and dining spaces, 1,135 square feet of terrace space, a wine cellar, game and media rooms, and an office, noted listing agent Tim Salm of Jameson Sotheby’s International Realty.
“This condo is in an elite class, a custom build-out with the highest-end finishes,” said Salm. “It is a private full-floor unit with more square feet of living area than most of the largest single-family homes in the Gold Coast or Lincoln Park.”
Historically, fewer than 10 condos in the Windy City have sold for more than $12 million.
The inventory of properties for sale at $1 million or more in the Chicago area ended the quarter at 2,710 units, only 1.2% less than at the same time last year. All of the decrease occurred in the suburbs, where the inventory fell 2.5%, while the city’s luxury inventory expanded by 1.1%.
In Chicago, first-quarter luxury sales were down a whopping 25% to 195 units, the lowest total for that quarter since 2016. However, the median sales price for city luxury homes climbed 7.8% to $1.485 million, the highest quarterly median price since 2010.
Experts say the first-quarter median price declines likely were caused by the Polar Vortex in Chicago, a volatile stock market and the sharp rise in mortgage rates at the end of 2018.
“The luxury market activity has been slightly sluggish over the last six months, but a real test will be in the current quarter when sales usually accelerate,” said Janice Corley, broker/owner of RE/MAX Premier.
“Typically, we see an uptick in both inventory and buyer activity after the deadline passes for filing income taxes,” Corley noted. “I’m encouraged by what we’re seeing so far, but we’ll have to see if that translates into stronger sales.”
Corley noted that the positive news in the first-quarter results is that median prices were generally steady or up and the inventory of detached luxury homes continues to decline although it is still uncomfortably high in the suburbs.
“But in the city, we have just an 11-month supply of detached homes even when you measure it against the first-quarter sales pace,” she said.
Luxury Detached Sales
First-quarter sales of luxury single-family homes in Chicago slumped by 11.7% to 106 units. However, the median sales price climbed a robust 9% to $1,523,288. Average market time dipped to 188 days—17 days less than for the same period last year.
Three Chicago neighborhoods with the most luxury-detached home sales continued to be Lake View, Lincoln Park and North Center, which taken together accounted for 64.1% of first-quarter luxury-detached transactions. Sales climbed in Lake View, up 11.1% to 20 units, and in Lincoln Park, up 16% to 29 units, while sales in North Center fell by 32.1% to 19 units.
“Those results helped boost the median sales price,” Corley explained, “because the luxury prices in Lake View and Lincoln Park typically are higher than in North Center,” Corley said. The first-quarter median in Lake View was $1,764,500, and in Lincoln Park it was $1,621,500.
Elsewhere in the city, luxury detached sales were little changed compared to last year’s results. Sales fell by five units in Logan Square, two units in Lincoln Square, one unit in the Near North Side and in West Town, were unchanged in Uptown and rose by two units in Edgewater.
Luxury Attached Sales
Sales of luxury attached homes in Chicago were especially sluggish during the first quarter, with 89 units changing hands, 36.4% less than in the same quarter last year.
The median sales price gained 4.7% to $1.4 million, and average market time rose to 169 days from 132 days a year ago. The inventory of luxury units on the market at the end of March was 635 units, an increase of 6.9%.
Each of the six city communities that lead the attached luxury market registered a sales decline in the first quarter compared to the same period last year, including the Near North Side, which traditionally dominates the attached luxury market and accounted for 49 sales, representing 55% of all city luxury attached sales during the first quarter.
“Even though fewer units are selling, the Near North market seems fairly healthy,” noted Corley.
“What we’re seeing are fewer sales of what might be called entry-level luxury properties, and more sales at the high-end, which explains why the median sales price there gained 18.6% for the quarter to $1.845 million.”
Elsewhere, attached luxury sales fell 42.1% in Lincoln Park to 11 units, a whopping decline of 68% in the Near West Side to 8 units, a drop of 36.4% in the Loop to 7 units, hefty slippage of 60% in the Near South Side to 6 units and a drop of 37.5% in Lake View to 5 units.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.