New Suburban Home Sales Increase

CHICAGO—After an anemic 2014, this spring new home sales in the region finally started to pick up, according to the Illinois Association of REALTORS®. And this more active market has given a boost to local new-home builders such as Northbrook-based Red Seal Homes. The company reports strong sales at its new Provenance development, a luxury master-planned community of 137 homes in the Northbrook area. Buyers have signed contracts on roughly two to three homes each week since sales began in March, according to the builder.

Across Chicago's suburbs, sales of new-construction homes were up nearly 5% in the first quarter of 2015 compared to the same period last year, according to a report from Tracy Cross and Associates, a Schaumburg, IL-based real estate consulting firm. Still, the recent uptick in suburban sales hasn't sparked enough new construction to balance housing supply and demand. “At present, only 79 individual establishments are building homes in the region's production sector which compares with 529 that were doing so in 2005 when the market was at its peak,” the Cross report shows.

“We're a medium-sized, privately-held firm,” Brian Hoffman, an executive with Red Seal Homes, tells GlobeSt.com, and the Provenance development is “enough for us to achieve the kind of sales we're looking for.” And currently, the big public firms don't see sufficient upside to launching major housing developments. “Land is very expensive and the market, while functional, is not robust. We're still in a time when many are cautious.” When the top five builders have 12 to 14 subdivisions underway, “then we'll know things are healthy.”

The family-owned Red Seal has been in business for 81 years and has built more than 6,000 residences in the Chicago area. Its “focus is predominantly infill development,” Hoffman says. The challenge for builders in this niche is to find proper locations. “It's not as if you look at the next farm down the road and say, 'this is where we're going to build.'”

And Provenance's Northbrook site near Techny Rd. and Pensive Ln. would be considered a top location “regardless of where we are in the business cycle,” he says, mainly because new construction of this scale on the North Shore is quite rare. “The last time we opened a sizable community in this area was 2002.”

Provenance will have 21 single-family homes called The Estates, with six floor plans measuring 2,948 to 4,362 square feet and prices starting at $909,900. A group of two-story townhomes called The Terraces, priced from $489,900, will range in size from 2,137 to 3,059 square feet with three bedrooms, 2½ baths and two-car garages. And a set of duplex homes priced from $649,900 called Villas will measure 1,857 to 3,704 square feet and include two to three bedrooms, 2½ baths and two-car garages.

“The majority of our buyers are either upgrading to a larger home or, in the case of empty nesters, reducing their square-footage, and the market for existing homes has boosted their confidence and convinced them that now is the right time to sell,” Hoffman says.

“We have found North Shore downsizers are looking for three key features in a home: new-construction, plenty of space, and maintenance-free living,” he adds. “The Terrace and Villa homes check all those boxes and then some.”

And the roughly 20 sales at Provenance since March show a sustainable demand. “One of the benefits of infill locations is that when you finally put one together the market tends to respond.” And the pace of sales “is not as crazy as it was in the housing boom. I think we're seeing solidity, not insanity.”