The start of a new year is often a time of reflection, as well as a time of anticipation for the future. It?s no different for Chicago?s real estate professionals, many of whom have weathered the recession and are now optimistic about 2011. From the return of new construction to the creation of healthier homes, the following are 10 residential real estate trends they see for the coming year:
1.) Building is back: After three years of little to no new development, John Wozniak of Wheaton-based J. Lawrence Homes said the builder is excited about 2011. ?After a couple of very challenging years, the market for new-construction housing is showing signs of life. Slowly but surely, homes are selling and new properties are breaking ground, such as the two communities we opened this year in Lynwood and North Aurora,? he said. ?We?ve had encouraging sales and I believe they point to an uptick for 2011.?
Deerfield-based Meritus Homes also feels good about 2011. ?We are definitely encouraged about the coming year,? said Brian Brunhofer, president of Meritus Homes. ?In fact, that?s one reason we launched our company and our first community, Creekside at Inverness Ridge, in 2010. We wanted to be ready for 2011.?
Chicago-based LG Development, together with Hartshorne Plunkard Architecture, also broke ground on a new community in 2010 ? Row 2750, a luxury townhome development in Lincoln Park. And Chicago-based Lexington Homes will soon start sales for Lexington Station, a new townhome community in Morton Grove.
2.) Apartments continue to thrive: If there has been one bright spot over the past few years in the real estate industry, it has been the rental market. ?People have realized the many benefits of renting, from having more flexibility with your housing commitments to a higher level of finishes and amenities. And, this demand will continue to outpace supply,? said Steve Fifield, president of Fifield Cos. ?Appraisal Research reports that Chicago?s Class A downtown apartments are at a nearly 95 percent occupancy rate, and those numbers will continue to stay very strong for 2011.?
RMK Management Corp. president Tony Rossi, Sr., agrees. ?The demand for high-end apartments is certainly there and a great example is our River North building, Parc Huron, that we grand opened this fall. It was 30 percent leased before it was even ready to move into,? he said. ?We have other new rental properties in the works to meet the demand we predict will continue for years to come.?
3.) Opting for established: The mega-communities in the exurbs are a thing of the past, said Brian Brunhofer of Meritus Homes. Instead, 2011 will see builders move toward smaller neighborhoods or pockets of homes in established communities, like the 27 home sites his company is offering at Creekside at Inverness Ridge, a gated and maintenance-free community. ?Close-knit communities with respected homeowner associations, mature landscaping, and neighbors waiting to greet you ? that attractive quality of life is going to appeal to buyers much more in 2011.?
Seconding the movement toward established communities is Jeff Benach of Lexington Homes. ?Buyers are looking for a safer investment for their home purchase,? he said. ?We won?t see them roll the dice like in the past on a fast-growing town in a far-out suburb. They want a proven area with access to retail development and employment corridors. They don?t want to wait for the surrounding area to be built. They want everything already in place,? he said. Benach also added that buyers will look for builders with proven track records and may be leery of large, national homebuilders who typically focus on building large, suburban mega-communities. Rather, he says buyers will seek local companies with an expertise in infill development.
4.) Make it modern: Chalk it up to ?Mad Men? or simply a pendulum swing in taste, but either way transitional and warm-modern design will be prevalent in 2011, said Brian Goldberg, a partner in LG Development Group. ?Our clients are looking for a cleaner approach to the style of their homes ? more mid-century and less traditional with a warm and tailored aesthetic.? he said.
Ray Hartshorne, principal of Hartshorne Plunkard Architecture, agrees. ?From the single-family side, our clients are gravitating toward modern design instead of strictly traditional, that is simple, clean line exteriors and open floor plans that are comfortable for the family and versatile for entertaining,? he said. ?In the multi-family sector, now more than ever, we are seeing an interest in contemporary-themed and luxurious interior design for lobbies and common areas.?
5.) Buying for the long term: The census shows the average person moves about 11 times, but Jim Chittaro, president of Smykal Homes, predicts that number will slowly decrease. ?Thankfully, the idea of a home as a short-term moneymaker is essentially gone, so when people do buy, they?ll do it with the intention of staying put for closer to 10 years rather than two to three,? he said
This means people will be studying floor plans more closely, to ensure the home will grow with them, Chittaro continued. ?Buyers want to be sure the home will suit their needs not only now, but down the road whether they plan to expand their family or prepare for kids to leave the nest,? he said. ?Floor plans that can adapt to lifestyle changes with flexible features like second family rooms should do well in 2011.?
Brian Brunhofer agrees that more buyers will be looking for a home for the long haul. ?It?s not just floor plans that buyers are going over with a fine-tooth comb,? Brunhofer said. ?Our buyers are very careful about school districts. They want to know they can send all of their children to a school with a proven track record and not have to relocate a few years down the road to ensure a good education.?
The shift to long-term buyers will also put long-term builders in the spotlight. ?People are hesitant to buy a home from a builder or secure a mortgage from a lender they don't perceive to be well-established,? said Jeff Benach of Lexington Homes, a Chicago homebuilder since 1974 who has built more than 40,000 homes. ?Buyers want to know their builder is committed to them and the community, and that it?s not about making a quick buck or boosting a shareholder?s financial interest. That personal connection is really important.?
6.) Upping the ante on amenities: In 2011, developers will continue to create new and exciting amenities to differentiate their properties and keep them relevant in the marketplace, said Tony Rossi, president of RMK Management Corp. ?With more than 20 apartment communities in our management portfolio, we have found our eclectic amenity packages to be one of the biggest draws for our renters,? he said. ?Renters are looking for something special, like an outdoor grilling area or special events like dance lessons. At our newest property, Parc Huron, we?re receiving positive feedback on new amenities like the wine storage room, aqua spa, and meditation area.?
According to Steven Fifield of Fifield Cos., successful apartment buildings in 2011 will go that extra mile to keep renters engaged and excited about their residence. ?One way we plan to do this at our new Alta at K Station apartment complex is through the K2 Club amenity floor,? said Fifield. K2 includes Chicago?s first-ever, full-court indoor sports court in an apartment building; a resident lounge; party suite with private balcony, outdoor seating and grill; business center with Macs and PCs; 23-seat home theater; men's and women's locker rooms with saunas; and two state-of-the-art workout areas. Outdoor amenities are important to residents, too, said Fifield, which is why K2 also features a sun terrace with an 80-foot Olympic-sized pool, outdoor spa, private cabanas, gourmet grill kitchen and gas fire pit.
But it?s not just enhanced outdoor spaces in apartments that will matter in 2011. Jeff Benach thinks condo and townhome buyers will also place a higher importance on outdoor space in the coming year, especially those who live in an urban setting. ?People may realize they don?t need to live with as much square footage inside their home, so to compensate they?ll want a place to call their own outside their home,? said Benach. ?The private rooftop decks at our Lexington Square townhomes in Bridgeport provide great outdoor space for city dwellers and definitely become an added benefit compared to other homes in the area that don?t have this type of space.?
7.) High-tech takes over: Running your home entertainment system, appliances and lighting from a centralized control panel is old news. Going forward, we?ll see more homeowners want a smart phone app that can control their residence remotely, noted Brian Goldberg. ?Each year, the demand increases for home technology that makes homeowners? lives easier,? he said. ?We?ll get to a point, and some of our clients are almost there, where homeowners can leave work and by activating an app on their phone have all of their home electronics queued up when they walk in the door ? the oven is preheated, lights come on and a TV show turns on when motion sensors recognize they?ve walked into the room. It may sound like a movie, but some of this technology we can build into homes now.?
8.) Smaller homes stay the course: The average size of a new home decreased for the first time in decades from 2008 to 2009, and that trend will continue into 2011, said Jeff Benach. ?This trend is fueled by first-time buyers with smaller budgets, requiring smaller homes,? he said. ?New buyers will have to be more conservative with their mortgages and will need to pay a higher percentage for a down payment, which means they?ll need a home with a smaller price,? he said. ?People won?t be buying more than they need. So to meet their needs, we?ll see builders continue to trim the size of their homes and look for new ways to make square footage work harder.?
John Wozniak agrees that smaller homes will remain a trend for 2011. ?We have introduced several homes at our suburban Chicago communities measuring around 2,000 square feet or less ? with a smaller price tag to match ? because that?s what buyers will want and can afford in the coming year,? he said. ?Buyers only want to pay for rooms they use on a consistent basis, so our plans are following their needs.?
9.) Green and gorgeous: As the green movement continues to grow, high-end builders and developers have found ways to make homes both green and gorgeous. ?The old mind set was that a green home couldn?t also be stylish and sophisticated. It was as if the two concepts were mutually exclusive,? said Ray Hartshorne. ?But new products and forward-thinking design have proved that today?s homeowners can have both. Also, building a green home doesn?t have to break the bank. We are constantly being introduced to attractive, sustainable building materials that are more cost effective than in the past.?
Steven Fifield agrees that energy efficiency and cutting-edge style can ? and do ? co-exist. ?Going forward, we have committed to only building apartment and office towers that incorporate energy-efficient materials and technology,? he said. ?As we?ve seen with Alta at K Station, which is poised to be Gold LEED, renters feel better about living in a green building, so we?re going to give it to them with a stylish design and high-end finishes. More importantly, it?s about being environmentally responsible.?
10.) Healthy homes: When you consider a study by the National Institutes of Health that found the number of people with allergies is as much as five times higher than 30 years ago, the trend toward building homes with a healthier environment will also gain ground in 2011, said Brian Goldberg. ?Indoor air quality, low VOC paints and adhesives, and all-around healthier materials are becoming more and more of a concern for people building homes ? especially for those with children,? he said.
Rick Croce, from Wheaton-based Smykal Renovations, said this trend applies to existing homes, too. ?Due to the economy, many people have decided to stay put in their existing home, which means they?ll be investing in changes to make it look better and live healthier,? he said. ?We expect to be pricing out more jobs that include installing HVAC systems with better filtration, using low-VOC materials and even replacing old doors and windows to safeguard against exterior pollutants.?
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