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Midwest Experts Share 6 Trends Shaping Residential Real Estate in 2017

February 1, 2017

After years of sitting on the sidelines, first-time buyers began making moves last year, setting the stage for an even more active 2017 as anticipated interest rate increases and steady job creation continue to fuel demand.

How will the election impact the housing market, and what trends will shape home construction and design in 2017? The Midwest’s leading residential real estate experts recently offered their predictions for the year ahead. (Note: please see trend headlines below, then scroll down for full write-ups and click here for photos):

  • Market Insight/Sales Predictions
  • Drone Wars
  • Island Fever
  • Sliding Options Open The Door To Flexibility
  • Attached Living for the Long Term
  • Outdoor Spaces In Demand

1) Market Insight/Sales Predictions: “Cautious optimism” is the sentiment shared by residential real estate experts heading into 2017, despite uncertainty about what policies the new administration will enact and how markets will respond. “The dust has settled, so to speak, and people are ready to move on – and move in,” said Steve Baird, CEO and president of Baird & Warner, Chicagoland’s largest locally owned independent residential real estate services company. “We saw an immediate increase in activity after the election, and that’s a reflection of consumer confidence.”

Most Chicago neighborhoods, especially those near public transit, will continue to see high activity thanks to first-time homebuyers in search of lower prices in areas that were not previously on their radar, such as Pilsen and the Ukrainian Village. “Millennials made up an estimated 50 percent of U.S. home transactions in 2016, and that number is likely to grow this year as they begin to start families and enjoy better job security,” said Baird.

The Federal Reserve’s decision to raise interest rates in December for just the second time in a decade is another positive sign, said Craig Achtzehn, vice president of residential lending for Draper and Kramer Mortgage Corp. “Rates will be a little higher for homebuyers, but the economy is also stronger,” said Achtzehn, noting that while homebuyers can expect the same minimum requirements when applying for a mortgage, new technologies will make the process easier. “We’re also already seeing the pendulum swing back the other direction on approvals, with government agencies and mortgage insurance companies allowing higher loan-to-value ratios, which is good news for buyers.”

Expect 2017 to be just as robust of a flipping market as 2016, if not more so, noted Eric Workman, vice president of marketing at residential real estate lender Renovo Financial, which saw its revenue double between 2015 and 2016. “As long as Chicago’s job market continues to stay strong, there should be a lot of transactions from both the professional flippers as well as those wanting to enter the market,” said Workman. “One segment where we’re seeing more interest in 2017 is for loans on high-end new-construction and luxury flips. And look for continued activity in neighborhoods like Woodlawn and Bronzeville where residential is following new commercial projects.”

Patrick Ryan, senior vice president and managing broker of Chicago-based Related Realty, expects to see smarter buyers who are prepared to negotiate due to tight inventory. “Buyers can easily access the latest sales data on cities, neighborhoods and even streets,” said Ryan. “While they need a broker’s expertise to interpret

2) Drone Wars: In addition to having more data at their fingertips in 2017, buyers will also have access to new real estate technologies. The use of drones in real estate took off in 2016 and should reach new heights this year. This is especially true for the newest cycle of luxury towers under development, for which virtual reality (VR) technology has become an indispensable sales tool, allowing buyers to see what their views will be before construction is complete. For example, Belgravia Group used a drone to capture multiple views from floors five to 17 of its Renelle on the River luxury condominium building in downtown Chicago that will deliver in 2018.

“When a building is early in its development process, anything we can do to bring it to life and make it tangible for buyers is a benefit for them and us,” said Liz Brooks, vice president of sales and marketing for Belgravia Group. “Buyers are more confident knowing exactly what they’ll see from their living room or bedroom at Renelle on the River – there’s no guesswork involved.”

Developer Related Midwest is also using VR to generate excitement about One Bennett Park, its 70-story ultra-luxury condominium and rental tower under construction in Chicago’s Streeterville neighborhood. Using a branded viewer and their smartphone, prospective buyers can see a series of aerial images – all photographed by drone – that have been stitched into a panorama to showcase 360-degree views from each of 26 condominium levels, located on floors 41 through 66.

“We’ve always sought to empower buyers by giving them tools and technologies designed to make their real estate decisions easier,” said Curt Bailey, president of Related Midwest. “VR allows them to visualize what it will be like to look out the window of their residence when the tower is complete. It’s an amazing experience – one that best conveys how expansive and spectacular the city and lake views will be from this building.”

Because drones can easily put a real estate community in perspective, look for developers to increasingly use them as a means of showcasing the size and scope of master-planned communities that span several acres.

“Well-executed drone footage is an incredible marketing tool for us,” said Tammy Barry, director of sales and marketing for Heritage Harbor Ottawa Resort, a marina resort community in Illinois’ Starved Rock Country region. “There’s so much to do at the community that a drone video is truly the best way to capture it all. We’re able to give a bird’s-eye view of everything from our pocket neighborhoods and on-site amenities to our harbor and setting on the Illinois River. We’re also able to showcase our proximity to nearby attractions like Starved Rock State Park and downtown Ottawa.”

3) Island Fever: Long considered the workhorse of any kitchen, islands are becoming not just more flexible and spacious in 2017, but also a destination within the home. According to Edward R. James Companies, while the kitchen is the main topic of discussion with homebuyers, it’s the island that gets the most attention. “A standard-size island is not enough for most of today’s new-home buyers; they want it to accommodate multiple serving locations and plenty of seating,” said Jennifar Evans, director of design at Edward R. James Companies. “And size matters, as many homebuyers want an island that is at least 8 feet long and 5 feet wide, which we joke is more like a continent than an island.”

But kitchen islands aren’t only changing in size – they’re also changing in configuration. Elissa Morgante, co-principal of Morgante Wilson Architects, says “spectator” kitchen islands, with the range as the focal point, are growing in popularity among serious at-home chefs. “People who love to cook want to put as much emphasis on the preparation of the meal as they do the enjoyment of the end result,” she said. “Putting the range in the island, with seating all around it and great lighting and ventilation overhead, makes cooking an event – whether they’re entertaining guests or simply making dinner for their family.”

An expansive center island is just as important to high-end condominium owners as single-family dwellers. “We have buyers who are downsizing from single-family living and they’re not willing to give up that essential design element,” says Liz Brooks, vice president of sales and marketing for Belgravia Group. “Plus, in many of our buildings, the views from the kitchens are magnificent, so the islands are a great spot for gazing out on the surrounding cityscape.”

And it’s not just homebuyers focused on kitchen islands. In luxury rental buildings like 73 East Lake, a 332-unit tower in downtown Chicago, select units feature a movable center island that provides valuable workspace and storage when needed. “Mobile islands offer the same functionality yet allow for a more flexible, open layout, which is especially appealing in smaller units,” said Diana Pittro, executive vice president for Chicago-based RMK Management, which manages 73 East Lake.

4) Sliding Options Open The Door To Flexibility: With their numerous practical applications and unique design aesthetic, interior sliding doors – from space-saving pocket doors to stylish barn doors and wall partitions – are becoming a must-have feature in 2017 whether they’re in a single-family home, apartment or condominium.

“Barn doors are more popular than ever because they’re such a great complement to the open floor plans almost all homeowners want today,” said Elissa Morgante, co-principal of Morgante Wilson Architects. “We use them to give our clients the flexibility to open up large swaths of space between rooms for even better flow in the home, or to create privacy for certain areas when they want it, such as an intimate dining room, quiet library or home office.”

Homebuilders, too, are discovering the appeal of sliding doors. Jennifar Evans, director of design at Edward R. James Companies, notes an uptick in buyers choosing pocket door options at the builder’s Anets Woods community in Northbrook, Ill. “Pocket doors are a great choice in places where buyers don’t want traditional swing doors that can interrupt traffic flow or sight lines,” said Evans. “They’re ideal in highly used yet often compact spaces such as hallways.”

Lexington Homes has also recently started offering the option of barn doors in its townhomes at Lexington Square 4 in Chicago’s Bridgeport neighborhood. “We take pride in offering homes that feature the most in-demand design elements that create functional yet fashionable statements,” said Jeff Benach, principal of Lexington Homes.

And at Heritage Harbor Ottawa Resort, a vacation home community in Ottawa, Ill., barn and pocket doors are an ideal fit for “just right”-sized vacation properties inspired by seaside cottage living. “Many of our homes are intentionally designed to be smaller and easier to maintain, and these types of doors allow us to pack more function into less space,” said Tammy Barry, director of sales and marketing.

Similarly, multifamily developers prize sliding doors as a smart tool for maximizing space in smaller studio and convertible units such as those at 73 East Lake in downtown Chicago. “Residents love having this contemporary and space-saving feature built into their units,” said Diana Pittro, executive vice president at RMK Management, which manages the building. “With a modern combination of frosted glass and stainless steel, the doors infuse the entire residence with natural light while maintaining a level of privacy.”

5) Attached Living for the Long Term: Attached-home options such as townhomes and duplexes were once primarily thought of as short-term stepping stones for buyers on their way up to – or down from – a single-family home. But today, buyers are increasingly viewing attached living as a long-term housing option thanks to builders who are reimagining these homes as more than a cost-efficient alternative.

“There are many buyers for whom the convenient, maintenance-free lifestyle of an attached home is a huge selling point,” said Brian Hoffman, an executive with Red Seal Homes, which offers upscale semi-attached homes as large as 4,400 square feet at its Willow Lake community in Lake Forest, Ill. “We saw a real opportunity to introduce duplexes that offer the finishes and size of a luxury single-family home, but without the exterior upkeep and maintenance. Until now, this level of semi-attached housing was not readily available in sought-after suburbs like Lake Forest, making it an attractive option for a variety of buyers, including families and empty nesters, all of whom appreciate the flexibility and time savings afforded by professional landscaping and snow removal services.”

Jeff Benach, principal of Lexington Homes, noted his firm’s townhomes have long-term appeal for first-time buyers, many of whom have grown accustomed to high-end finishes as renters. “Today’s first-time buyers have more sophisticated tastes than past generations and, because many are purchasing homes later in life, they don’t want a basic entry-level home,” said Benach. “Our townhome communities like Park Ridge Reserve include many of the high-end features these buyers want, such as master suites with luxurious master baths, professionally designed chef’s kitchens and great rooms that combine elegance and functionality. The homes offer sprawling entertainment spaces while also serving as an affordable, new-construction alternative to single-family homes in the same area.”

6) Outdoor Spaces In Demand: Whether they’re in a high-rise residential tower or single-family home, outdoor living spaces have emerged as one of the most coveted features for buyers and renters, especially in cities where green spaces are few and far between. And while a simple patio or balcony can be transformed into an urban oasis, developers and homebuilders are taking outdoor living to new heights – in some cases, literally.

Lexington Homes offers buyers a trifecta of outdoor areas – a rooftop deck, fenced-in front yard and balcony off the kitchen – at its Lexington Square 4 and Lexington Shore rowhome communities in Chicago’s Bridgeport and Hyde Park neighborhoods. “Typically, rowhomes in the city may have one or two private outdoor spaces, but to have all three is practically unheard of,” said Jeff Benach, principal of Lexington Homes. “Outdoor spaces such as decks, balconies and patios are at the top of most buyers’ wish lists because they offer additional living space that can be easily adapted for multiple uses. They also add long-term value to the home because they’re something that never goes out of style.”

Outdoor spaces are also playing a pivotal role in attracting and retaining renters at some of Chicago’s newest apartment towers, said Mark Durakovic, principal of Kass Management Services. “Amenities like rooftop decks with grilling stations, fire pits, lounge areas and dog runs serve as an extension of individual residences, enhancing the livability of smaller studio and convertible units,” said Durakovic. “Whereas before these ‘extras’ were just that, today’s renters demand comfortable outdoor spaces – some private, others shared – where they can relax, socialize and entertain.”

The shift in focus to the outdoors reflects what’s happening indoors, too, according to Elissa Morgante, co-principal of Morgante Wilson Architects. “Many of our recent renovation projects have involved shifting walls and even moving elements like fireplaces so that sightlines to the outdoors are preserved and highlighted, while many of our new-construction projects feature huge expanses of glass overlooking rear yards and gardens,” Morgante said. “Plus, with materials like NanaWalls, which completely fold back to open a space to the exterior, we now have more ability than ever to blur that line between indoors and outdoors. We also love giving clients flexibility in their spaces, such as a screened porch with retractable floor-to-ceiling screens that can be opened up when weather permits.”

PHOTOS:       Click HERE to view photos and captions that accompany this release via Flickr.