Tracy Sparks moved up. And then some.
Having sold her 1,800-square-foot cottage on the North Side’s landmark Alta Vista Terrace — the house was on the market literally only half an hour, she said — Sparks decided she wanted more space and more “personalization” in her residence.
The 39-year-old financial consultant found what she wanted in a brand-new single-family home about a block north of the Cabrini-Green housing project, where for something over $1 million, she more than doubled her space, got a backyard, and customized with high-end fixtures and cabinetry and put in such special-use spaces as an art room.
“In this market, you want quality things. You want things that are unique and personal to you because your home is important to you,” she explained. “It’s not only an investment, it’s an investment that you choose to live in.”
Welcome to Chicago’s million-dollar real estate market, where size always matters and where some new players are changing how and where the game is played.
Real estate observers say the market locally probably has less velocity than some other million-dollar-mad areas (they cited San Francisco — a perennial — and some areas of Atlanta and such resort areas as Kiawah Island, S.C.). But, it’s nonetheless steady and healthy — with some interesting twists.
At the high end of the market, Chicago real estate agents and builders say they’re seeing buyers with some new profiles, who have surprised them in where they choose to move and in some cases the ardor with which they go about it.
For one thing, many of them are younger than they used to be, some of them even in their 20s.
Fueled by robust investments and entrepreneurial success, they’re stepping up and buying showplace homes.
“In this market, your younger buyer has been out en masse because of the lower interest rates,” said James Kinney, president of the Rubloff Residential real estate firm.
“Everybody is starting out way up there,” agrees Rita Starkey, an agent with Re/Max South Suburban in Flossmoor who is currently marketing a $2.5 million house in Beecher that comes with 46 wooded acres, four lakes and a horse stable.
Starkey says that although million-dollar-plus activity is fairly uncommon in her area, she nonetheless sees younger buyers confidently purchasing at much higher price levels than just a few years ago.
Carrying perhaps even more purchasing clout, though, are empty-nester couples, many of whom are leading the widely reported charge from suburbs to expansive condominiums and townhouses in the city. Other empty-nesters are not moving nearly so far, choosing instead to go for the mansions they’ve long dreamed of, just blocks from the places they’ve long called home.
“It’s the biggest change I’ve seen in 20 years,” said Northfield architect and builder Charles Page, who specializes in upper-bracket houses and who recently sold a North Shore spec home (built without a specific client) for $3.2 million.
“There are so many couples with older children who are building such beautiful, ornate homes,” Page said. “I used to build all the time for families with young kids. Right now I’m working on half a dozen large projects, and four of them are for empty-nesters.”
Experts say that, in general, such pricey homes are not a quick sell and never have been. But there are some startling exceptions.
“What’s interesting to me is the average market time,” explains Rubloff’s Kinney, whose firm specializes in downtown and North Side properties. “Last year, the average market time (of existing single-family homes in our area) was 122 days. This year it’s 67 days. What we’re seeing across the board is people are making decisions quickly to buy now or lose. They’re feeling they have to jump on it.”
Within the areas where Rubloff is active, this means gravy for sellers, Kinney said: It means multiple offers, with sweeteners. It means buyers of million-dollar-plus homes are paying in cash, and fairly often.
“Because of the scenario of bidding wars, a lot of them are making it cash,” Kinney said. “It makes a cleaner offer. We are having more cash offers now than you’ve ever seen in the history of Chicago.
“They’re also making their terms more attractive. They are eliminating the inspection clauses, eliminating attorney approval of the contract. They’re trying to make it as clean as they can” in order to stand out from competing bids, Kinney said.
For the losing bidders, however, these tactics only increase the tension, Kinney said. “Unfortunately, on the multiple-offer scenarios, instead of the regular transaction, where you walk out with two happy people, you walk out with one, two or even four unhappy people. That’s what fuels them the next time to bid higher.”
“Unhappy” is not a word that comes up too often in tales of the current real estate climate: “Giddy” is more like it. Swept along by stock market riches, a booming job market, low unemployment and the fabled low interest rates, Americans sort of went house-crazy last year, buying and selling almost 4.8 million homes, according to the National Association of Realtors (NAR). At the same time, these buyers and sellers pushed the rate of appreciation several percentage points ahead of inflation. Translation: Everything got more expensive.
The bidding wars over million-dollar homes probably are limited now to the city, local real estate experts agree, but the activity in that bracket, across the board, is undeniable.
In metro regions across the country, the percentage of homes sold at $1 million and up more than doubled between 1993 and 1998, according to First American Real Estate Solutions, a California firm that gathers housing data.
(The median price of an existing single-family home in metro Chicago was $166,800 in 1998, according to the NAR.)
Some segments of the market may have peaked, observers say.
Residential Planning Corp. of Hoffman Estates tracks home-building statistics, and finds that 1999 starts have declined from last year’s at subdivisions with houses priced at $1 million. On the other hand, it also reports that the Chicago area has fully 78 subdivisions that are pretty much exclusively priced in that bracket.
Even if Chicago-area sales have been fairly steady for several years, experienced real estate agents say they’re surprised by the actual numbers. For example, on July 12 the Multiple Listing Service of Northern Illinois, which covers the Chicago region, offered 569 single-family residences priced at $1 million and up. These don’t include condos, homes for-sale-by-owner, and projects of many custom builders who don’t work with the MLS.
The most expensive listing on July 12 was $11.5 million, for which you get a traditionally styled three-story affair in Highland Park with five bedrooms, seven full baths, and a seven-car garage. The NAR’s Web site (www.realtor.com) offers a glimpse of the home and information about purchasing it (it identified Coldwell Banker’s Highland Park office as the lister), with the helpful suggestion that a typical monthly mortgage payment on the house would be $64,453.78.
If that’s a tad steep, in July there were plenty of homes slugging it out closer to the $1 million mark, and they were all over the metro map. A few:
– A vintage six-bedroom stone house in the Kenwood Historic District on Chicago’s South Side listed by Urban Search of Chicago for $1.4 million. The property includes a grass tennis court and five fireplaces;
– In Batavia, a home for $1.195 million on five acres, with an indoor pool and a “cave room” entertainment area in the basement, which the owner festooned with custom-made stalagmites and stalactites to create an underground mood, offered by Realty Executives agent Paul Barclay;
– In West Rogers Park on Chicago’s Far North Side, a vintage 12,000-square-foot residence on an understandably large lot, priced at $1.2 million, includes five fireplaces and an indoor pool, according to data provided by Wrightwood Realty Co.
But the single-family listings are unsurprisingly dominated by Lake Forest, which during the July 12 search counted no fewer than 72 homes for sale priced from $1.05 million to $4.4 million. The Barrington area finished a respectable second, with 57 properties for $1.05 million to $5.9 million. In the city, 53 single-families made the million-plus list, topping out at $8.9 million for an Astor Street home.
In the condominium area, of course, most of the upscale action is downtown, and Kinney says a significant percentage of million-dollar “pending sales” are signed contracts for units in buildings that haven’t even been constructed yet. Part of their allure, he says, is the developers’ willingness to cater to moneyed customers who want customization.
For example, MCL Companies is well into sales for its River View development along the Chicago River where it flows into Lake Michigan, even though first occupancies aren’t expected for almost another year. At the base of River View’s two condo towers will be a row of four-level townhouses, which begin at $1.2 million for a 3,766-square-foot unit. Some of the townhouses will stretch out to 6,200 square feet.
MCL Vice President Tamara M. Laber expects that most buyers will add 15 to 20 percent onto the base price in the form of optional features and upgrades. And she says the company specifically planned for the wishes of empty-nester buyers.
“We created some larger spaces for individuals moving in from the north and west suburbs who are accustomed to having large entertaining spaces, large spaces for families to come and visit–not to live,” Laber said, explaining that these clients “don’t want to be limited to 1,500 square feet.”
“These are fairly young empty-nesters. They have collected some art pieces and some treasured furniture pieces, and they want to still keep them, and that’s why we made room for them.”
But the downtown, upscale buyers are not exclusively ex-suburbanites. And apparently they’re more broad-minded about where they want to plunk down their million-plus.
“We’re finding that all of the old, preconceived ideas of `acceptable areas’ have really gone away,” says Kinney. “The buyers will say, `Let’s look at Bucktown, let’s look at Taylor Street. These newer buyers don’t have neighborhood prejudices.
“If they can get the bigger lot by going to a fringe neighborhood, they don’t have the fear of plunking down the million to build the house.”
Roger Luri’s company, Metro Homes, built Tracy Sparks’ house near Cabrini-Green and is building several other similarly priced ones in the same neighborhood. He says his buyers are mostly younger city-dwellers, moving up from townhouses or lofts in search of square footage.
What do you get for a $1 million these days? Luri says one thing that draws his buyers is four to six bedrooms, even though most don’t have kids. He also says brand names mean a lot, so Viking ranges, Sub-Zero refrigerators, Grohe faucets, Kohler whirlpool tubs are standard.
Scott Sevon, who builds custom homes mostly in northern and northwest suburbs, adds a few items that are frequent features: “For one thing, larger garages — no, mega-garages — with an average of four or maybe six bays.
“They want stairways that lead from the garage into the lower level. Everyone wants an `English’ or walkout basement. They’re doing fancy libraries and exercise rooms. Home theaters are very prevalent.
“There is a tremendous influx in elaborate lighting. We’re building homes with `safe rooms’ and hidden areas” to protect the residents in case of a home invasion.
North Shore architect Page agrees that his buyers want the finest finishes and amenities, but there’s one other biggie: “They want land. They want as much of it as they can get.
“You won’t get an acre in Winnetka for under a million, that’s for sure. I have had people who have paid a million and a half” for a teardown.
But like everything else, money isn’t what it used to be, to a degree. For one thing, there’s that appreciation factor. And then, well, there are just some changing expectations out there.
“I’d have to say that a few years back, if you bought a property for a million, you didn’t say that you missed much,” according to Rubloff’s Kinney. “Today, you get high finishes and you get some spaciousness, but your million-dollar buyer is still walking away, saying, `I wish I had this’ and `I wish I had that.’ “
