Demand for single-family homes in Chicago is soaring as buyers flee the suburbs for downtown, where a shortage of inventory is pushing up prices.
“This is the most competitive single family house market I’ve seen so far,” said Jeff Lowe, the top agent in Compass’ Chicago office.
In the neighborhoods of Lakeview, Lincoln Park and Bucktown, empty nesters are chasing a shrinking inventory of high-end properties, with competitive bids driving some sales above asking, Lowe said. His team’s residential sales volume is up by about 26 percent year-do-date and is expected to exceed last year’s $298 million in residential closings, he said.
The number of homes for sale in Lakeview in November is down 62 percent year-over-year, but the median price for a four-bedroom house in Southport Corridor, the pricier section of the neighborhood, was $990,000, an increase of more than 33 percent during the same period, according to data from Movoto and Rocket Homes.
Buyers are looking for big lots in a city setting, and those areas offer some of the best options.
A listing for a six-bedroom single family home in Southport Corridor with more than 1,700 square feet of outdoor space closed for $20,000 above the asking price in June when one of the bidders raised their offer.
“The buyer, who lived four blocks down with young children, was looking to expand their home,” said Jeff Lowe, the top agent in Compass’ Chicago office who represented the buyer.
It’s the houses with unique layouts, oversized lots and amenities such as home theatres and saunas — features that have become more sought-after since the pandemic — that are getting attention, he said.
A total of 1,067 new homes, townhomes and condominiums were built in the Chicago area in the third quarter, according to Tracy Cross & Associate. That’s about 27 percent fewer than during the same period in 2020. Lowe said Lincoln Park, Bucktown and Lakeview are where there’s the biggest inventory crunch.
Next year, a dozen three-story single-family homes will be built in Lakeview with asking prices at a minimum of $2 million. In the past two years, 13 homes in that price range were sold in the area.
While there’s a shortage of single family homes in the city, the Fulton Market area is an exception, he said. The vacancy rates there are more than 20 percent, mainly because of all the new developments, which Lowe believes big firms like Sterling Bay will fill with tenants.
Compass has listings for both Hayden West Loop, a 28-unit, eight-story condo building, and Embry, a 58-unit, 15-story condo building in Fulton Market. Available listings of three bedrooms are in the $2.5 million range at Hayden West Loop. Embry, expected to open next year, offers two-, three- and four-bedroom units starting at about $1.2 million.
Of the 40 projects in the pipeline in Fulton Market, a one-time meatpacking district that’s transforming into a bustling area of restaurants and bars aimed at attracting young professionals, 14 are apartment buildings and four are condominium projects that have either been proposed or are under construction, according to SVN Chicago.
On a Friday in mid-October, the Fulton Market area was bustling with shoppers and workers at lunch.
“I don’t know where all these people that can afford these types of prices are coming from,” said 27-year-old Sydney Johnson, who works in advertising in Chicago. “But there are people that fill out all the buildings so that’s always going to happen.”
John Downing, a 46-year-old general contractor working for Chicago-GC, said there are remaining empty lots that developers are filling with retail businesses, restaurants and office buildings. “Just in construction in general, it’s been crazy,” he said.
Sterling Bay received a greenlight from the Chicago Plan Commission for a 29-story, 282 residential unit building at 160 North Morgan Street in Fulton Market in September. LG Development Group is also planning a 665-unit apartment building in the area, at 1143 and 1150 West Lake Street.