Market Conditions: Surprise! First Half Luxury Home Sales in the Chicagoland Area The Same As in 2011
The data doesn’t lie.
It seemed to me that the luxury home market was hotter than the previous few years but Crain’s refuted my non-data “theory” with real data.
200 homes priced over $1.5 million sold in the first half of the year in the Chicagoland area which was the same number as sold in 2011 and was just 3 more than sold in 2010 (which saw 197 sales.) There are 1019 homes currently listed above $1.5 million in the Chicagoland area.
The peak number of sales was, not surprisingly, 2006 when 381 homes sold over $1.5 million.
The low point was in 2009, when just 168 homes sold.
[It appears this article is referring ONLY to single family homes- and NOT condos.]
Traditionally, luxury homes have been the “first market to fall and the first market to pick up” through economic cycles, said Jim Kinney, vice-president of luxury home sales at Baird & Warner. Though high-end home sales are up 19 percent from the bottom in 2009, they have held steady this year while the broader market has perked up.
“There’s obviously fewer and fewer people trading up when you get to the top of the pyramid,” Mr. Kinney said. “Instead of a pyramid, it’s looking like a straw.”
Uncertainty over the upcoming presidential election has kept some luxury buyers on the sidelines this year, Mr. Kinney said, and the euro crisis and sluggish U.S. economy also may be a concern among some would-be buyers. And many buyers still face the same old problem: They can’t buy a new, more expensive home until they sell their old one.
The “best” markets?
- Lincoln Park – 33 sales
- Winnetka- 33 sales
- Hinsdale- 21 sales
Those markets with the highest inventory based on prior sales?
- Northbrook was #1 with 102 months of inventory and 19 properties listed
- Clio’s Oak Brook has 48 months of inventory with 36 properties listed
- Hinsdale, another Clio favorite, has 30 months of inventory with 80 properties on the market
Northbrook tries to explain its #1 ranking.
Based on sales activity, Northbrook is the weakest high-end market, with 102 months of supply — more than eight years. Just 19 homes in the north suburb are on the market for $1.5 million or more, but only two have sold thus far this year.
The listing agent on one of those sales, Shaun Raugstad of Coldwell Banker Residential Brokerage, said the statistics are likely skewed because of Northbrook’s smaller market.
Yet he also admits a buyer-friendly climate and that “people tend to flock a little more east” than Northbrook.
“People know exactly what they’re looking for, and in this market they want to find their dream home,” he said.
What are luxury sales really like in the city if you add in condos?
What happens to Lincoln Park’s luxury “inventory” when Lincoln Park 2520 (aka 2550 N. Lakeview) and its hundreds of condos is added to the equation?
What does it mean for the overall market if luxury sales are NOT picking up?
Luxury sales lag as housing market picks up [Crain’s Chicago Business, David Lee Matthews, July 24, 2012]
clio is going to blow a fuse.
“The data doesn’t lie.”
Uhhhhhh – YES IT DOES – when interpreted by idiots and morons……
Let me explain why this story and interpretation is TOTALLY false. What is happening in Oak Brook and Hinsdale right now is that MANY MANY people are buying teardowns (500-700k+), tearing them down, and building 2 million+ houses. The sales figures NEVER reflect the cost of the new house (unless it is a spec house) so there is an inaccurate conclusion drawn by these morons (reporters, realtors, bloggers, etc.).
Remember, people who buy 2 million plus houses (and there are many) DON’T want to move into someone else’s bizarre custom designed house. At that price point, they can buy new – and most do (unless there is a historically significant house or a house exists that somehow “speaks to them”.
It really isn’t hard to understand if you open your eyes (to see what is actually happening) and also if you get into the mind of a 2million plus buyer.
I hearby dub jw as the new Carnac the Magnificient. He says it, and then it happens.
Clio has a point. If I’m spending 2 million, I’d want it my way and would build if cost was the same or similar to what is on the market. I think the truth is somewhere in the middle.
Northbrook is #1? Go figure, I’ve always figured Northbrook/Glenview to be the purview of those residents who would wanted to live on the north shore, but couldn’t afford the lifestyle, so instead, they heloc’d the hell out of their own 1970’s ranch to live the dream, and now they’re stuck.
the 1% are doing fine, nothing to see here just keep moving.
“Clio has a point.”
But where’s his data to support it? “MANY MANY” isn’t a real data point. Sure, maybe 4 or 5 people are doing this. But I find it hard to believe that 100 buyers have come into Oakbrook and Hinsdale, purchased $500-700M homes, and are tearing them down to construct 2MM homes.
I’m shocked Gold Coast is #6 in terms of months supply. I guess families don’t want to move into vintage fixer uppers when they can get a new build in LP for the same price or slightly more. And they will have parking and many other families around them.
It is good to see the # of sales holding constant instead of declining but the high end isn’t “hot” according to the data – more like lukewarm. Just like the peripheral ‘burbs the peripheral areas of Chicago are the most stagnant – west LP / Lakeview.
But where’s his data to support it? “MANY MANY” isn’t a real data point.
GMT you have not learned yet, clio is alway short on data and long on conjecture.
I’m not sure what the point of this analysis is. The numbers are small and I would expect there’s no attempt to normalize the data based on the kinds of effects that Clio is talking about or other factors which uniquely affect certain segments of the real estate market. I’m not even sure if the data is individually actionable. It’s difficult to find many matching transactions on the same property over this stretch.
but but but zillow told me my house is worth .8% more than last month!
and oh great another clio thread… whats wrong sabrina, traffic getting low? Oh wait, I know… the inventory sucks!!!
I’d be curious to see the data in that $700-$1.4 range because that segment feels like it is booming right now. I don’t have hard data, but I’ve been busier than ever with purchases in that range. The $2 million plus market is relatively small and I’d have to agree it is somewhat of a stretch to read into changes in that market.
OT question for Russ, on refi & new mortgage apps, I’m asked what i paid for my current place. Why does that matter? Shouldn’t they only care about what it’s worth in today’s market (didly over squat) and how much I currently owe? What is the point of asking what anyone paid 5, 10 or 15 years ago, especially if they’ve refi a bunch of times.
If you build that $2 million house in Oak Brook but no one will ever buy it since it is “used”, is that house really worth $2 million dollars ?????
“200 homes priced over $1.5 million sold in the first half of the year in the Chicagoland area…There are 1019 homes currently listed above $1.5 million in the Chicagoland area.”
mismatched datasets, too. Some significant percentage of those currently listed above $1.5 will sell below $1.5 (or, if you prefer, some significant number of houses that closed under $1.5 were listed over $1.5).
“is that house really worth $2 million dollars ?????”
Lot is still “worth” $750k or whatever, and the structure still cost $1.25m.
The question is whether any rational bank should lend against the structure. 80% loan on the land would still seem pretty safe.
Icarus, it is just info overload. The underwriters will find out from the title records anyway. What you paid comes into play if you are refinancing shortly after purchasing. For example, you bought a home for $200k 10 mos ago and now refinancing. New appraisal comes in at $300k. The u/w is obviously going to start asking some questions as to why the value is higher (could be renovations, bought distressed property, etc).
City of Chicago Detached SFH
$1.5M+ closed sales
Jan 1 – Jun 30 each year
2012 57
2011 53
2010 57
2009 55
2008 79
2007 91
City of Chicago Condo/TH
$1.5M+ closed sales
Jan 1 – Jun 30 each year
2012 61
2011 54
2010 84
2009 42
2008 131
2007 77
City of Chicago Detached SFH
$700K-$1.499M closed sales
Jan 1 – Jun 30 each year
2012 215
2011 206
2010 220
2009 123
2008 248
2007 329
City of Chicago Condo/TH
$700K-$1.499M closed sales
Jan 1 – Jun 30 each year
2012 260
2011 231
2010 334
2009 230
2008 560
2007 399
“I’d be curious to see the data in that $700-$1.4 range because that segment feels like it is booming right now.”
This is very true in Hinsdale.
Chicagoland Detached SFH
$700K-$1.499M closed sales
Jan 1 – Jun 30 each year
2012 1,018
2011 1,022
2010 1,035
2009 680
2008 1,247
2007 1,847
Chicagoland Condo/TH
$700K-$1.499M closed sales
Jan 1 – Jun 30 each year
2012 278
2011 253
2010 356
2009 232
2008 605
2007 453
“Northbrook is #1”
Northbrook is mostly nicely middle-class and not over-extended. It’s however attracted some highly-leveraged showy obnoxious types over the years, trying to step up from places like Buffalo Grove or Skokie, etc. Most of the McMansions and knock-downs there have been sold and marketed to that particular demographic. Nobody seeks to live next to or associate with, nor live in their second-hand garishly designed mcmansions (“only two have sold thus far this year”), so demand for these properties is low, as compared to areas with nicer and less obnoxious surroundings and people. I bet many of these properties have huge loans on the them and the Lexus SUVs are all leased.
Hinsdale Detached SFH
$700K-$1.499M closed sales
Jan 1 – Jun 30 each year
2012 70
2011 56
2010 53
2009 35
2008 36
2007 39
Hinsdale Detached SFH
$1.5M+ closed sales
Jan 1 – Jun 30 each year
2012 21
2011 31
2010 21
2009 17
2008 26
2007 30
How many homes sold in these brackets in 2000? Aren’t we back to that year’s prices?
‘If you build that $2 million house in Oak Brook but no one will ever buy it since it is “used”, is that house really worth $2 million dollars ?????’
Meaning, will you ever get your money out of it? Only so many people willing to buy someone else’s ‘bizarre custom designed house’, without first thinking of building their own bizarre custom designed house. I mean, how many people out there want another’s version of a pirate ship bowling alley in the basement, or because this is Oak Brook, a tandoori oven in the kitchen? At some point, your $2M investment just keeps going down…. and down in value, until the next boat load of freshly printed dollars (maybe rupee or yen?) arrive with their internet downloaded teardown blueprints.
Speaking of foreign investors, I’ve noticed a few houses in my neighborhood were bought by Chinese families… mainland Chinese, not moving on up from the south side. One house (all cash buyer) is managed just by the nanny for a son who goes to Lab, while the parents stay back home. A trend? Maybe, maybe not, but I’m glad nothing can be torn down here, unlike any town with ‘Brook’ in its name.
Hinsdale Detached SFH
$700K-$1.499M closed sales
Jan 1 – Jun 30 each year
2012 70
2011 56
2010 53
2009 35
2008 36
2007 39
Thanks. I had no data, just a gut feeling. The data confirms it. Is this the start of the echo boom moving out of Chicago/
I’m not that impressed with the #’s either way. We are still way below 2007/2008 levels in Chicago and Chicagoland for the 700K to 1.5M and $1.5M+. Yes, there are pockets doing well in the 700K to 1.5M segment (Hinsdale), but there are still far too many boomers who think their places are worth Mt Everest levels, and where their kids would not be able to afford them until age 40 or more, while said boomer purchased it at the age of 25 many years ago…
I have 2 examples of people I know who purchased homes in Hinsdale in the past 2 years. Both are in their 50’s and were moving from within the area. One of them tore down the house he bought and built a mcmansion. The other did an extensive renovation that cost $150-200K. They were not from the echo boomer segment at all, and their kids will never be able to afford homes like their parents because they simply don’t make the same kind of money inflation adjusted that their parents do and home prices are so out of whack. Unless there’s some sort of massive inflation decade like their parents lived through, there is still a correction coming in the coming years.
Imo the source of “..MANY MANY people are buying teardowns (500-700k+), tearing them down, and building 2 million+ houses” is wildly overly optimistic. While I haven’t looked lately I believe lots/ teardowns cost less & construction costs are low. I hazard a guess that as in north shore communities, rational prospective purchasers in Hinsdale with time and qualifications can find lots @ $300-400K and spend closer to $1mil all in.
‘Unless there’s some sort of massive inflation decade like their parents lived through, there is still a correction coming in the coming years’
I tend to agree with you, and I think it also depends on the type of house and it’s location. Good luck with boomers thinking that the next generation wants, needs, or can afford the maintenance (taxes, utilities, furnishings too) of their egocentric McManses. Sure there’s always going to be a small group who buys a few, but the sheer number of large houses out there leaves me puzzled in what will happen to all of them in the future. On the other hand, a manageably sized and maintained house in a *great* area will always be in high demand, regardless of the price. Like the poor, the rich (or credit rich) will always be with us, albeit in much fewer future numbers. How are your McManse to apartment renovating skills?
We aren’t back to 2000 prices for the $700K+ market yet. The upper tier of CS is at May 2001 value but represents props over ~$250K. Besides, much of the $700K+ market didn’t even exist in 2000. For example, ~65% of the $1.5M+ 2012 sales, and ~55% of the $700K-$1.499M, were built since 2000.
I’ve added a few more years below for comparison.
City of Chicago Detached SFH
$1.5M+ closed sales
Jan 1 – Jun 30 each year
2012 57
2011 53
2010 57
2009 55
2008 79
2007 91
2006 100
2005 69
2004 48
2000 21
1997 4
City of Chicago Condo/TH
$1.5M+ closed sales
Jan 1 – Jun 30 each year
2012 61
2011 54
2010 84
2009 42
2008 131
2007 77
2006 71
2005 97
2004 66
2000 23
1997 9
City of Chicago Detached SFH
$700K-$1.499M closed sales
Jan 1 – Jun 30 each year
2012 215
2011 206
2010 220
2009 123
2008 248
2007 329
2006 331
2005 328
2004 263
2000 115
1997 29
City of Chicago Condo/TH
$700K-$1.499M closed sales
Jan 1 – Jun 30 each year
2012 260
2011 231
2010 334
2009 230
2008 560
2007 399
2006 379
2005 407
2004 300
2000 91
1997 36
“Is this the start of the echo boom moving out of Chicago/”
Not likely in that demographic. How many 17-31 yr olds do you know that can afford a $700-1.5MM home?
“How many 17-31 yr olds do you know that can afford a $700-1.5MM home?”
Please no. Not an argument about that.
clio,
Two years ago you boasted on CC about your neighbor’s house, then offered at $8.5 million. But that house may soon trade at $2 million:
http://www.redfin.com/IL/Oak-Brook/Undisclosed-address-60523/home/17991802
What’s your understanding of the backstory, this:
“Remember, people who buy 2 million plus houses (and there are many) DON’T want to move into someone else’s bizarre custom designed house….”
A lot of the 700$+ market can be explained by FIRE and dot coms combined with low interest rates and creative financing. I in times past have shown over and over again that many of the $1,000,000 homes were not only purchased by individuals benefiting from th FIRE sector, but often, many of them were purchased with large mortgages. Servicing a large mortgage, for nearly everyone but the extremely fortunate, requires a large, sustainable income, with adequate job security, which as we’ve lerned quite poignantly in this economy, is not as common as everyone once believed, especially inn the FIRE sector.
“clio,
Two years ago you boasted on CC about your neighbor’s house, then offered at $8.5 million. But that house may soon trade at $2 million:
http://www.redfin.com/IL/Oak-Brook/Undisclosed-address-60523/home/17991802”
I’m not going there – and if you knew what was good for you, you would do the same. keep digging and soon you will find yourself six feet under…..
I don’t know what you all are talking about. Oak Brook has the BEST houses/mansions than ANY other city in the world. Do I have to remind you guys…..
http://www.redfin.com/IL/Oak-Brook/3015-Lincoln-Rd-60523/home/18681360
…or better yet (if you want something more understated):
http://www.redfin.com/IL/Oak-Brook/704-Deer-Trail-Ln-60523/home/18083187
…and who can forget the absolute crown jewel of oak brook:
http://www.redfin.com/IL/Oak-Brook/51-Cambridge-Dr-60523/home/18087634
Surely you are joking the 1970s split level is hideous. Just disgusting.
“Good luck with boomers thinking that the next generation wants, needs, or can afford the maintenance (taxes, utilities, furnishings too) of their egocentric McManses.”
Jay- we’re already seeing this reality on the North Shore. Tons of baby boomers looking to unload their big (and now outdated) houses. They’re not prepared for the reality that Generation X neither wants nor can afford their $1.3 million colonial with outdated kitchen counter tops. There simply aren’t enough Generation X buyers (demographically) and Generation Y can’t afford it (not yet.) The reality is, prices are going to have to come way down as the baby boomers retire and downsize.
“There simply aren’t enough Generation X buyers (demographically) and Generation Y can’t afford it (not yet.) The reality is, prices are going to have to come way down as the baby boomers retire and downsize”
Yes I agree with Sabrina’s comment. That is another key reason why I do not agree with the bottom statement. I think that some limited or unusual stock will hold up quite well such as in places with a special niche or amenity. A good example would be the few homes lining the north east end of the golf course or homes surrounding those small lakes in Park Ridge. Those two amenities are in very limited supply and will always command a premium.
Other burbs that have multiple golf courses will continue to slide as they are not unique or niche. Played on a course in Naperville today and saw several empty abandonded mansions and many more for sale. Very depressing! Apparently they had nothing special going for them that set the homes apart from the pack of golf course listings.
“keep digging and soon you will find yourself six feet under…..”
aww, I ain’t digging dirt on nobody nohow.
My point is: if 204 Canterberry trades at $2 million, its new owner will prolly petition for lower property taxes, something less than its current $43,000/year, so you & your neighbors ought to make the case that your property taxes ought to be lowered too.
Another data point. Remember when we discussed this Oak Brook property trading at $1.7m, about 40% off its original list price?
http://www.redfin.com/IL/Oak-Brook/10-Hunt-Club-Ln-60523/home/18087497
You wrote:
“clio (August 23, 2011, 10:38 pm) ?Wojo – that person got the deal of the century for that place. There is absolutely no doubt in my mind that the property will soon (by 2015) be worth 2-2.4 million. In the meantime, the family will have a great time on that resort type place!!”
But given where 204 Canterberry may close, it looks like the 10 Hunt Club Lane buyer paid too much. If those properties are worth 2m & 1.7m respectively, you could make the case that Oak Brook’s high end real estate has cratered even more than the CSI, so you & your neighbors ought to petition to have your property taxes reduced.
btw clio, kudos to you for selling the Ponderosa when you did, because the guy you bagged is now trying to sell it for a sensible loss, so you made a good exit there.
http://www.redfin.com/IL/Saint-Charles/Undisclosed-address-60175/home/17970713
wojo,
that canterbury listing is not a traditional sale/contract, etc. – something else is going on that you don’t realize. believe me, there are several people who would pay 3-3.5 million cash for that property today and still consider it a “fire sale”. There are only a few houses on this block – look at this pos unlivable house on land that floods every time it rains – only a few houses down from the subject house you speak of:
http://www.redfin.com/IL/Oak-Brook/321-Canterberry-Ln-60523/home/18082306
remember, don’t believe everything you read. and also, I warn you – don’t start snooping around with that other canterbury listing.
wojo, look at the zillow estimate for 204 canterbury:
http://www.zillow.com/homedetails/204-Canterberry-Ln-Oak-Brook-IL-60523/49907780_zpid/
the map is wrong on zillow – the house is just south and to the west of the one that they show.
I am actually beginning to think that the 1.9999 million dollar listing was NOT for the house but may be for the 2nd PIN number (piece of vacant land next to the house) for that same parcel. That would be a vacant 2 acre parcel at the east end of Canterbury for 2 million – a fair price in today’s market. Now THAT would make sense. The house itself (on an additional 2 acres) is worth over 4 million even in today’s market (even though zillow says over 5 million)
“I don’t know what you all are talking about. Oak Brook has the BEST houses/mansions than ANY other city in the world. Do I have to remind you guys…..”
Really? That’s a bold (and ignorant) statement.
http://www.trulia.com/property/1049460460-8-Ledge-Rd-Newport-RI-02840
http://www.trulia.com/property/1079183388-659-Bellevue-Ave-Newport-RI-02840
http://www.trulia.com/property/3058291931-36-Beacon-Hill-Rd-Newport-RI-02840
And a personal favorite:
http://www.trulia.com/property/3005817080-237-Ruggles-Ave-Newport-RI-02840
Look at the view from the “backyard.”
Oakbrook is better than Newport? Yeah, sure it is, and pigs can fly. Haha.
“Good luck with boomers thinking that the next generation wants, needs, or can afford the maintenance (taxes, utilities, furnishings too) of their egocentric McManses.”
Jay- we’re already seeing this reality on the North Shore. Tons of baby boomers looking to unload their big (and now outdated) houses. They’re not prepared for the reality that Generation X neither wants nor can afford their $1.3 million colonial with outdated kitchen counter tops. There simply aren’t enough Generation X buyers (demographically) and Generation Y can’t afford it (not yet.) The reality is, prices are going to have to come way down as the baby boomers retire and downsize.”
I was talking to a coworker a couple of weeks ago. He was from Glen Ellyn and he thought the housing market would be in trouble until “kids could buy their parent’s houses”. The theme was that even though he was at the same age as his father, in a similar income and career trajectory, he wouldn’t be able to buy a similar house his father had for many, many years (probably not until he’s 40 or more). This is a major problem for the housing market in the long run. It also comes back to whether or not kids would want to even buy houses like their parents had.
” kudos to you for selling the Ponderosa when you did, because the guy you bagged is now trying to sell it for a sensible loss, so you made a good exit there”
Wojo–note that there is no public record sale in the Redfin history. Believe the contract sale failed.
GMT, you are dumber than a baboon’s butt!!! Obviously you are too stoopid to understand sarcasm!!!