While the pandemic dealt a blow to the overall economy in 2020, residential real estate held steady and the year ahead promises to be a strong one thanks to rock-bottom interest rates, a desire for more living space – including rooms with indoor/outdoor connectivity – and renewed interest in home improvement projects.

“As we all found ourselves spending more time at home this year, the market for new homes and even secondary residences exploded, and we expect that to continue in 2021 as priorities change in response to COVID-19,” said Steve Baird, president and CEO of Baird & Warner, Illinois’ largest family-owned independent real estate services company. “Many buyers aren’t waiting for a return to normal; instead, they’re anticipating a new normal in which they live, work and entertain differently than ever before and view housing through that lens.”

“Although they may have missed the lowest of the low interest rates of 2020, borrowers will continue to benefit from a low-interest environment in 2021,” said Paul Lueken, CEO of Draper and Kramer Mortgage Corp. “Home sales will be strong because of the low rates and strengthening economy. With COVID-19 vaccines predicted to become widely available in the spring, expect mortgage interest rates to begin rising back to 4% starting at that time.”

Against the backdrop of uncertainty around a pandemic that has also created a renewed emphasis on the importance of “home,” here are some of the trends expected to impact residential real estate in 2021, according to leading Midwest experts.  

(NOTE: Scroll down for full write-ups. Click here for photos.) 

  1. Bringing the Indoors Out
  2. Cozy Color Comeback
  3. Shape-Shifting Spaces
  4. Fusion Solution
  5. Second-Home Surge
  6. Walkability for the Win  
  7. Permanent Pandemic Pivots

Bringing the Indoors Out

Whether they’re looking to lead a healthier lifestyle or simply wanting more space, homeowners are exploring how outdoor areas can function as a year-round extension of their home, no matter the climate.

As a result, designers are making the transition between indoor and outdoor seamless and creating new possibilities for how these areas can be used in 2021. “By combining indoor and outdoor living space, we are able to increase the perceived size of a home’s footprint while promoting a person’s physical and mental well-being, both of which are selling points in the eyes of today’s buyers,” said William Ramsey, principal in the Denver office of KTGY Architecture + Planning. As shown in the firm’s Chowa Concept House in the Summerlin community outside Las Vegas, indoor/outdoor connectivity can be established by using large swinging glass doors in the main living area.

Functionality and healthy living have become increasingly important in projects targeting first-time buyers, as younger generations are more aware of how the environment affects their wellness, noted Mary Cook, founder and president of commercial interior design firm Mary Cook Associates. “As such, this group is taking everything outside. They want a space for al fresco dining and watching TV, plus an open-air office with Wi-Fi capabilities and Zoom-friendly backgrounds. Because of that, there will be a more critical eye on ensuring outdoor spaces have sufficient shade structures and protection from the elements, lighting at night, heating features for cooler months and thoughtfully placed outlets near seating and work areas as we adapt outdoor spaces to be usable year-round for multiple functions.”

Condo buildings are seeing not only a trend toward bigger balconies and terraces, but also more sophisticated outdoor materials, according to My-Nga Lam, design principal with architecture firm Lucien Lagrange Studio. “In addition to stepping up the size of outdoor spaces, we’re also improving their connection to the interior with sliding doors or NanaWalls that fully open to indoor living areas,” she said. “Shared outdoor amenities are also becoming more privatized, especially at properties where residents want more seclusion. These new ‘private’ outdoor spaces go beyond your typical seating areas separated by planters or landscaping; instead, they’re designed to be outdoor ‘rooms’ that may be equipped with a cooler, grill and TV for entertaining.”

Elissa Morgante, co-founder and principal of Morgante Wilson Architects, adds that the high quality of weather-resistant furnishings and materials available today only heightens the indoor feel of outdoor spaces. “This is not your grandmother’s wicker porch set,” she said. “The variety of styles and materials to choose from are not only chic, but also incredibly comfortable, so it will become more common to see a terrace or patio that’s as thoughtfully furnished as a family room. Knowing how much our clients use their outdoor spaces – especially now – we also love to round out the room-like feel of a patio, terrace or porch with elements like lighting, area rugs, accessories and even outdoor fireplaces in some projects.”

Cozy Color Comeback

Move over, white kitchens. Light colors and warm tones such as those recently introduced in the BEHR® Color Trends 2021 Palette have become go-to choices in all types of finishes and materials, particularly as homeowners prioritize coziness and comfort after months at home.

“At our townhome and single-family home communities alike, we’re definitely seeing buyers gravitate toward light wood finishes such as white oak for flooring, lighter shades of cabinetry and even wallpaper that emulates the look of wood,” said Denise Benach, director of interior design at Lexington Homes. “Perhaps the biggest shift of all is buyers moving away from the ever-popular all-white kitchen to earthy wood grains that contrast against painted finishes in deeper shades. These natural, softer elements provide an ideal setting for the current nesting trend known as ‘cottagecore’ that celebrates a calming aesthetic with tranquil, relaxing colors and cozy, textured fabrics.”

High-end condominiums also are infusing more warmth into finish packages, mixing subtle tones with rich neutrals for style and drama that creates a backdrop for buyers’ individual aesthetics. At Parkline Chicago, a luxury tower in Chicago’s Loop with 24 condominium homes and 190 apartments, two of the most popular color palettes include “Scandinavian Warmth,” which features light, welcoming wood tones, and “Chicago Modern,” which includes elegant, calming shades of gray-brown. “Natural, inviting tones in a range of hues feel ‘of the moment’ and are what buyers are gravitating toward in lieu of cool grays,” noted Thomas Roszak, FAIA, president of Parkline developer Moceri + Roszak.

Even stone – from countertops and backsplashes to shower enclosures – is being used to create a more soothing aesthetic. Polished Carrara marble in earthy cream and bronze tones has become an on-trend choice in both common areas and individual residences across many newly developed multifamily communities, according to Sandya Dandamudi, principal of GI Stone.

“High-end condominium developers have definitely increased their use of stone, as it’s a durable, easy-to-maintain material that can also be extremely sophisticated, adding both interest and texture,” said Dandamudi. “Single-family homeowners are also using stone in their décor to create a natural look that moves away from the all-white aesthetic popular in recent years.”

Shape-Shifting Spaces

Flexibility has long been a tenet of good home design, and the ability of spaces to serve multiple functions is especially sought after with “home” now being synonymous with “work” and “school.”

“A well-designed home has the resiliency to adapt with changing needs, whether due to a global pandemic or simply a lifestyle shift such as children reaching a new stage,” said Elissa Morgante, co-founder of Morgante Wilson Architects. “It’s impossible to anticipate every change, so we infuse the homes we design with features that allow for that adaptability – from a kitchen with ample built-in seating and expansive islands to serve as a catchall for remote work, e-learning and, of course, family meals, to small touches like pocket or folding doors that allow rooms to be closed off from an open plan and used for a specific purpose.” 

Homebuilder Lexington Homes remembers when it was a luxury if a home had one bonus room. Now, buyers want multiple flex spaces, which is why the builder’s new Lexington Trace townhome community in Warrenville, Ill., offers floor plans with lofts, finished lower levels and dedicated offices. “Buyers value having the ability to reimagine how a space can be used without taking on a renovation,” said Jeff Benach, president of Lexington Homes. “Right now, a loft can serve as an office or classroom during the day and then used as a reading nook or TV lounge later. Meanwhile, finished lower levels afford more privacy, which is often preferred when multiple people are working from home. When that use is no longer needed, it can easily be converted into an exercise room or home theater.”

Chameleon-like spaces that serve multiple functions throughout the day are in high demand at condo properties, too. “Even in larger floor plans, there’s a desire for flexibility,” said Liz Brooks, executive vice president of marketing and sales for developer Belgravia Group. “‘Modified’ open floor plans like the ones we offer at Triangle Square in Chicago’s East Bucktown neighborhood include a bonus area where residents can focus on specific tasks while still being connected to the rest of the home.”

Other lifestyle factors will also be driving the high demand for double- or triple-duty spaces in 2021, such as the rising number of multigenerational households. “Even before the pandemic, we were seeing an increase in young adults saving money on rent by moving back to their parents’ home, as well as adult children taking in older relatives who need care,” said Mary Cook, founder and president of commercial interior design firm Mary Cook Associates. “What’s interesting is that many of the same features that work well for creating privacy for Zoom calls or online coursework – for example, sliding doors and partitions – also are helpful in multigenerational homes where each generation needs and wants its own space, as well as open common areas where the whole family can gather.”

Fusion Solution

Putting a fresh spin on the ”rent vs. buy” debate, a new crop of residential communities opening in 2021 and beyond are offering both luxury rental and for-sale residences in a single development – a hybrid model that benefits both buyers and renters.

For example, at Parkline Chicago, a 26-story luxury tower in Chicago’s Loop with 24 sky-level condominium homes above 190 apartments, renters and owners will have their own separate lobbies and elevator banks, while amenities and services, including a doorman and concierge, will be shared by all residents. “With the hybrid tower model, buyers have the ability to purchase units on higher floors with better views – in the case of Parkline, overlooking Millennium Park – while enjoying access to a robust suite of amenities that couldn’t be offered in a smaller condo-only building due to the long-term costs of managing and maintaining those amenities,” said Thomas Roszak, FAIA, partner of Moceri + Roszak, which is developing Parkline.

Also featuring a hybrid design is One Bennett Park, a 70-story residential tower developed by Related Midwest and designed by world-renowned Robert A.M. Stern Architects that includes 69 condominiums atop 279 apartments in Chicago’s Streeterville neighborhood. While owners enjoy their own exclusive suite of amenities on the 41st floor, they share access with renters to Bennett Park, an adjacent 2-acre green space, along with a 10,000-square-foot recreational sun deck, multiple entertainment suites and lounge areas, and a children’s play suite overlooking the park. “With this hybrid model, we’re able to offer the best of urban living – an architecturally significant and amenity-rich building in a highly walkable neighborhood – to renters and owners alike,” said Nick Millot, vice president of development at Related Midwest. “And for those choosing to rent and considering an eventual home purchase, it offers an opportunity to test drive the building and neighborhood and find options right upstairs.”

Another form of hybrid design places condos and apartments in separate towers, with owners given access to amenities in both buildings. In Chicago’s Lakeshore East neighborhood, partners Lendlease and Magellan Development Group are developing Cirrus, a 350-unit condominium tower, alongside Cascade, a 503-unit apartment building, and Cascade Park, an adjacent green space that provides an activated connection to the lakefront and Chicago Riverwalk. Residents of Cirrus have access to more than 48,000 square feet of amenity space in their own tower, an outdoor pool and 41st-level amenity deck overlooking Lake Michigan, plus additional offerings at Cascade. These shared amenities include an indoor lap pool, heat therapy pool and splash pad; children’s playroom; fitness center with adjacent yoga/spin studio, HIIT training area and locker rooms; massage and steam rooms; game room with golf simulator and billiards; screening room; shop space; music room; multi-purpose community room; dog-washing station; and indoor dog run.

“These expanded offerings are a real differentiator in the market because we’re essentially able to offer buyers dual amenity suites for the price of one,” said Ted Weldon, executive general manager of development for Lendlease’s Chicago office. “It’s a selling point for everyone, but especially first-time purchasers who have grown accustomed to that lifestyle as renters, as well as pied-a-terre buyers who view the space as an extension of their home.” 

Second-Home Surge

As the quarantine lifestyle has led many homeowners to reevaluate how and where they live, expect continued momentum for second-home purchases in the year ahead.

“Fueled in large part by work-from-home capabilities, the second-home market skyrocketed in 2020 and we don’t see activity slowing anytime soon,” said David Wolf, president and CEO of Wolf Development Strategies, a premier full-service development advisory, marketing and sales firm for residential developments. “In fact, some buyers are contemplating not just second-, but also third-home purchases.”

Wolf noted that in these cases, buyers want homes that offer very different activities and experiences from each other – if one residence has access to the beach, then another may be near the mountains. “We’re not even calling them vacation homes anymore, as most people are still working or e-learning; they’re just doing it in different surroundings,” he added. “And because the demand for secondary homes increased so quickly, existing inventory is pretty low. That won’t be the case in 2021 as developers are moving quickly to offer new-construction options in a variety of desirable locations, especially those that have flown under the radar until now, like Utah, Montana, Wyoming and Tennessee.”One new development that continues to benefit from second-home sales is Optima Kierland Center in north Scottsdale, Ariz., where more than one-third of buyers at 7180 Optima Kierland purchased residences as second homes. This was a 35% increase from buyers who purchased second-home condos at the development’s first condominium tower, 7120 Optima Kierland.

“We saw a large contingent of California residents as well as buyers from the Midwest and several other markets make 7180 Optima Kierland their second home in 2020, and they all had one thing in common: they wanted an amenity-rich, maintenance-free home,” said David Hovey Jr., president and principal architect of Optima, Inc. “Our buyers seek the lock-and-leave lifestyle that allows them to enjoy our 5-star, resort-style amenities throughout the building and walk across the street to Kierland Commons and Scottsdale Quarter, two world-class outdoor pedestrian malls. There was definitely more urgency in their decision to buy than in previous years – something we think will continue in 2021.” 

Walkability for the Win

Even though homebuyers’ wish lists look different now than before the pandemic, walkability is still coveted and perhaps even more of a priority going forward. As more people return to workplaces and classrooms, the expectation is a walkable commute will have more appeal than riding public transit or sitting in traffic.

According to Ben Creamer, founder and managing broker of Downtown Realty Company, a full-service brokerage specializing in luxury housing in Chicago, today’s urban buyer wants to be a 15-minute walk from work and essential businesses like grocery stores, pharmacies and restaurants. This is a change from previous years, when a 15-minute ride was acceptable.

“In 2020, many of our relied-upon social norms were disrupted, which only emphasized the importance of living in amenity-rich neighborhoods,” said Creamer. “There are countless benefits to residing in a place that satisfies all of one’s mental, physical and social needs. And urban neighborhoods are nearly unparalleled in their ability to check all of those boxes.”

David Wolf, president and CEO of Wolf Development Strategies, a premier full-service development advisory, marketing and sales firm for residential developments, agrees that a prime, walkable location will likely carry more weight with buyers in 2021. “Buyers aren’t just purchasing a home – they’re investing in a community,” Wolf said. “Access to neighborhood assets is just as critical to a development’s success as its on-site amenities, and in many cases, those external benefits are even stronger. We recently worked with buyers who purchased adjacent units in a building across the street from the park where their dogs met and play together. The influence the dogs and park had on their purchase cannot be understated.”

One developer quadrupling down on walkability in 2021 is Belgravia Group. “We have four active developments in three distinct locations, but all share one common element: walkability,” said Liz Brooks, executive vice president of Belgravia Group. “We’ve found that regardless of what is happening in the world around us, buyers crave a walkable lifestyle, not just for the convenience, but also for its ability to keep people connected to the community around them.”

That’s certainly the case at CA6 West Loop, Belgravia’s new 72-unit condominium building with family-friendly plans that not only will put residents in proximity to the abundant restaurants and retail of Chicago’s popular West Loop – including a Target less than a block away – but also three of the city’s most prestigious schools.

Walkability will also be a top selling point of Lendlease’s new development in Chicago’s Lakeshore East neighborhood, along the Lake Michigan shoreline in the heart of downtown. The international property and investments group, along with partner Magellan Development Group, is currently building Cirrus, a 350-unit condominium tower, alongside Cascade, a 503-unit apartment high-rise, on one of the last parcels of land in this highly sought-after neighborhood, which is more like a self-sufficient village with its own grocery store, restaurants and other service-oriented retail.

“In addition to enjoying the luxuries and conveniences of the city’s bustling 24/7 lifestyle, buyers also want immediate access to green space,” said Ted Weldon, executive general manager of development for Lendlease’s Chicago office. “Cirrus is one of those rare projects that delivers on all fronts, as Cascade Park, a public green space we are developing adjacent to the tower, will give residents and neighbors an activated connection to the lakefront and Chicago Riverwalk.”

Permanent Pandemic Pivots

There’s no doubt COVID-19 has impacted nearly every facet of life, and in residential real estate, that includes everything from homebuyer preferences to how properties are designed, marketed and sold. While some changes were short-term pivots born out of necessity, others will be long-lasting due to the efficiencies they provide.

“Many of our multifamily developer clients anticipate work-from-home will continue indefinitely in some form, so they’re asking us to incorporate dedicated workspaces into floor plans,” said My-Nga Lam, design principal with architecture firm Lucien Lagrange Studio. “While they don’t want to design specifically for COVID-19, they also realize the value of designs that not only function well during a pandemic, but also have broader long-term appeal. That could mean making outdoor spaces or overall unit sizes larger, or creating amenity spaces that can be partitioned into private areas but also revert to the open, social spaces that have been so popular in condo and rental buildings over the last 10 to 15 years.”

Health and wellness will also continue to be a focus of residential design in the coming year as developers opt for materials with antimicrobial properties and ventilation systems that improve air quality. “Whereas before homebuyers tended to focus more on aesthetics, today they’re taking a look under the hood to understand how a building’s design – all the way down to its mechanics – promotes overall health and well-being,” said Jonathan Boriack, associate principal in the Oakland, Calif., office of KTGY Architecture + Planning.

Meanwhile, many of the new practices put into place for the homebuying process itself will become a regular part of business in 2021 and beyond. One example is the “curbside closing” approach Chicago-based title insurance firm Proper Title, LLC introduced during the early days of social distancing, allowing buyers to remain in their vehicles as paperwork is completed. And in instances where remote online notarizations are permitted, all documents can be signed remotely. “Curbside and no-touch closings are definitely here to stay,” said Kathy J. Kwak, executive vice president of operations and counsel for Proper Title, LLC. “Virtual options reduce travel times and scheduling challenges that surrounded the closing process before the pandemic, which makes the entire process faster – something everyone likes.”

Laura Ellis, president of residential sales and executive vice president of Baird & Warner, Illinois’ largest family-owned independent real estate services company, noted that while the world health crisis altered the ways people buy and sell homes and access financing, the tried-and-true fundamentals are more important than ever.

“Today, we have all of this technology at our fingertips, and its value is clear when it becomes essential to day-to-day operations, but we also understand that real estate is a people business at its heart,” Ellis said. “Just as there are advantages to touring a property in person instead of virtually, there is extreme value in face-to-face interaction among the various parties involved in a home sale. This was especially true in 2020, which saw a very complex and intense housing market. Buyers and sellers alike needed the empathy and understanding that only comes with a human connection. Going forward, the key will be striking a balance between efficiency and service as we help clients navigate a process that continues to evolve but remains fundamentally unchanged by the pandemic.”      

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For more information or to schedule an interview, contact Kim Manning, kmanning@taylorjohnson.com, (312) 267-4527, or Abe Tekippe, atekippe@taylorjohnson.com, (312) 267-4528.

Photos:

A Flickr album of images to accompany this release can be viewed here.