Interest rates are up. Millennials are just beginning to make their housing play and empty nesters are looking for something new. Change is underway, making what now? the question of the year. In our annual yearlong series, we hope to answer that question — at least for real estate — by shining a spotlight on all the regions of the country.
Along with a snapshot of real estate markets, we take a dive into the latest on housing, developments and design. For this issue, we begin with the middle of the country, grouping three regions together: the Midwest, Mountain West and Desert Southwest.
Location, location, location may be real estate’s timeworn mantra, but more than location determines value today. Condition, price, property type, and even architecture are all at play, having more or less influence on value, depending on the location and price bracket. From the rugged mountains of Colorado and Utah to the desert expanses of Arizona to the heartland, the geography of our focus regions varies, but surprising threads run through all three, making them as similar as they are different.
Chicago and the Midwest
Midwest luxury fared well in 2016 with sales of homes priced at $1 million and up increasing by 11.1 percent year over year; sales in the $750,000 to $1 million range were up by 20 percent. Like almost every market in the U.S., sales here showed a strong up-tick following the election and into the beginning of the year. “The dust has settled and people are ready to move on — and move in,” observed Steve Baird, president of Baird & Warner in Chicago. “Prices for high-end properties have surpassed the peak of 2007 and 2008,” reports Joanne Nemorvski, with Berkshire Hathaway HomeServices KoenigRubloff Realty Group, who brokered one of 2016’s highest transactions, an $8.35 million home in Lincoln Park, which also happens to be one of Chicago’s premier luxury locations.
Highest-priced listing: $50 million urban estate in Lincoln Park set on a lot equal to eight city blocks with a 25,000-square-foot main house. Also notable is a $30 million estate in Fort Wayne, Indiana.
What’s Hot: Urban dwellings. And new residences affiliated with upscale hotels.
On the Radar: Luxury flips. Lenders such as Erick Workman, vice president of marketing at Renovo Financial, say, “We’re seeing more interest in 2017 for loans on high-end construction and luxury flips.”
Design Trends — In Chicago
Decadent is the word Chicago designer Donna Mondi uses to refer to what’s hot in design here. “There is so much color and drama that is happening in design.” Noting that design typically follows fashion, she points to runway looks she says sometimes resemble “grandma’s closet meets a 70s partier.” Interiors haven’t gotten quite that crazy, but she expects them to become “much more eclectic.” Beyond colors, floral wall coverings are also back. “You can do a lot with wallpapers because it is a way to get major impact in a space. Textured wall coverings are great, but I’m talking about the highly patterned stuff that is really hot now,” observes Mondi.
Here, real estate is a story of many markets, price points and sales. The region is expected to have some of the hottest markets in the country in 2017, according to Realtor.com. Phoenix leads its list of 100 top markets for 2017, with projected growth of 5.9 percent in price and 7.2 percent in the number of sales. Tucson is also in the top 10 with an expected 6.1-percent increase in prices and 5.5-percent bump in sales. Arizona was hard hit during the recession. Many places or price brackets are coming back as the last pieces of the recovery puzzle to fall into place.
Entry and mid-level brackets have a tight supply of for-sale properties, but the luxury story revolves around an oversupply. In Paradise Valley, one of the Southwest’s premium locations, the median list price was $2.33 million, while the median sale price for the million-plus bracket was $1.43 million. The supply of luxury properties on the market in Paradise Valley ranges from 30.9 months for the $2 million-to-$3 million bracket to 102 months for $5 million and up. Scottsdale has a median sale price of $509,000. Over $1 million, the months of inventory range from under a year to 61 months for the $3 million-and-up bracket.
“People want quality, and if you are selling for over $3 million in Paradise Valley, you should talk to a stager and an interior designer, so you can be competitive, not in price, but in condition,” says Aazami.
What’s Hot: “What’s on fire are new builds. You can’t get enough of new builds. They are getting north of $500 to $700 and $800 per square foot,” says Aazami. Penthouses like those at the Ritz-Carlton and Mountain Shadows are getting over $1,000 per square foot. At $1,100 per square foot, a unit at Mountain Shadows set a record for the region.
Highest-priced listing: Paradise Valley has the region’s highest with a $29.5 million estate on 11.48 acres, available as a pocket listing through Walt Danley Realty. Also notable is a $13.6 million estate with a guesthouse in the hills north of Santa Fe.
New Development of Note: The Residences at the Ritz-Carlton Dove Mountain in Tucson, which combine resort amenities and service with exceptional architecture.
Design Trends — The Southwest
For architectural influences, it’s all about Contemporary in the Mountain West and the Southwest, from a soft California Contemporary to Postmodern and Mid-Century. Even more traditional homes are changing. In certain locations, a Santa Barbara style or a Colonial or a Mission style might remain popular, according to Tony Sutton, president and owner of Est Est Inc., in Scottsdale, but they are still manipulated by Contemporary influences.
“If you bring in a more Contemporary element to a Traditional or a Transitional design, you will get an eclectic twist. It helps give it more intrigue and excitement.” Grey tones and neutrals still predominate, but expect an infusion of color — greens, blues and aubergine. Indoor-outdoor synergy is key, with main living spaces often oriented around patios and pools.
The real estate landscape in this region is as varied as the geography. For the last couple of years, Denver has been one of the strongest markets in the country; and, like many hot markets, the story here is a lack of inventory. In a recent RE/MAX housing report, Denver and Seattle tied for the fewest homes on the market, with less than a month and a half of supply. Experts such as Anne Miller, director, brand marketing for RE/MAX, say availability will continue to be an issue.
“Smashing” might best describe recent sales in mountain resorts, where transactions in both Vail and Aspen crushed existing price records. Overall, Telluride broker George Harvey, who is also NAR’s 2017 vice president for the region, says, “All the mountain resorts have recovered nicely.” For many, the 2016 story was keeping pace, while Vail saw overall sales increase by 9.5 percent. The highest price for a single-family property in Vail was $17.6 million, which was eclipsed in January 2017 by the $23 million sale of Vail’s most treasured estate. Another record was a new high price per square foot in Lionshead. Just in the first month of 2017, the Stockton Group at LIV Sotheby’s International had $60 million worth of property under contract.
In the first half of 2016, sales plunged in Aspen, but recouped some by year end. Still, the fourth quarter saw a new record price per square foot of $5,427, with the sale of a $16 million penthouse in the new Mountainside building at Dancing Bear Aspen. The same building accounted for $40 million in transactions in the last quarter.
Highest-Priced Listing: Elk Mountain Lodge, an $80 million compound in West Aspen.
On the Radar: Foreign buyers (or the lack of them), residence clubs and new construction in Snowmass.
Denver, Colorado: New master-planned development RidgeGate is generating lots of interest and also is a good indication that Millennial families are looking outside of urban centers. This is only one of a number of large communities underway in the Denver area.
Park City, Utah: Now that Vail Resorts owns both Park City Resort and the Canyons Resort, more than a few cranes are in evidence with new builds underway (some previously approved) at the Canyons. Apex Residences will be located at the highest point in the Canyons Village. Deer Valley also plans to expand on the east and south sides overlooking the Heber Valley. Look for new everything — terrain, lifts, and exclusive communities.
Aspen, Colorado: More than Dancing Bear Aspen is happening here. Another new development, One Aspen, named after historic Lift One (once the longest ski lift on the planet), is located at the base on the west side, which is often described as Aspen’s best-kept secret. Prices begin at $12.1 million, and almost half have already sold.