One of the more fascinating and underrated statistics I have found in Lake Forest real estate is the relationship between price and premium paid. The above VIZ shows an interactive scatterplot for every closed home sale (single-family detached) in Lake Forest (60045) from 1-January-2019 to 3-March-2020.
The vertical axis shows the “Price Per Square Foot” of the home sold.
The horizontal axis is simply the price of the home sold.
(Ex: 123 Main St. is a 1,000 square foot home that sold for $500,000 and 456 Shady St. is a 1,000 square foot home that sold for $300,000. Therefore, 123 Main Street sold for $500/sf and 456 Shady St. sold for $300/sf.)
Price Per Square Foot ($/SF) is a measurement most appropriately used for finding trends in markets and is not necessarily a perfect way to compare a few or even several different homes. It is common in the commercial real estate industry to compare large buildings against projected revenue generated and market averages to determine a suitable price for the property.
Generally speaking, comparing historical data from markets across the country, as the price of a home increases the Price Per Square Foot paid decreases. The logic is that after a certain point, a buyer is not willing to pay a premium for additional living space that they may not necessarily need.
In Lake Forest, as shown in the data above, the Price Per Square Foot increases on an accelerated trajectory as the price of the home increases. This means that the more expensive the home, the more premium a buyer in Lake Forest is willing to pay. If there was no premium for luxury, the trendline would be flat, a solid floor bolted to $240/sf.
Furthermore, the data provide an illustration necessary to convincingly argue that Lake Forest is still truly a luxury home market. There are well-known editorials and journals who have incessantly underscored the decreasing prices of luxury homes along the North Shore. Overall, perhaps so. But luxury is timeless, demand for best-in-class real property is resilient, and the luxury market in Lake Forest will withstand the test of time.
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