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By Robert Pratt | Broker in Chicago, IL

Sales of Luxury Homes Up, South Side Growing Slow

Montana Row, a luxury development spearheaded by local builders, Belgravia Group Ltd., is being constructed on the city’s north side in Lincoln Park. The development, which will feature three story rowhomes with Sub-Zero refrigerators, Wolf ovens and Bosch dishwashers, signals a trend in Chicagoland’s real estate market.

Luxury rentals are on the rebound, even though some Chicago neighborhoods are still in the earliest stages of recovery. There’s a pent-up demand in the more affluent areas of the city for new, luxury housing, and Montana Row is just the beginning of this demand being fulfilled.

The rebound in affluent areas is being driven by a housing supply shortage and a slowly improving economy, particularly in areas like West Loop and Lincoln Park. Even as a good portion of Chicagoland remains plagued by unemployment that surpasses the national average and a high rate of foreclosures, these neighborhoods are thriving.

Local developers began construction on 90 for-sale units of housing through September, and experts predict that number will jump to 150 by year’s end.

But as the gap between wealth and income continues to grow, so do the differences in the housing markets in wealthy versus working class neighborhoods.

On the south and west sides of the city, crime and high unemployment have kept the housing market down. With our local jobless rate around 8%, the people hardest hit are in the less well-to-do areas of the city. Foreclosure filings rose 59 percent in the first half of 2012 from a year earlier in West Pullman, and 24 percent in Englewood, according to the Woodstock institute.

But while things are turning around in better-off areas, Chicago’s condo market continues its recovery at a snail’s pace. After reaching a record high in the first quarter of 2007, condo prices fell 51% below their peak. Developers are confident that smaller, more specialized developments can help revive the city’s condo market, but only time will tell if those builder’s assumptions were correct.

We all know recovery is a process, and apparently it’s a process that occurs at different rates in different areas. Nonetheless, improvement continues across every facet of Chicago real estate.

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