Meeting the market where it is

Getting real about high-end real estate pricing

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By Lacey Sikora

Contributing Reporter

In February, Baird & Warner CEO Steve Baird made news with a video released to agents and on YouTube, in which he said agents and sellers of homes need to get realistic about the market. 

In particular, he singled out high-end homes on the North Shore, noting that owners of the these very nice homes were not immune to market trends and to the overall interests of a new generation of buyers who might not want a large estate home far from the city. We wondered, are these same market forces affecting the near-west suburbs?

At the start of the spring market, there are plenty of single-family homes to choose from in the local market: 240 in Oak Park and 73 in River Forest, as of press time. 

Of those, 18 in Oak Park and 32 in River Forest are asking $1 million or more. Oak Park and River Forest are no North Shore, but all local markets are not immune to the market trends seen throughout the greater Chicago region. 

A look at the numbers and what a few local real estate experts see happening in our communities shows that selling high-end is no cake walk.

Stephanie Eiger, broker with Oak Park's Coldwell Banker, recently prepared a market trend report and notes that if you're feeling like the local market has stagnated, the numbers bear that out. 

Her research shows that 460 single family homes sold in Oak Park in 2018, 457 in 2017 and 544 in 2016. Prices fell on average 0.59 percent in 2018 after rising 1.36 percent in 2017. 

Across all price points, the market is not seeing growth like other cities across the country might be experiencing.

In River Forest, she says the news is relatively similar. Average prices have dropped the last three years in a row, and sales numbers have stayed steady at 130 a year.

When it comes to selling the higher-end homes, Eiger agrees with Baird's points. Sellers need to be realistic on pricing and on how long it might take to sell that more expensive home. For homes in the $750,000 to $900,000 price range in Oak Park, she notes that market time has increased from five months in 2016 to 6.2 months now. For homes over $900,000, that number has grown to 9.6 months.

John Lawrence, Realtor with Berkshire Hathaway Home Services in Oak Park, says that looking at market time for these expensive homes can be tricky. 

"It's hard to gauge the exact market time, because market time resets if the home is off the market for 90 days," Lawrence said. "This time of year, a lot is coming on the market that was pulled off over the holidays. Some of the houses in this higher price range keep getting pulled off and put back on, some of those for years. We've seen extended market times."

Eiger, who has worked in real estate locally for almost seven years, thinks that the local market is reacting to two forces: changing trends and the after-effects of the real estate recession. 

"[The years] 2008 to 2012 put a crimp on the market," Eiger said. "A lot of people who could afford to stay stayed, even if they might've sold under other circumstances. They felt like they just couldn't get the value out. In 2013, people started to sell, but I'm not sure we've worked through all that back log.

"We are not San Francisco or Las Vegas. There's no huge influx of people coming in to bail us out."

Eiger says that one thing slowing down local sales could be less supply in the lower price ranges, and notes that no one can ignore property taxes when evaluating Oak Park real estate. 

"Everyone talks about our taxes," she said. "It changes what people can afford and at what price range."

Lawrence agrees. He notes that Oak Park saw a real market slowing in homes priced at $1 million and higher coming out of the recession and credits a few factors. 

"A lot of people hunkered down in their houses and decided to wait out the recession," Lawrence said. "There are also the tax implications. A lot of these expensive homes have really, really big tax bills. Also, River Forest has become more affordable, so more buyers in this bracket may be searching on the other side of Harlem for a house."

Another factor? Tastes change. Eiger says that not as many buyers from the city are looking for historic homes. 

"The things I love about our houses, others may not," Eiger said. "People are not as willing to do work." 

Lawrence concurs. 

"Newly-rehabbed properties definitely tend to get more activity, especially those with open floor plans that are turnkey," he said. "Not as many people are looking to take on a project. They want to spend their time living their lives, rather than fixing up their homes. There has been a mind-set shift."

Eiger says that while Oak Park's close-to-the-city location is a bonus, she doesn't know if it carries as much weight as it used to, as she sees more families staying in Chicago to raise their kids. "The city schools are getting better. That's changed over the last 10 years." 

For Lawrence, while younger families might find the city more appealing, that can translate to Oak Park. 

"Peoples' focus is on being in walkable neighborhoods and being in the hustle and bustle," Lawrence said. "That's one of the things that makes Oak Park desirable."

At the end of the day, both Eiger and Lawrence agree that this is not a hot market in which a freshly painted million-dollar home will garner multiple offers within days. Lawrence notes that while they might be well-appointed and well-maintained, estate homes are victim to the buyers' market. 

"In the upper brackets, it's a buyers' market," Lawrence said. "There's no sense of urgency for these buyers. They can wait for the perfect house."

Eiger says that these are not the kinds of houses that can make their owners a quick return.

"These houses are investments, but really they are places to live. They are dual purpose. You kind of hope you break even in the end," Eiger said. "People expect to get rich because they look at other parts of the country, but that's not necessarily going to happen here."

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