Sales of Luxury Homes Accelerating

CHICAGO—Luxury homes in the seven-county metropolitan Chicago real estate market sold at a faster pace during the first quarter of 2015 than they did a year earlier, according to a new report from RE/MAX. Luxury home sales totaled 378 or 16% more than the same period last year. And sellers were also finding buyers more quickly, requiring an average of just 144 days, compared to 158 days last year.

The RE/MAX analysis included all of the $1-million-plus home sales in Cook, DuPage, Kane, Kendall, Lake, McHenry and Will counties. The median sales price for these homes was $1,350,000 during the first quarter, down slightly from $1,372,500 a year earlier.

“In our view that isn't a negative,” Jim Merrion, regional director of the RE/MAX Northern Illinois real estate network, tells GlobeSt.com. “Instead, it indicates that sales accelerated most rapidly in the $1 million to $1.5 million segment of the luxury market, which is what you would expect to see as consumer confidence rises.”

And that confidence is having a wider impact. “We're finding movement throughout the price ranges,” Merrion adds. As reported in GlobeSt.com, a recent analysis by RE/MAX found that overall sales in the seven northern counties during March jumped 13% and hit their highest level since 2006. And the median sales price for homes in this metro area reached $205,000, 16% higher than in March of last year and the highest March median since 2008.

“We had such an issue last year as the market struggled with a low inventory,” Merrion says. “Many people were asking, 'hey, what kind of recovery is this?'” But he feels that the rise in home prices, which kept going up in 2014 even as sales lagged, have finally given enough homeowners the confidence they needed to put their current homes on the market and move up to luxury homes. “The market is now just like a fighter getting up off the canvas.”

Over the course of the last two years, luxury home sales in metro Chicago during the first quarter of the year have grown by 37%, and the lion's share of that growth has been in Chicago, rather than in the suburbs. First-quarter city luxury sales rose 54% over that period, while suburban luxury sales gained 21%. And average market time in the city fell by 10 days to 115 days.

Three Chicago communities showed particularly sharp gains. In Lake View, 20 luxury properties were sold, an increase of 82% from the prior year. West Town recorded 13 luxury sales, up 86%, while sales in North Center were up 69% to 22 properties.

The luxury home sector “feels like it's ahead of the pack,” Merrion says. But the strengthening inventory gives him confidence that the both the luxury and middle-income markets will continue to recover from the relative doldrums of 2014. “I think this could be our best year since 2008.”