Luxury Home Sales Keep Rising While Middle Market Lags

Resiliency in the luxury market, where borrowing costs matter less, spotlights just how much high interest rates have affected typical home transactions.

In the ultra-high-end home buying bracket of $4 million and above, which represents less than 0.1 percent of Chicago-area home sales, transactions in the first six months of this year have surpassed those of the same period last year, Crain’s reported. On the other hand, overall home sales declined in the same period.

“People with cash to pay have immunity from interest rate worries,” Jennifer Mills Klatt of Jameson Sotheby’s International Realty told the outlet. Mills Klatt handled this year’s highest-priced sale, a $9.3 million Gold Coast condo.

Upper-end home sales in Chicago have increased compared to 2019, the last pre-pandemic year, while the broader market lags behind.

So far this year, 39 homes have sold for $4 million or more in the Chicago area, an 8.3 percent increase from 36 in 2023, and 18 percent more than 33 in 2019.

Meanwhile, total home sales reached 41,940, down 5.7 percent from last year and 30 percent from 2019.

High-end sales have declined since a peak in 2022, when 71 homes sold for $4 million or more in the first half. But it has rebounded, unlike the overall market, which has been sliding since spring 2022, when mortgage rates first exceeded 5 percent, later surpassing 7 percent.

Even so, the high-end market isn’t brisk. Mills Klatt’s client received about two-thirds of the $13.9 million asking price for a property listed in March 2022. This year’s top sale also trails the $11.2 million peak sale of early 2023. The third-highest sale this year, a $7 million St. Regis condo, sold at a $1.1 million loss from its 2022 purchase price.

Inventory shortages affect the luxury segment as well. Dan Pape of Hudson Parker, who represented buyers of a $5.75 million Glencoe home, noted the fierce competition for limited high-end listings.

Pape’s clients in that transaction found inventory very limited and even backed off of a listing because competition was so high. When a six-bedroom home listed for just under $6 million in February, they moved quickly. The sale closed in June at 96 percent of the asking price.

The highest suburban sales, both off-market, included a $6.27 million Lake Forest home and a $6 million Hinsdale property. Off-market transactions, often a sign of tight inventory, underscore the competitive nature of the market.