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New-home sales plummet in the city, surge in the suburbs

Sales in Chicago dropped to their lowest in 25 years in 2020 while climbing to a 12-year high in the suburbs.

By:  Dennis Rodkin                                              February 2, 2021                               Crain's Chicago Business

Sales of new-construction homes in Chicago dropped to their lowest in 25 years in 2020, according to a new report. At the same time, new home sales in the suburbs surged to a 12-year high. 

It’s more evidence of the tilt toward the suburbs that many people predicted when COVID made density a bad word, and that has been proving out in year-end reports on all segments of the housing market. But housing industry sources say the tilt is happening not only because of COVID but because of prices as well. 

In Chicago, 219 newly built homes were sold during the year, according to a 2020 year-end report released this week by Tracy Cross & Associates, a consultant to the homebuilding industry based in Schaumburg. That’s down 38.5 percent from 2019 sales, and the lowest figure in Cross’s records, which date back to 1995. 

In the suburban area, 4,676 new homes sold in 2020, an increase of 23.3 percent from 2019. It’s the highest figure since 2008.

Combined, city and suburban sales totaled 4,895 in 2020, an increase of 17.1 percent over 2019. It’s the highest number of new home sales in the region since 2008.

The Cross data captures only homes sold in developments of 10 or more and covers both detached houses and attached condominiums and townhouses. Homes built on individual lots, a popular model in the city, do not get counted. 

In the past several years, builders in the city “had moved into the luxury realm. Most of what was happening was million dollar-plus homes,” said Erik Doersching, executive vice president at Tracy Cross. “They’ve gotten away from any mainstream type of $300,000-to-$800,000 condo development.” 

 

COVID made many households need more space, and at the $1 million-and-up level, people increasingly looked to the suburbs to find it. Crain’s reported in January that $1 million-plus home sales rose by 40 percent in the suburbs in 2020, and fell by almost seven percent in the city. 

Three of the best-selling new-home developments in the city had an average sale price below $1 million, according to Doersching’s calculations. They were CA6 in the West Loop, where 29 condos sold at an average of $830,000 each; Lexington Village in Avondale (16 townhouses at an average of $586,000); and 5748 N. Hermitage (26 condos at an average of $741,000). 

Alan Candea, a partner with his brother in Candea Development, which built the Edgewater condos, said he’s not surprised that most builders’ product delivers at over $1 million. 

Fast-rising land costs and the city’s tight regulations on construction “make it hard to build anything you can sell for less than $1 million,” Candea said. His firm bought the Hermitage land in 2014, he said, and “warehoused it while we did five other projects.”

Had they bought the land five or six years later, he said, “we would have paid 35 to 40 percent more,” which would have been passed along to buyers in the form of higher unit prices.

Another reason for the big drop in city sales was that “the empty nester, or more broadly the buyer that’s moving from the suburbs to the city, hit the pause button during COVID,” said Jon McCulloch, co-CEO of Belgravia Group, the developer of CA6 in the West Loop. 

McCulloch said that while the average price Doersching cited for his project is accurate, it conceals the fact that CA6 sold several condos priced at more than $1.6 million. They were all sold to existing city households desiring more space, he said. 

The biggest-selling suburban new-home development in 2020 was Cambridge Lakes, a Pingree Grove subdivision by D.R. Horton, a national firm based in Texas. D.R. Horton sold 215 houses there, nearly as many as the total new- construction sales in all of Chicago during the year. A D.R. Horton press representative did not respond to a request for comment. 

Doersching said the strengthened suburban new-home market, if it continues, could “lead to a bigger sense of urgency among those builders to go look for more opportunities” for development. 

At just under 5,000 sales for the year, it’s a long way back to the heyday of Chicago-area homebuilding in the early 2000s, when annual sales were over 20,000 and sometimes over 30,000.

Here's how home prices did in 2020

Our exclusive look, neighborhood-by-neighborhood, suburb-by-suburb, at price movement in homes sold last year. Spoiler alert: It's pretty good news.

By:  Dennis Rodkin                                              January 22, 2021                               Crain's Chicago Business

The Chicago-area real estate market finished 2020 strong, year-end data released this morning confirm.

In the nine-county metro area, the number of homes sold and the prices they sold at both rose by the most in several years, according to the data released this morning by Illinois Realtors, a statewide industry group.

Prices also rose in Chicago, though the number of homes sold dipped slightly, as homeowners turned away from the density of downtown neighborhoods. (Click through the links in the box to see our exclusive suburb-by-suburb, neighborhood-by-neighborhood look at price movement in homes sold last year.)

The number of homes sold in the metro area during the year rose by 8.8 percent in 2020, to 120,256 sales. That’s the highest since 2012, according to Illinois Realtors’ archives.

In the city, the year ended with 0.8 percent fewer sales than in 2019. The total, 25,999 home sales, was the fewest since 2014.

These increases are big, but pale in comparison to the nationwide surge in home sales. Home sales across the United States rose by a little over 22 percent in 2020, to the highest level since 2006, according to data released separately today by the National Association of Realtors.

The median price of a home sold in the Chicago metro area during 2020 was $268,000, up 8.1 percent from the previous year. It was the biggest jump in prices since 2015, when prices rose 8.5 percent during the year. In both 2018 and 2019, home prices grew by less than four percent.

In the city, the median price of homes sold during the year was $316,000, up 7.1 percent from 2019. It’s the highest since 2015, when the median price in the city rose by 7.9 percent. In 2018 and 2019, the median price in the city rose by less than two percent.

The National Association of Realtors did not report a year-end price growth figure.  "Housing sales and prices are expected to continue their positive trends into the first quarter of 2021,” said Geoffrey J.D. Hewings, emeritus director of the Regional Economics Applications Laboratory at the University of Illinois, in prepared comments that accompanied the data.

“A major source of continuing demand is likely to come from those seeking to relocate to accommodate opportunities to sustain the percentage of time spent working from home," Hewings said. "Declining housing affordability and a decrease in rental prices may serve to dampen housing demand especially at the lower end of the price spectrum.”

With prices rising fast and interest rates low, “buyers who are on the fence should be encouraged to make their move,” Nykea Pippion McGriff, president of the Chicago Association of Realtors and vice president of brokerage services at Coldwell Banker Realty, said in the prepared comments.

Prospective sellers, Pippion McGriff said, should consider getting into the market if their expectation of a sale price is “aligned with market needs.” That is, they should be aware that even with the recent runup, many Chicago-area homes would still not sell at a profit, particularly if their owners bought at the high prices of the 2005-2007 period.

Luxury home sales skyrocket in suburbs, dip in city

 

City home sales at $1 million or more dropped nearly 7 percent in 2020. In the suburbs, they were up 40 percent.

By:  Dennis Rodkin                                              January 15, 2021                               Crain's Chicago Business

Chicago-area buyers of luxury homes showed a strong preference for the suburbs over the city in 2020, a year marked by pandemic and social unrest.

In the city, home sales at $1 million or more dropped nearly 7 percent in 2020 from the year before, while in the suburbs, sales were up a whopping 40 percent.

Combined, the two types of housing ended the year with 1,204 sales, the fewest since 2016, when the city recorded 1,129 million-dollar-and-up home sales.

The surge of suburban luxury sales carried the overall market—city and suburbs taken together—to a new high. In Chicago and seven surrounding counties, 2,922 homes sold for $1 million or more in 2020, the most on record and 16 percent ahead of 2019's tally.

Of those, 41 percent were in the city, down 10 percentage points from 2019, when 51 percent were in the city.

In some suburbs—Wilmette, Glenview and Hinsdale among them (see chart)—the surge was even stronger. Lake Forest had by far the biggest revival in luxury sales in 2020: Sales of $1 million-plus homes were up 69 percent, to 149 sales.

 

"We had a bunch of young families from the city move up to Lake Forest," says Marina Carney, a Griffith Grant & Lackie agent in that lakefront town. "But let's be honest: My age group moved up from the city at the same time (in our lives), and we didn't have a pandemic and we didn't have social unrest" pushing those moves.

Carney says she moved "back home" to Lake Forest from Chicago in 1984.

While the activity in Lake Forest's housing market "was exciting," Carney says, "the prices weren't necessarily exciting." In part because of a large stockpile of inventory from the several previous years of a slow market, 2020 sellers sometimes took a loss. That included the sellers of the only Frank Lloyd Wright house in Lake Forest, which sold in late October for $100,000 below what the sellers paid for it in 2007.

As 2020's wave of buyers picked off most of the existing inventory, 2021's buyers may find fewer, and thus pricier, offerings.

The hearty appetite for million-dollar suburban homes boosted Glenview into the top five suburbs for luxury sales, a list it hasn't been on in past years. Glenview's luxury home sales rose 34 percent in 2020, to 110.

Compass agent Brandy Isaac, who lives in Glenview and sold several luxury homes there in 2020, says the increase was fueled by transplants from the city. "If you were a young family living in the city in a duplex sharing a little bit of yard on a 25-foot lot," Isaac says, "after four months, that showed you needed more space—indoor space and outdoor space."

  With her husband and three kids, Isaac made a similar switch from a duplex in the city to Glenview in 2009. It's not an uncommon move at any time. A difference in 2020, she says, was that when city buyers came to look at suburban homes, "there was an urgency to it. They were like, 'How soon can we get in?' "

Anyone who wants to interpret the 2020 luxury home sales data as a death knell for Chicago's high-end market should look at the sales totals. Even with a drop in sales in Lincoln Park and a steep falloff in the Near North, which includes places like North Michigan Avenue and Old Town, both of those neighborhoods still sold dozens more homes of $1 million or more than any of the individual top-selling suburbs.

In the top-selling neighborhood, Lincoln Park, there were 288 sales at $1 million and up in 2020, while in the top-selling suburb, Winnetka, there were 178.

"The neighborhoods (in Chicago) have been fine," Nathan says. It's mostly downtown "that's been hurt."

Chicago’s on-market housing inventory at record low

Residential sales have bounced back, but inventory hasn’t kept up

The Real Deal  (TRD)                             January 6th 2021                              TRD Staff

The Chicago area housing market has been a case study in extremes.

The pandemic sent sales into a tailspin in the spring and part of the summer. Now, inventory of homes on the market has plummeted, according to Crain’s.

As of December, there were enough homes listed to sustain just 1.8 months worth of sales, the lowest inventory since January 2008, Crain’s reported, citing Midwest Real Estate Data.

Generally, a four- to six-month supply of homes on the market notes a functioning market.

Sales took off beginning in August, when 13,360 homes sold across nine counties, representing nearly 20 percent year-over-year increase. In Chicago alone that month, 2,813 homes sold, up 8.2 percent from 2019.

The rise in demand — suburban luxury sales also jumped — meant that most of the decent supply on the market was soon snapped up. Sellers have not listed properties at the pace they once did and new construction, slowed by the pandemic, has not kept up, either. The diminished supply compares to a near eight-year run of inventory hovering at between three and seven months. That streak ended in October, when it dipped.

A new nationwide report in Realtor.com found the lack of inventory widespread. It showed that as of late December, Chicago had about 34 percent fewer homes on the market compared to the same period in 2019.
There are supply exceptions.

The condo market in the Loop has stalled out. Crain’s reported in December that there was two years worth of unsold condo units, after buyers decided to head for the suburbs for more space amid the Covid restrictions.

Jennifer Ames, a partner at Engel & Volkers Chicago, told Crain’s that “the market is definitely tighter on single-family homes outside downtown, where you see a lot of inventory and longer market times.” 

Chicago area home sales, prices soar for first time in years

Housing market sees major rebound from early months of pandemic

The Real Deal  (TRD)                             September 23, 2020                              TRD Staff

Residential sales and prices in the Chicago area saw big gains last month with the biggest spike in home sales since September 2013.

Across nine counties, 13,360 homes sold in August, a year-over-year increase of nearly 20 percent, according to data from trade group Illinois Realtors first reported by Crain’s. In the Windy City alone, 2,813 homes sold, up 8.2 percent from 2019.

“The Chicago market was hot in August as homebuyers took advantage of record-low mortgage rates,” Maurice Hampton, president of the Chicago Association of Realtors, said in comments accompanied the data. “The spike in sales reflects increasing desires for greater space as a result of the ongoing pandemic.”

The median price of a home sold in Chicago in August was $335,000, up more than 15 percent from a year earlier — the biggest year-over-year-increase since March 2014.

The report is a major point of redemption for the market as it comes just months after Cook County was ranked among the top 50 most vulnerable housing markets in the U.S., according to a second quarter report from Attom Data Solutions. Six other counties across Illinois were also listed as poor performers.

Things started to pick up in July, when showings and the number of homes in contract began to rebound.

 

 

Meanwhile, the final week of summer saw a surge in demand for mortgages from homebuyers and homeowners alike nationwide.