Million Dollar Deals

Last year was, unexpectedly, a banner year for the real estate market on the North Shore. Ask any broker back in March or April what their 2020 prospects were for the market as the COVID-19 pandemic was unfolding and they at best expressed uncertainty. Fast forward to January 2021 and what turned out to be a record year for home purchases, especially for the luxury market, shows no signs of dropping.

According to Midwest Real Estate Data, homes at all price points, with an average sale price of $1.6 million, were up 47 percent in Kenilworth last year over 2019. They were up 17 percent in Wilmette with a price average of nearly $1 million; 30 percent in Winnetka with an average sale price of $1.3 million; and 21 percent in Glencoe with an average sale price of nearly $1.2 million. Interviews with North Shore real estate brokers and realtors this week reveal a confidence that these trends will continue throughout 2021.

“There’s been a huge push in January of even more buyers and there’s less inventory so it’s so competitive. I was showing a $1 million-plus property yesterday and there were back-toback showings. We were in and then we had to be out at a certain time because there was another showing behind us,” says Carly Jones, with Engel & Völkers Chicago North Shore. “There is an urgency right now for buyers but not the same urgency for sellers. There are so many buyers out there who need to get into places because they have deadlines; they have leases coming up or they’re selling their house and they have to find something else. I’m not seeing the same urgency in sellers.”

Even so, Jones says the luxury market will continue to be hot as long as buyers are insisting on more space and on homes that are newly constructed or fully updated.

I think the luxury market will continue to stay busy like it has been because people have a desire to change,” she says. “It’s not just COVID-19. People have decided they want to change their lifestyle and a main factor in that is getting a new house. People are willing to spend a little more on houses again. Because we do have the vaccine on the horizon and people are getting it, there are estimates of when we’re going to be back to normal, but no one really knows when that’s going to be. I think we expected to see a little bit of a letup from the market being so busy but I’m not seeing that. People are really just saying, ‘Why should we stop now?’ It’s almost a philosophy of just enjoying life. If they ever thought about moving, they’re asking, ‘Why are we not?’”

Jena Radnay, with @properties in Winnetka, believes the increase in demand from buyers for luxury properties, along with the drop off in inventory, is starting to impact pricing.

Because of the increase in demand, there is an increase in price. That’s why prices have gone up,” she says “When you look at the luxury market, it’s actually doing better than last year. I’m seeing it already because the people that could sell their $1 million to $1.5 million house in 2020 were staying or upgrading. Now they’re selling their houses to people from the city who want more space. In turn, they are buying something bigger. So, they are getting the price they want for their house, which gives them more motivation to buy something bigger.”

Radnay says she’s seen a significant need for $2 million-$3 million houses, based on the demand from potential buyers.

Luxury was great last year. It was an incredible segment of the market, and I’m predicting this year will be just as good.” she says. “We’ve got some big blockbuster names leaving Michigan Avenue and Michigan Avenue is the hub of what attracts people to the city. People are going to want more space, they’re not going to want to be in the city and they have money.

“This is not just the North Shore; it’s going to be in a lot of places. Luxury is going to be really in demand this year, especially new construction, because no one wants to deal with building and finding an architect. They want it done, and they’ll pay for it.”

Radnay says she regularly entertains calls from buyers who have luxury condos in Chicago, but are looking to move to the North Shore.

“They want what they have in the city, but they want it on two floors up here, so I’m really seeing an interesting year for luxury,” she says. “The lake market up here is doing outstanding, and there’s not much to buy right now. I just sold a property on the lake. My buyers were going to be in the city forever, and … they bought it. And now they’re going to be doing either a gut rehab or rebuild. The market’s changing, and it’s changing fast.”

On the North Shore, the spring real estate market, including luxury properties, has traditionally been viewed to start after Super Bowl Sunday. Even before the uptick in the market prompted by the pandemic, some brokers have advised their selling clients to jump in the market earlier in the year.

“Many people believe the spring market starts after Super Bowl Sunday. That is the North Shore norm,” says Colleen McGinnis, with @properties in Winnetka. “It’s been the same for years. I’m of the belief you put your house on the market right away after the first of the year and be sold by Super Bowl Sunday, because at the beginning of the year, typically, there’s not a lot of competition.”

McGinnis takes a somewhat philosophical approach in her analysis of what drove the demand for luxury properties on the North Shore in 2020, and what will carry that demand deep into 2021.

“2020 was a very unique year. We’re a very mobile society here on the North Shore, a get-up-andgo society. We go to work. We go to exercise. We go out and volunteer. We belong to organizations. We’re doers and we’re goers,” she says. “All of a sudden, most of that stopped and because it stopped, I believe people were reassessing, having time to really reflect on their lifestyle, to prepare and renew themselves, and maybe make a change not only in housing but in life in general.

McGinnis says that people in the city, successful young professionals in particular, were at home in 2019 and at the beginning of 2020 enjoying their luxury condos and townhomes with high ceilings and great closet space. A lot of them were casual lookers on the North Shore, but it was difficult for them to leave their urban lifestyles.

“Now 2020 comes around and people are together more with their children. They’re working from home, the kids are going to school remotely and they are on top of one another. They saw they have time to be with their kids and thought, ‘Well, what can I do now?’,”

McGinnis says. “Many of the condos and townhomes in wonderful places in the city don’t have backyards. Then they closed down the parks and the lakefront and that made a difference. This spring and summer I saw so many families out walking their dogs with their children and it was so beautiful to see families reconnecting and not necessarily running off to work, to exercise, to volunteer, to do all the things we have been so used to doing. I think that 2020 has given many of us the opportunity to reflect on our lives and to make changes going forward. I think it changed our values.”

In early spring, as larger luxury homes and estates that had been on the market on the North Shore for an extended period of time began to sell, the market for new construction in the luxury space began to take flight. With fewer updated luxury houses for sale, Steven Aisen and Victoria Birov, the husband-and-wife team that owns and operates Newgard Custom Homes in Northbrook, experienced the impact of the housing boom.

“We had a phenomenal 2020. With custom building, people wanted to move out of their current situation to something that accommodated more work at home and had more outdoor space,” Aisen says. “We usually do two or three or four luxury up and their friends start moving up to the North Shore and they’re pulled away from the city to the suburbs,” Aisen says

While the pandemic has benefitted some industries, including the luxury real estate market, it has also created challenges.

“From a construction standpoint, you’re likely to see prices go up because material prices have gone up. You look at the price of lumber, for example. It’s tripled since summer. You’re going to see pricing pressure go up hand-in-hand with increase in demand,” Aisen says. “You’re not going to buy the same product you were able to buy two years ago for the same price.”

Another issue lurking in the weeds for the market this year is interest rates, which are highly favorable for buyers and helping to fuel demand for luxury homes. With a new administration, it unpredictable how long the low rates will last.

“I think we’re all predicting that it will remain a vibrant market. Interest rates are low, demand remains high, and inventory is incredibly low,” says Janet Karabas, with the Noah and Janet Group and Engel & Völkers Chicago North Shore. “If someone’s thinking of selling their home, now is the time.”

With demand so high for luxury properties and listings often receiving multiple offers, Karabas advises buyers who come with an offer to be prepared.

“I coach buyers to be ready, to prepare, and have their ducks in a row,” she says.

Sellers need to line up their ducks as well, even though the market currently is in their favor.

“What I’ve seen from realtors is that there’s a lot of prep work, staging, and painting, because that’s what buyers expect, especially with COVID,” Karabas says. “Buyers out there are educated. Most of the homes that are selling are show ready. It’s like a beauty pageant.”

Karabas’s partner in the Noah and Janet Group, Noah Levy, believes the market for luxury is being influenced by changing notions of what home means during the pandemic.

“The overall meaning of home changed, so in addition to working at home, additional private and common space was needed for family members to be able to have their own space and also common space for all to enjoy together. More space translated to higher price points throughout the North Shore,” Levy says. “Another driving force of continued sales in homes over a million dollars is the lack of inventory, which means that homes hitting the market will likely sell at a higher price point than they would have in the past year. We need more inventory for our buyers so if you are contemplating selling your home, get an evaluation as it’s a great time to jump on the bandwagon and join the market.”

Chris Veech, with @properties in Winnetka, says that part of what’s fueling the market for luxury homes on the North Shore now are educated buyers who’ve been around the track once or twice.

“I would say that the million-dollar trend is bigger, but I also think a lot of the people who decided to move up here weren’t your typical first-time homebuyers. A lot of them were people who were established in the city in their long-term home, or so they thought. But then they found those homes to not have enough space, to feel too cramped, and to not have the yard space that they wanted when the world changed,” Veech says. “City houses are expensive. If you’re coming from the north side of the city somewhere, if you’re selling your city house for a million and a half, then when you’re coming up here you’re looking to buy the same size house or something a little bigger at the same price, or maybe you’re going to bump up a little bit.”

Veech says she also believes that as 2021 moves along it’s likely potential sellers will come to market as the pandemic fades, making for a more robust luxury market in the spring than in previous years.

“Older sellers who decided not to sell last year because it didn’t feel like a safe time to be opening your house up for showings are going to be getting ready to do that later this year,” she says. “They’ll have had a chance to get vaccinated and the world becomes a little bit more normal and open. So, I’m thinking that we’re going to have a later spring market than what we’ve had in the last few years.

“Agents have a lot of buyers. We’re looking and struggling to find quality inventory for the number of buyers that are still out there. There are a decent amount of showings going on but there isn’t a lot of great inventory, not just for buyers looking for luxury on the lake, but buyers in every price point.”

Jamie Roth is with Engel & Völkers in Winnetka and he says the Chicago market has had a significant impact on the luxury market on the North Shore.

“Fundamentally, work has changed for the longterm, so the commuting issue has dissipated or, in some cases, completely disappeared,” Roth says. “Those in the city with larger homes were finally able to sell them to people in smaller residences who wanted more space but preferred to remain in the city. You also have people in the suburbs who were able to sell their smaller homes enabling them to move up to a larger one.

“As for 2021, I think we’re all predicting that it will remain a vibrant market. Interest rates are low, demand remains high, and inventory is incredibly low. If someone is thinking of selling their home, now is the time.”

In a tight market for luxury, the private listing service is as important as ever for realtors and brokers, says Winnetka Compass broker Eileen Collins.

“Potential sellers are reluctant to make a move as we have adjusted to a stay-at-home/work-at-home economy. We are seeing about 30 percent less new inventory from January of last year. Consequently, desirable properties are often selling before hitting the market, with multiple offers. I see this trend continuing until the long-term projection for the pandemic economy stabilizes,” Collins says. “It is a classic supply and demand scenario. Due to the pandemic, what was an increasingly sluggish migration of families to the suburbs has taken on a new urgency. Buyers are seeking the classic North Shore home—a big sprawling house with room for the whole family plus office/workspace.”

Milena Birov with @properties in Winnetka, chalks part of the demand for luxury homes on the North Shore up to political challenges in the city of Chicago and how they impact parents.

“There are a few factors that drive the suburban market up. First of all, the schools. Chicago school teachers most likely are going on strike,” Birov says. “That drives parents to move to the suburbs.”

There’s an urgency in the current market that Katie Traines, with @properties in Winnetka, says she’s hasn’t seen in a while, if ever.

“I was out with a client who’s relocating and on three occasions we pulled into the driveway and the broker called us and said that the property went under contract,” Traines says. “I had a property that’s just over the million-dollar mark sell in two days a week before last. It’s a nontraditional home that you would have expected to take quite a bit longer to sell.”

Traines adds that new buyers on the North Shore have broadened their horizons, so to speak.

“People aren’t really locked into one community like in the old days, like, ‘I will only live in Wilmette.’ They’re looking everywhere the inventory is good, especially as work at home continues,” she says.

One big question that remains is if and when inventory will eventually catch up with demand. Scott Lackie, Designated Managing Broker with GGL Realtors in Lake Forest, says it’s a bit early to prognosticate.

“It’s hard to predict. I think it will eventually catch up, and when it catches up, I think prices will start to stabilize,” Lackie says. “COVID is a huge component, and interest rates are tangentially involved. Right now, interest rates are a big incentive for people to get going. It can make a huge difference in purchasing power.”

As long as interest rates remain low, Linda Martin of Coldwell Banker in Winnetka sees the market heating up earlier in the year in 2020 than in past years.

“Because of COVID, referrals were faster and more furious than ever late in 2020, and the third and fourth quarter skyrocketed for home sales. People wanted to move much more quickly,” Martin says. “This is going to continue in 2021. The spring market will start quicker as interest rates might start to inch up.”

While the luxury market has always required a personal touch, like other agents and brokers on the North Shore, Martin says that an emotional connection with clients is as important as ever. She held social distancing events for clients and potential clients during the summer, including a pickle ball party, and has relied on written notes and regular communication with clients during the pandemic.

The pandemic has not just prompted a migration to the North Shore, it’s also caused an increase in North Shore residents buying homes on Florida’s Southwest Gulf Coast. Long a winter vacationing spot for those from the North Shore, and also a retirement destination, the market for luxury properties in the area is exploding.

“The South Florida Gulf Coast has always been an area that the North Shore flocks to. They just do. They’ve owned second homes here. They own anywhere from Naples to Fort Myers,” says Lesley Barton, a North Shore native who’s with Coldwell Banker Sun Star Realty in Punta Gorda, Florida. “A lot them move and retire here as well. There are a lot of New Trier alums, and I can tell you that because I run the New Trier Alumni Group here.”

Barton’s company saw sales of homes between $800,000 and $10.5 million jump 85 percent in 2020 over 2019, and she sees no dip in the market on the horizon.

“Because the market is so tight, I have buyers that are selling homes $21,000 to $75,000 over asking,” she says.

All of these trends speak to the unexpected—and unprecedented—societal conditions that created the perfect storm for Americans to reassess their futures and think differently about the idea of home. Most tragedies, regardless of scale, produce a silver lining, and as much as the pandemic has taken an unimaginable toll, the real estate world might benefit, and not just financially.

“I think COVID changed the real estate market for the positive. I think the real estate business became more personal again,” says Jones. “It had been very transactional. COVID made clients want to have personal interactions and check in and talk to each other. We had time to slow down and I think that will continue. I hope that continues because the favorite part of my job is the personal.”