Chicago’s Luxury Real Estate Market: Comparing Luxury Home Activity to the Rest of the Market

Three Chicago luxury real estate agents talk about the state of luxury in Chicago

Luxury is a complicated time in Chicago right now. It’s okay, not the worst, but definitely a step down from where it was in the last few years.

Leigh Marcus, of the Marcus Realty Team with @properties reports that “The market in general is just supply and demand: economics 101. In the luxury market, there is a much higher supply of homes than there is demand compared to the condo market. In the condo market, if there are 60 condos for sale, there are maybe 20 buyers a month for those condos. In the luxury home market, there could be 4 buyers for the 60 homes available over a month. So it’s much slower with lower demand right now. We use a month’s supply of inventory as our baseline, so in general the luxury market has about 5 times as much supply as the non-luxury market.”

In Chicago, most real estate agents seem to agree on $1 million as the threshold dollar price to start to define a “luxury” home. However, as Marcus notes, “In Lincoln Park, land alone is more than $1 million. Luxury is $2.5 million. I don’t mean luxury by caliber of home. You can have a really nice $2 million home.”

Real estate agent Izabela Sloma with Sloma Real Estate Group of Jameson Sotheby's International Realty, also feels like the luxury home market is going through a recent shift. “The market is changing,” said Sloma. “The land value is getting pretty expensive. It’s not as great of a value as it was 2-4 years ago. Luxury homes are not moving as quickly as a few years ago.”

Stacey Grossman, luxury real estate agent with Coldwell Banker, agrees the state of the market is changing for luxury homes and that the market is softer than what was. As for what constitutes a luxury home, “I would describe a luxury home as an expensive home built on expensive land,” Grossman said. “Location is key. In Chicago, for example, Lincoln Park’s location is what has made it so special. It is close to the lake, parks, shopping, restaurants and all the city has to offer along with good school districts. Also, a luxury home should be ‘timeless’ regarding finishes and details, especially in kitchens and baths and have a practical lay out that works for a family. Amazing outdoor spaces have become very expected in the luxury market with built in kitchens and impressive landscaping.”

What appears to be pulling away at the luxury market in Chicago is uncertainty. Chicago is struggling with crime and financial woes. Just last month, Crain’s reported that tax hikes are hurting the luxury home market. According to the article, another property tax increase is on the way, and the impact is felt even by the luxury market:

For the owner of an eight-bedroom house on Howe Street in Lincoln Park now on the market at $7.8 million, property taxes will go up about $2,120, or $176 a month, when the board enacts the tax hike. On State Parkway in the Gold Coast, the owners of a mansion listed at $12.5 million will be on the hook for an additional $2,470 a year, or $205 a month.


Yet some agents who work at the upper end of the market say the issue is larger than the dollar amounts. That's particularly true of upper-bracket people who are financially astute and see a long, hazy path ahead. For one thing, they may have the means to leave on principle, while homeowners at lower rungs in the market are tied down by jobs.

While the news isn’t great and, on top of that, Illinois had the most residents leave the state in 2016, Chicago was also named as the 2017 best big city in the US by Conde Nast Traveler’s Readers’ Choice Awards. Which goes back to the point that it’s complicated. Chicago has one of the most vibrant cultural scenes in the US, but it’s also working through some challenges that are hitting the funding source of some of those cultural institutions: residents who can afford to buy luxury homes.

What’s coming next? Although Grossman agrees that the market is softer, there’s still a lot going on in the luxury market and that it isn’t all about price. “The luxury market will continue to be about location, whether it’s Lincoln Park, the Gold Coast, Streeterville, River North or West Loop, and we will continue to see this market grow with all of the new construction in each of these locations,” Grossman said. “There is always something new to learn about real estate in Chicago and it keeps it interesting and exciting.”