Chicagoland second home market sustains surge

Chicagoland’s vacation home market isn’t slowing down, as prices have been driven up by owners giving buyers few options.

Increased demand for second homes is striking the market in affluent areas like Lake Geneva, Wisconsin and Union Pier, Michigan, and deals are often closing well beyond initial asking prices amid low inventory levels, Crain’s reported.

Supply is tight for a number of reasons. After the housing boom peaked around last summer, there simply wasn’t much to sell. Plus, rising interest rates and home prices are causing would-be sellers to wait for market conditions to stabilize.

“There’s not much out there to buy,” Maureen Culp, an agent with Re/Max Harbor Country, told the outlet. She added that before 2020, it was common to see about 300 homes on the market each year between the 20-mile stretch of lakefront from the Indiana state line to Bridgman, Michigan, but “for the past year and a half, we’ve been under 100.”

The number of home sales have dropped considerably throughout the Chicago area. Within the aforementioned 20-mile stretch, 71 homes sold last quarter. That’s down 34 percent from the same period in 2022, according to data from the Southwest Michigan Association of Realtors cited by the outlet.

The bulk of shoppers on the hunt for new digs in these areas are inevitably disappointed. Culp referenced a Union Pier property that got 18 offers within the first few days of being on the market, highlighting how quickly people flock to the rare home that’s listed. With wealthy buyers determined to scoop up one of these homes, they’re often willing to make a highball offer. 

The average sale price for homes along the lakefront stretch was $635,700 last quarter, up 21 percent year-over-year. Home prices in Walworth County, which includes Lake Geneva, were up 18.3 percent at the end of April from a year ago, the outlet reported. Culp pointed to several transactions where a buyer paid anywhere from 10 to 15 percent more than the asking price.

Dru Cash, also a ReMax 100 agent, believes the rise of second-home shoppers will remain a trend.  Bob Webster, a Compass agent in Lake Geneva, said the second-home market is strong because “it’s not just a purchase of shelter, people are looking to buy a lifestyle,” he told the outlet.

— Quinn Donoghue