Unveiling the Resilience of Chicago’s Luxury Single Family Home Market
As the winds of change swept through Chicago’s most prominent zip codes in 2023, a tale of resilience unfolded within the luxury single-family home real estate market. Despite a notable dip in MILLIONEUM ALLURE SCORES℠, which serve as a barometer of an area’s allure based on million-dollar-plus home sales, the underlying currents point to a market that’s not only weathering storms but poised for continued growth.
Headline Numbers Don’t Tell the Whole Story
Data shows a decrease in MILLIONEUM ALLURE SCORES℠ for areas like Lincoln Park (60614), Lakeview (60657), and Ukrainian Village (60622) – all established luxury enclaves, plunging by up to 53% compared to the previous year. This might suggest a decline in luxury market vibrancy on the surface.
Million-Dollar Allure on the Rise
However, the story doesn’t end there. MILLIONEUM ALLURE SCORES℠ Weights, a separate metric, paint a different picture. These weights specifically measure the contribution of million-dollar and above single-family homes to a neighborhood’s attractiveness. Interestingly, the MILLIONEUM ALLURE SCORES℠ Weights for these same zip codes have increased to record highs in 2022- 2023. This suggests that while the volume of high-value home sales may have fluctuated, their impact on neighborhood desirability soared.
Analyzing the driving forces behind this shift uncovers a compelling insight: M2 money supply emerges as the primary catalyst, overshadowing the influence of high 10-year treasury yields. Interestingly, this surge in demand for million-dollar homes in Chicago comes despite a significant rise (90% to 200%) in 10-year treasury yield between 2018-2019 and 2022-2023. Traditionally, rising treasury yields can dampen demand for real estate. By studying historical M2 movement and analyzing the data, we found that the M2 money supply in 2023 is more representative of what we’d expect to see in years 2026-2027. This abundance of money appears to be a stronger influence on the luxury real estate market in Chicago than treasury yields at this time.
Consider the trajectory from 2010 to 2023: while fluctuations occurred, the overarching trend is unmistakable. Despite occasional dips and peaks, the dollar amount of million-dollar-plus single-family home sales steadily climbed, mirroring the trajectory of M2 money supply. This correlation highlights the symbiotic relationship between liquidity and luxury real estate transactions, where ample capital fuels demand and propels market resilience.
This analysis of Chicago’s luxury single-family home market reveals a complex interplay between headline statistics and underlying trends. While metrics like MILLIONEUM ALLURE SCORES℠ suggest a decline, a focus on their Weights paints a different picture. Furthermore, M2 money supply appears to be a more significant driver of demand than previously thought. These findings suggest a market with the potential to maintain its current position, if not experience a future uptick.