Fierce competition in Chicago’s luxury real estate scene is spurring all-cash offers, often above asking price.
Flush boomers are breaking out the greenbacks to snag their dream retirement pads—and bankroll their millennial children in sweet starter homes. In Chicago, single-family homes in good school districts and stunning aeries in high-touch buildings are selling faster than Stan’s lemon pistachio old fashioneds. So buyers must act fast and ante up cash, advise Baird & Warner’s Pamela Sage (312.318.8008) and @properties’ Phil Skowron (312.612.0303).
HOW FAST IS FAST? Pamela Sage: Immediately. Good luxury units in great condition are so scarce right now that you need to make a strong offer quickly to get what you want. An all-cash offer without contingencies is much stronger; even if someone bids higher, sellers always go with the stronger contract.
HOW DOMINANT ARE THOSE ALL-CASH OFFERS? Phil Skowron: The luxury condo market is on fire right now, especially for larger units, so if a place is really great it takes cash to get it—competition is that fierce. In the last 12 months, there were 651 sales for condos $1 million or more along Lake Shore Drive down to the Loop, and 258, or 40 percent, went for cash and 26 of those closed above ask. So even cash isn’t always enough.
WHAT ABOUT SINGLEFAMILY LUXURY HOMES? Sage: The market is softer for luxury homes, so sellers are waiting. For detached single-family homes $2 million and over in Chicago, there were 151 listings at this time last year and there are only 120 right now.
WHY DO WE KEEP HEARING THAT SINGLEFAMILY HOMES ARE GOING SO FAST? Skowron: Because good starter homes are also on fire, fueled by boomers who are helping their children pay cash. In the last 12 months for detached single-family homes between $700,000 and $999,999 in the area south of Addison, east of Western and north of Cermak, there were 193 sales and 95 of those—almost 50 percent—were all-cash, with 26 of those going at or above ask.
HOW COMMON IS IT FOR REALLY GOOD PROPERTIES TO GO ABOVE ASK? Sage: Pretty common. Last year, 18 percent of Chicago-area home buyers paid more than the asking price, according to Zillow. And the numbers have risen every year since 2012. If you want to buy something that’s in demand—from those great starter homes to condos in prime buildings—be prepared to pay cash as well as more than ask.
WHAT KIND OF PROPERTIES ARE IN DEMAND? Sage: Luxury buyers are looking for fullamenity buildings in great neighborhoods. People want to walk everywhere and still prefer Streeterville, the Gold Coast and Lincoln Park. I just sold a beautifully redone 2,400-squarefoot, three-bed, 3.5-bath vintage coop at 1120 N. Lake Shore in a week for $1.062 million, a price that far exceeded the sellers’ expectations. Another great unit I have right now is a 3,100-squarefoot, three-bed, 3.5-bath at The Palmolive (159 E. Walton, 8D) for $2.099 million with two valet spots, which is a great price for the location and amenities. Skowron: Size also counts, especially with boomers. They may say they’re scaling down, but they still want large units. We just sold a 2,500-square-foot unit at 1035 N. Dearborn in 10 days for $1.375 million. We’re seeing a lot of action on a 3,000-squarefoot, three-bed, 2.5-bath unit at 190 E. Walton that just went up for $1.695 million, and a combination unit on the 80th floor at 401 N. Wabash that’s a spectacular deal. It’s two contiguous units that together make up 5,000 square feet for $7 million; a similarly sized unit on the 88th floor just closed for over $2 million more.