Chicago-area luxury home sales suffered a steep drop in the first quarter, led by a big slowdown in the city’s high-end condo market.
Just 380 homes across the seven-county metro region sold for $1 million or more in the first quarter, a 22 percent drop year over year, according to a report from luxury brokerage RE/MAX Premier.
It was the second consecutive quarter of year-over-year declines in sales, the report showed. Luxury sales dropped by about 10 percent year over year in the fourth quarter of 2018.
But the region’s median price for luxury homes notched up by about 1 percent during the same period, hitting about $1.4 million.
Brokers typically see declines in raw home sales as a leading indicator that prices will flatten out later. The first-quarter sales free-fall led broker Janice Corley, owner of RE/MAX Premier, to predict a broader “price adjustment” in the luxury market starting in July, she said.
“We’re at the peak, so now is the time [for sellers] to make sure they’re pricing their homes correctly,” Corley said. “Most people are looking to buy between now and June, so if you don’t get an offer in the next 45 to 60 days, you’re going to have a problem.”
The broader market slowdown was magnified this year by an especially frigid winter, she added. And ugly weather can have an even sharper impact on wealthy buyers than it does for those moving out of necessity.
“The luxury clientele has a lot more power to say ‘I’ll put this on hold when the weather gets better’” Corley said.
The high-end condo market in Chicago proper was a big drag on the overall luxury market, with just 89 units in the city closing for $1 million or more, compared to 140 a year earlier.
Luxury condo sales fell most sharply in Lincoln Park and on the city’s Near West Side, which saw just 19 high-end closings in the first quarter, down from 44 in the first quarter of 2018.
The sudden availability of trophy condos in new buildings like JDL Development’s No. 9 Walton and Related Midwest’s One Bennett Park is making it harder than ever to sell older units outside Downtown, Corley said.
“When you have new product where no work has to be done, it’s going to go quickly,” Corley said. “But these products out there that need updating, where [condo association fees] are high, they’re going to stay on the market a long time.”
Average market time for luxury condos in the city jumped from to 169 days last quarter from 132 in the first quarter of 2018, and citywide condo inventory grew to 635 in March from 594 a year earlier
But sales of single-family homes were more mixed, with slight declines in both inventory and market time last quarter, according to the report.
The city saw 106 detached homes trade hands for $1 million or more last quarter, compared to 120 a year earlier. But the median luxury sale price climbed by about 9 percent during the same period, to more than $1.5 million this year.
High-end single-family home sales jumped slightly in Lakeview and Lincoln Park, where 49 combined deals closed last quarter compared to 43 at the beginning of 2018. But they were offset by declines in Logan Square, North Center and West Town.
With spring buying season now fully underway, the next two months will be crucial to see whether last quarter’s slowdown was a temporary blip or a sign of a long-term shift, Corley said.
“I believe May and June are going to be a very important time for the market to correct the decrease in sales we saw the first quarter,” she said. “But that’s only going to happen if consumers are pricing their properties right.”