The demise of the Chicago luxury home market is greatly exaggerated. Last week Crain's ran this story on area luxury home sales: Luxury home sales skyrocket in suburbs, dip in city. The article led with the fact that home sales above $1 MM were down 7% in the city and up 40% in the suburbs last year. While all the facts of the story were obviously accurate there is a bit more going on here.
First of all the city has wayyyyy more condos in the luxury home mix than the suburbs and we all know that condos - especially at the higher price points - are out of favor right now as we all enjoy the Covid pandemic. So let's start by taking that component out so that we are comparing apples to apples. Also, for purposes of this post I'm going to compare the city of Chicago to Lake and Du Page counties. Those are easy comparisons for me to make.
Chicago Luxury Single Family Home Sales Were Not Down Last Year
Once you take out condos Chicago luxury home sales were actually up 10.8%. However, Lake and Du Page county home sales were up a lot more - 51.8% and 29.85 respectively. But let's not forget that
The Bulk Of The Luxury Home Market Is In Chicago
While the suburbs experienced tremendous growth in luxury home sales last year the market is really in Chicago, as the Crain's article acknowledges. The city had more sales of homes over $1 MM than both Lake and Du Page counties combined:
- Chicago - 728 sales
- Lake County - 290 sales
- Du Page County - 409 sales
But sales volume doesn't really tell you much about how strong or healthy a real estate market is. For instance, an area that is out of favor might be beset with a deluge of home sellers and that could lead to a lot of sales at lower prices. But that certainly wouldn't mean that the market is strong. If you want to know how healthy a real estate market is you need to look at other indicators.
Luxury Homes Sell Faster In Chicago
In my mind homes sell fast in a strong real estate market and that's what's happening in Chicago. Luxury single family homes sold much faster in Chicago than in the suburbs last year and average market time actually dropped from the previous year. Meanwhile, the average market times actually rose significantly in Lake County.
- Chicago - 126 days (-8.7%)
- Lake County - 243 days (+21.5%)
- Du Page County - 175 days (-2.8%)
The Demand For Luxury Homes Is Stronger Relative To Supply In Chicago
Another good indicator of the health of a real estate market is the inventory of homes for sale, measured in terms of months of supply - i.e. the supply of homes relative to demand. Chicago also trounces the suburbs in terms of this metric and that's why the market times are lower in the city.
- Chicago - 6.9 months (-4.2%)
- Lake County - 13.8 months (-33.3%)
- Du Page County - 11.5 months (-21.8%)
As you can see both Lake and Du Page counties saw a significant drop in their months of supply last year while Chicago had an almost negligible drop. Yet, even with these drops the suburbs have a significantly larger supply of homes relative to demand - or lower demand relative to supply.
So by all measures - at least right now - the Chicago luxury single family home real estate market is in better shape than the suburbs.
Stay tuned for another update on the Chicago luxury market because this is the time of year when I post on the most expensive home sales for the previous year.
#LuxuryHomes #ExpensiveHomes #ChicagoLuxuryHomes
Gary Lucido is the President of Lucid Realty, the Chicago area's full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider's view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.