Find out how these affluent buyers impact Illinois residential real estate landscape and how their preferences have evolved.
Initially, real estate activity paused in spring 2020 during lockdowns.
But soon after, demand from affluent buyers surged.
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Peak Luxury Demand
This upscale homebuying boom continued into 2021.
Luxury home prices began climbing significantly as well.
The volume of high-end sales in the Chicago area hit record levels in 2021.
In the $1M+ bracket, sales were up 19% from 2020.
Market Cooling (2022-2023)
Interest Rate Impact
2022 brought a turning point.
Inventory at the high end also tightened as would-be sellers held off.
Rise of Cash Buyers
Despite fewer transactions, prices at the top end stayed resilient.
Statewide, home price indexes showed modest growth, but the luxury tier outperformed.
The typical high-end Chicago-area home continued to appreciate in value, even as sales lagged.
Illinois followed this national trend with strength at the very top of the market.
When COVID hit, affluent families craving more space drove a migration to larger homes.
Features like home offices and big yards shifted from luxuries to necessities for many upscale buyers in 2020.
Urban vs.
Suburban Shifts
Urban preferences also shifted.
Notably, the craze for ever-bigger homes cooled off.
An industry survey in late 2022 found that smaller luxury single-family homes (2,5003,500 sq.
ft.) were selling nearly 19% faster than larger ones.
This suggests that affluent buyers appetite for huge houses diminished once the pandemics peak passed.
High operating costs and the realization that much of that extra space went unused likely contributed.
Many acted on this belief by purchasing second or even third homes.
However, the legacy of 20202021 is that many more Illinois high-income households now own vacation homes than before.
Those who purchased during that period largely held onto their properties, even if they returned to the office.
Perhaps the most striking difference is in volume and market momentum.
As the economy recovered in the mid-2010s, affluent homebuying picked up.
By the late 2010s, the luxury market was setting post-recession records.
However, that entire recovery was gradual and steady compared to the rollercoaster of 20202023.
Even the subsequent pullback in 20222023 was a sharper swing than anything in the earlier decade.
This generational shift brought slightly different tastes (younger buyers often prefer modern design and tech-equipped homes).
From 20082017, second-home buying was steady but not explosive; vacation properties were considered luxuries or retirement plans.
Cash vs. Financing
Another significant change: the role of cash and financing.
In the 2010s, even rich buyers often took advantage of low mortgage rates to finance purchases.
But by 2023, after the pandemic run-up, Illinois luxury real estate reached new price highs.
As noted, luxury prices outpaced mid-range prices for the first time in years.
This is a departure from the 2010s, when the lower end appreciated faster.
This contrasts with the prior decades slower, more predictable recovery and traditionally motivated moves.
