Sales of luxury homes were at a record-setting pace through the first three quarters of 2018, but a rough fourth quarter dragged down the yearly totals, and could be a harbinger of things to come.
Sales of homes for $1 million or more in the Chicago area in 2018 were up 1.4 percent over 2017 totals, according to a report from Re/Max Premier of Chicago. Median sales price was up 1.2 percent, and luxury homes were on the market an average of 166 days, three less than 2017.
The fourth quarter numbers, however, paint a far less rosy picture.
Some 494 homes sold for $1 million or more during the quarter, a decrease of more than 10 percent year over year, according to Re/Max. Average market time rose to 192 days, up from 165 days year over year. Median sales price rose less than 1 percent to $1.34 million.
“Both the nation and the Chicago area were dealing with a lot of uncertainty in 2018 even though the overall economy was strong, and that impacted the luxury home market,” Janice Corley, broker/owner of Re/Max Premier Properties in the Gold Coast, said in a statement.
Even the best-performing portions of the local luxury market couldn’t escape a fourth quarter downturn. Sales of luxury attached homes were up 10.5 percent in 2018 despite the submarket seeing a 10 percent drop in fourth quarter sales year-over-year, according to Re/Max.
In Chicago, luxury sales have been buoyed by the delivery of products like No. 9 Walton, which recorded at least 20 sales of $4 million or more in 2018. And in the booming West Loop, luxury sales jumped 160 percent to 117 units sold in 2018, Re/Max reports. There were just 17 sales of $1 million or more in the neighborhood in 2016.
But the Downtown luxury market also has seen a number of high-end rental projects delivered recently, including Related Midwest’s One Bennett Park. The continued popularity of rentals has hampered the luxury home sales market, Corley said.
There were 685 detached luxury home sales in Chicago in 2018, the exact number recorded in 2017, Re/Max reports. But fourth-quarter luxury deached home sales were down by nearly 19 percent.
Housing market experts previously told The Real Deal a soft fourth quarter was likely the beginning of what will be a downturn in the market. Chicago is predicted to have the weakest housing market in the country this year, though experts think the outlook is more complicated than that.
One sign of hope is that inventory is starting to balance out. While there was a glut of inventory at the luxury level and not enough in the starter home market, that trend is now starting to reverse. Inventory of homes priced $1 million or more fell 7.8 percent, according to Re/Max. Nationwide, overall inventory is expected to creep up by about 5 percent.