Remember the cheering from homeowners that echoed across Chicagoland last year? It has been replaced with a few gnawed fingernails. The healthy price increases that followed the 2012 bottom of the local housing market have induced more people to list their homes. In part because of that increased inventory, sales prices appear to be leveling off. It’s happening for bungalows—but especially for mansions.
By the time 2014 draws to a close, predicts Svenga Guddell, director of economic research at real-estate research firm Zillow, the median value of a house in the broad 14-county Chicago area won’t have budged appreciably from where it was at the end of 2013 ($178,000). Ditto for super-high-end houses, those listed at roughly $5 million-plus. “We’re beginning to see price cuts a little more often,” says Guddell, “and [high-end] homes are being sold at below list price.”
Translation: Would-be sellers are finally getting real about what their spreads are actually worth. In the wealthy North Shore village of Winnetka, for example, brokerage firm Redfin counted 11 residences for sale at $5 million or more as of early July. Seven of them had been on the market 12 months earlier; five of those have had significant price cuts.
Deep-pocketed buyers can therefore be picky about amenities, according to Nela Richardson, Redfin’s chief economist. Not everyone, for example, may want to pay a premium for the conservatory and underground garage added to a 6,350-square-foot English country “cottage” at 191 Sheridan Rd. in Winnetka. The owners listed it for $8 million in 2012; at press time, the price was just below $7 million.
When price cuts don’t work, some brokers are turning to gimmicks. Another Winnetka mansion, a 27,000-square-footer at 68 Locust Rd. dubbed Le Grand Reve (the Big Dream) and billed by the agent as the most expensive Chicago-area house ever built, hit the market in April for the sixth time in four years—this time at $18.8 million, down from $32 million in 2011. In June, the agent offered brokers a $250,000 bonus on top of the $375,000 commission. Richardson has heard similar stories in other markets. “In D.C., the seller of an $800,000 home offered a Lexus to the broker who found a buyer,” she says.