It was "a pricey roller coaster ride" blares a brief article in the current issue of Chicago Magazine, accompanied by a chart that illustrates the "surge" in high-end home sales. A lengthier companion article provides additional detail.
What's missing from both articles, however, is any perspective on the supply of $1M+ homes. That perspective is critical to understanding this market segment.
The elephant in the room is that 1,000s of newly-built $1M+ homes came to market during 2004 – 2007, the majority of them sold, and homes in this price bracket typically don't enter the resale market within a few years of being purchased. Back in 2006 we identified nearly 1,000 $1M+ homes in various stages of construction on the North Shore alone.
Does the chart reflect reduced demand for $1M+ single-family homes or simply reduced supply of new homes in that price bracket following the satisfaction of a surge in pent-up demand? It's worth noting that more homes have sold in the $1M+ range during the past 3 years than in the years preceding the surge in supply, an indication that the market is healthier than a different reading of the chart would suggest.