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Inventory, Luxury Demand, and the Future of Real Estate with Paula Avenaim of Baird & Warner 8-10-26
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Paula Avanam
this
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Scott Becker
is Scott Becker with the Becker Business and Becker Private Equity Podcast. Thrilled today to be joined by a brilliant realtor and entrepreneur. We're joined today by Paula Avanam. And Paul works both in Florida and in, in the greater Chicago area and has built this amazing following in great practice. Paula, take a moment and introduce yourself and tell us about your business and then we'll talk about trends you're watching in real estate. Is there enough inventory? What do you sing? And a lot more.
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Paula Avanam
Well, thank you for having me. And I'm Paula Avenum. I am with Bearden Warner in the Highland park office. Most of my book of business is in the North Shore, but I also do have quite a bit in Chicago. I've sold and have clients buying in the past and actually coming up soon in condos in, in downtown Chicago, single family homes in Lincoln Park. So I do tap into other areas, not so much west but definitely basically from downtown Chicago all the way up to Lake Gurney or Lake Forest. So that's been exciting. And I, and I've been fortunate enough to work with so many clients and help them in their biggest move of their lives, whether it's moving out or moving in. And yeah, I am watching. I mean it's really, it's really amazing. I actually had a call with quite a few people today about the housing market. Just different things with different brokerages and having an event. So we were talking about different, I was talking to different agents in different brokerages in my managing broker and I spoke first this morning and, and I just confirming, you know, that this has been typically my business is very consistent throughout the year with this low and lull in August for sure. It's just quiet in August. Kids are going back to school or families are taking their last vacations. College, they're getting their kids set to college and whatever it is. But August historically has always been a very lull low month for me. Starts picking back up in September, October and then, you know, it's quiet again. November, December, January, very, very common. It's Been like that for a lot of years. Well, this year I had a tremendous first quarter. I mean, wildly busy. And then it just was, like, quiet. I was just like feeling the pulse with other brokers. And really across the board, I heard, you know, the same thing. I was not everybody, not every broker, but I would say 80% of the brokers were saying that May and June, there was just like nothing. And then July, tiny bit picking up. And August historically has been very quiet. So it's the same pretty much. So the trends that I'm seeing, you know, we start. We start honing in on the trends because we were like, what's going on in the market? We know that whenever there's something going on in the world that could impact the economy or does impact the economy historically as well, this is. Buyers and sellers just pause. They hold back. It's the unknown. So the unknown creates fear. And when there's fear, people don't want to have change. They like to just kind of sit tight, stay where they are and see what's coming. So we know with the war going on in Iran and that's ca, you know, the gas prices going up and other things, you know, other prices driving up has caused this fear. So it is still the trend that has been common for many, many, many years that when that. When that happens, that the market, housing market pauses. And we've seen some of that. I do see. I see so much new construction going on, which is so pleasant for me to see. And I myself am working with a client for a new development in Deerfield that hopefully next year breaking ground. But it's really great to see because new construction was really paused for a long time. And a lot of that had to do with just builders could not pencil out the dollar amount to do new construction. And that usually had to do with impact fees per each district that they have. You know, Deerfield, Highland park, all. You know, every district is different, Every municipality is different. But I'm seeing a lot of. There's been a lot of conversations. I'm involved with gpic, governmental affairs, and we really pay attention onto what, you know, these town hall meetings are talking about. And a lot of the topics at these town hall meetings involve real estate in the. Having the conversations about the impact that impact fees have for builders and for the inventory. And so it's really been a hot topic. And I have to say I'm really proud of people step, you know, the builders and the agents and GPEC and other organizations for stepping up and really letting know, letting the different municipalities, the mayors know how this is impacting the livelihood and the communities because if you don't have housing, you know, housing helps to bring in families, it helps the businesses, it helps the schools, it helps with the taxes. So I have to say I've been really pleased to see that there's so much construction going on. I feel like the voices have been heard, the need for new construction has been heard. So I think next year we're going to really be in a good, we're going to have a good boom with, with sales because there's a lot of construction going on. So that's great. Even in the city, in downtown Chicago, I'm seeing a lot of construction. So I'm so happy seeing. So luxury inventory also is growing. Buyers shopping above the million dollar price point have more choices than they did a year ago. And that means sellers need to price strategically. And I think we talked about this last time on our podcast that really is that sellers have to present their homes exceptionally well if they want to sell at top dollar. Professional photography, staging, I'm say 50% of the time, maybe more, a little bit more. You really need a stage video, strategic marketing, they're just like not an option anymore. You have to have these if you're expected to sell in a luxury market. So and, and get bidding wars or even just get your, your price point sale without a lot of contingencies. So I'm seeing, I'm also watching a lot of the trends in the North Shore because I live up here. I pay attention to Chicago too. But I am seeing the North Shore continues to be one of Illinois's strongest luxury markets. Communities like Highland Park, Glencoe, Winnetka, Lake Forest, Deerfield are continuing to attract buyers looking for top schools, larger homes and exceptional lifestyles. And so that feeds into this building frenzy, that not frenzy, but building a lot of new construction going on, as I mentioned earlier, which again is great to see, especially people just seem to prefer it's either new construction or move in ready homes. They're still commanding a premium. So that's continuing. Buyers are negotiating again. And I think we might have talked about this last time on our podcast that buyers are negotiating again where previously it was, you know, you have multiple offers and buyers weren't. There was no contingencies, which is a little scary for the buyers, not for the sellers. But it was unlike, it's unlike the frenzy we saw a few years ago. They're negotiating on the prices. Everybody is having an inspection. Even if they waive, you know, inspection with no requests.
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Paula Avanam
And sellers are giving concessions again. So that's, that's good. It's been.
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Scott Becker
Let me ask you, we just had colleagues whose parents bought a house in Glencoe, like a ranch house. I think they said that the house they bought had 15 to 17 offers on it. Are you still seeing some of that or is that less the less the rule now or. Because we were, as you mentioned, we were sort of upside down and not enough inventory to sell. And, and so a lot of attractive houses or semi attractive houses. We're getting a lot of competitive bidding. What, what are you seeing?
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Paula Avanam
Currently I am seeing the multiple offers on homes that are either new construction or they could be homes or townhomes or condos, but especially the homes, the single family homes. I am seeing multiple offers and that's true. And my, my, I myself, I had a buyer, there was a house in Highland park and there are multiple offers and that's a whole nother great topic. And how to strategize with your buyers. We actually got the, we got the listing. They accepted our offer over. I think there were probably six other offers. And it took me, I know I had to really educate my buyers on how to do that and how to win this offer. And it worked. And that would be a whole nother podcast to talk about because there are, there is definitely a strategy and I love helping my buyers to win offers, you know, to win, you know, it's the property that they want. So there is a great way to strategize in how you present your offer.
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Scott Becker
Thank you. As you look at the end of this year, the start of next year, what are you most focused on and excited about? And are you spending a lot of time in the Florida real estate market too? And if so, what do you see there?
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Paula Avanam
So I'm seeing right now, as I mentioned earlier, I'm seeing a lot of new construction. So that tells me, you know, well, buyers can definitely and sell and the listing agents can definitely do pre sale contracts or pre sale. I'm sure that will go far. But once they actually get a one home built to show, I'm sure those, that construction, the new construction will go under. All of the homes will go under contract pretty quickly because we are still in this shortage of inventory. So I'm seeing in 2027 this uptick, I think we are going to be very busy in 2027, especially because there are, there are a lot of new developments going up. So I'm seeing that. And then the trends I'm watching in Florida's market are, you know, luxury is outperforming any entry level market. Buyers purchasing million dollar homes unless you know, depend on the mortgage rates. And so demand is remaining stronger in the lower price points but luxury is still stabilized.
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Scott Becker
In the luxury home market, are people paying more cash than mortgages? What do you see there?
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Paula Avanam
That's a great question. And it is cash is king in Florida, high net worth buyers continue to make all cash offers giving them a significant advantage in a competitive situation. You know, with cash you're waiving some costs that are required by the lender. You're waiving the need for an appraisal by a lender which if it doesn't appraise out because they're offering over a list price which will probably be over appraised price or appraisal value, then cash is king because you don't have to worry about that because if you have a lender, it's not going to appraise out and then you're going to have an issue getting the mortgage. So I have to say in Florida, cash is king for sure. I mean I had a sale last year in Florida and It was a $4.7 million listing and they were cash buyers. It was just wild. I, I was like, wow, they actually were from Chicago, so. And they bought in Florida. So that's it is cash is king there. Inventory is improving, but only selectively in Florida. Insurance costs are influencing buyers decisions in Florida and that's gonna, you know, it's happened here a little bit as well with the HOAs have been challenging. You know, in, you really have to be educated and know, understand what you're getting into when you purchase any property that has an HOA in Florida. Still, waterfront and lifestyle properties remain highly desirable. That's what people, you know, it's the walkability people are looking for or boating access.
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Scott Becker
And Paula, let me ask you this question. What about in Florida? I know there's this whole, the club communities where there's golf and tennis remain very hot, but some of them end up going south. And we've seen that over the periods of time. What do people think about the club communities with the hoas, the, you know, the golf course, the cost of the clubs, et cetera. And now there's these rising initiation fees in these clubs too. Will that at some point have a negative impact on some of the values, the home values in these club communities in Florida?
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Paula Avanam
Yeah, they are having an impact and especially with this crisis that happened where the building collapsed in Miami and then was a complete Mandatory reassessment. It happened throughout the whole country, actually. But in Florida it was really, they started doing this reassessment early on and every single property that had an HOA had to have some improvement, which meant that there was some, a special assessment cost, you know, passed down to the homeowners. And so what? Some of them were small costs passed down, but a lot of them were large. We're talking like, you know, $15,000 per homeowner of costs that they were special assessed on and which is wild, but there's, you know, you either gotta move and then tack that onto your sale price or pay it and stay and hope it doesn't happen again. So I am seeing people move away from these club communities because of the. Also these fees that are really, really high to be a part of the club where some people don't, they don't golf or they don't play tennis. Right. And they don't really care about those amenities. And so to pay an extra, you know, you have to pay like $30,000 to be the club because it's mandatory to be part of the club. And then it's $1,000 a month. People just are like really moving away from that. And I'm seeing the developments that are happening are more single family homes with no ways, or maybe it's two homes together or like side by side or three. And there's a small hoa, very, very small. But it's close to the water. It's close, it's walking distance. People are really more focused now than ever on walkability. They want to be close to a downtown or even if it's a strip mall, somewhere that they can walk or especially the ocean or the intercoastal. If they're going to Florida, they really want to have that walkability and that summer living life. So I'm seeing that switch for sure. And even me personally, when we look at properties in Florida ourselves to purchase and flip. I am no longer looking at properties that have an hoa. I, I won't do it. It's too risky. You know, if we want to keep it and rent it, I'm not going to do it where there's an hoa because those prices, you know, we have to change according to what the guidelines happen or what we get hit with, with this by the city. I am seeing still in terms of club amenities. And again, people can buy a home, single family home, and there's, I don't know, there's probably 25 golf courses, whether they're public or private, you know, anywhere between Palm beach and Miami. Maybe even more so on every block. You know, not every block. Every mile, there's one.
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Scott Becker
Yeah.
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Paula Avanam
Public. So you can go for, you know, $50, $100 and play at your leisure without the commitment of $1000 a month or $1500 a month. And then to join somewhere like the Boca, it's 110, $110,000 to join, and then you have your monthly. So some people are moving away. They don't, they don't mind that, but they don't want to be in the committed communities, the golf and tennis communities. Again, like I said, some people don't even play tennis. Some people play golf.
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Scott Becker
Take a moment. Don, when you look at this next year, what are you most excited about? Heading into 2027, as I mentioned earlier,
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Paula Avanam
I'm seeing a lot of new construction, and for me, that is just awesome. We really need it. We need it. Especially here in Illinois, we have some such a shortage of inventory that to see that is means that our voices were heard as realtors representing our clients, our buyers mostly that, you know, they can't buy anything and their sellers can't sell because then they can't buy anything and move some, or there's a shortage of inventory or the means that the prices are crazy and there's multiple offers, offers, and some buyers just have not been able to succeed. So I'm very thrilled to say that I feel, and based on what the trends I'm watching is that 2027 is going to be a very busy. We are going to have a lot of sales. Properties are going to probably sell very quickly. People have been waiting and people really do. This has been over the last many years, three to five years that people will pay top premium dollar for new construction. They just, they love it and they get, you know, if it's, if it's, they get to choose. If it's early enough in this process, they get to choose, you know, what kind of concessions they want, what they want for cabinets and what they want for flooring and, and that matters. So I'm very excited for 2027. 2026 has been a little rough, so I'm happy to, to end 2026, you know, in a few, in five months and move on to 2027 because it's going to be good. I. I know it for sure. And so I'm excited.
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Scott Becker
No, fantastic. Well, it's always a breath of fresh air to visit with you. It always makes my day. I want to thank you for joining us on the Becker Business and Becker Private Equity podcast. You're literally just fantastic. Thank you so much for taking time with us.
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Paula Avanam
Thank you. You're terrific. Thank you.