For much of the 2010s, the luxury real estate market (homes over $1 million) on the North Shore remained stagnant. Many large homes and estates stayed on the market for years or boomeranged on and off the market for long periods.
That all changed starting the second half of 2020 when the COVID-19 pandemic drove up demand for luxury properties as families wanted more room and amenities during lockdown. The market pattern continued all through 2021, and according to North Shore area brokers, demand for luxury properties in 2022 shows no sign of letting up.
“So far, the luxury market continues to be strong. Expensive homes are going under contract every day and in relatively fast market times depending on the price range,” says Jamie Roth, Managing Broker with Engel & Volkërs, Chicago North Shore. “There is still high demand and low inventory, and I don’t see that changing in the near future. When one home goes under contract, there are many potential buyers who remain left in the lurch.”
Roth says that so far this year he sees many similar factors to those that drove the market in 2020 and 2021, including demographic shifts as more and more young couples are leaving the city for the suburbs.
“So many younger people have moved out already and their friends and family want to be in the suburbs with them,“ Roth says. “The specter of classroom lockdowns still looms strongly. Space continues to be the new luxury and people are looking for properties where each family member can work, play, and live accordingly.”
Roth adds that what he’s not seeing—not yet anyway—is fatigue among buyers frustrated with the low inventory in the luxury market and the high level of competition.
“My buyers are in it to win it. They trust me to navigate this market for them and they know that experience and connections count,” he says. “Indeed, I just helped three separate buyers land the house they wanted.”
Dinny Dwyer, a broker with Coldwell Banker in Winnetka, says one factor that definitely hasn’t changed from last year is the desire for amenities, such as pools.
“There is still a very strong demand for homes in every price point including the luxury market. Many listed properties are receiving multiple offers and offers over the list price,” Dwyer says. “Many of the buyers of the larger homes and properties realized during COVID-19 that they wanted more space and a larger yard. Pools became very popular, as well as properties where a pool could be added.”
As with Roth, Dwyer says buyers are being patient given the inventory situation, but they need to jump on properties as soon as they come on the market.
“I have not seen buyers retreat from the marketplace due to the lack of inventory. There is some frustration for buyers because they do have to act quickly,” she says. “I try to help my buyers get ready with current data on home sales in the areas where they are looking. I tell them to get their financing organized so they are getting a jump when the right house comes along.”
Because of the high buyer demand, homes are turning fast, says Liz Kohler, a broker with Berkshire Hathaway Home Services in Winnetka.
“Even in the high price ranges market times are relatively short, Kohler says. “Several years ago, you couldn’t give the large old houses away and now market times are under 112 days in the $2 million and up price point.”
One thing to keep an eye on as we move through 2022 is interest rates, Kohler says, which have ticked up. But rates are still comparatively low.
“While mortgage rates are up slightly, they are still exceptionally low. A 3.5 or 4.0 percent rate is still a bargain and drives demand. COVID-19 continues to drive buyers to the suburbs where people can spread out, get into nature, and work from home,” Kohler says. “People want space and no longer are worried about being walking distance to work as they work remotely.”
According to what she’s seen so far this year, Engel & Volkërs broker Carly Jones believes the luxury market in 2022 will be unchanged from last year, or perhaps even stronger.
“The luxury market is still extremely active and there is still more demand than inventory. As we start 2022, there are even less homes on the market and the ones that are taking advantage and listing in December and January are going quickly and with high demand,” Jones says. “I expect to continue seeing this trend through most of 2022. This is going to be another great year for real estate.”
Jones says that people are thinking differently about what they want from a home and are looking for features that they might not have considered before the pandemic. That, too, is driving demand for luxury among buyers.
“People want space for everyone in their family to be able to work and play. They also want parts of their home that make it feel like a vacation and a luxury’” she says. “Whether that be a large backyard, a pool, a movie theater, a chef’s kitchen, or a spacious basement, buyers realize that some of the things they use to do outside of the home, they want to be able to do within their own homes.”
While inventory for luxury properties remains historically low, Jones isn’t seeing buyers drop out of the market, but they are definitely adjusting their expectations.
“They are readjusting what they are looking for. Buyers who only want move-in ready homes are starting to understand that sometimes you have to do a little work to get the location and features that you want,” she says. “There are also buyers who are increasing their price points to allow them to get what they want.”
Laurie Field, with Engel & Volkërs in Winnetka, echoes many of the views of the brokers The North Shore Weekend spoke with. The optimism for 2022 seems to be universal among North Shore real estate professionals.
“The luxury market is as strong as ever along the North Shore, as evidenced by the low median days on market we’ve seen in January,” Field says. “Inventory is incredibly low and there are already a ton of luxury buyers out looking. I foresee even more luxury buyers in the market in the weeks and months ahead.
For luxury buyers in 2022, patience may be the most important virtue.
“The buyers I’m working with are in it for the long haul. They will continue to look until they find a house that meets their needs,” Field says. “They also know I’m on top of what will be coming on the market and that I will be able to get them the house that they want once we find it.”