The Hamptons of the Midwest

A partial reprint of the Wall Street Journal “Mansions” section article from April 5, 2013.

Straight across Lake Michigan from the Chicago Loop is a ribbon of tucked-away beach towns. On the Michigan side, this region is called Harbor Country. Elsewhere, it’s known as the “Hamptons of the Midwest.”

Now, after a slowdown, Chicago’s luxury buyers are returning to Second City’s longtime second home. Roughly 80% of its vacation properties are owned by residents of the Chicago area, according to real-estate agents, including such high-power figures as the Daley family, Mayor Rahm Emanuel and former Obama adviser David Axelrod.

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“There aren’t six degrees of separation here,” says Kim Pruitt with the Harbor Country Chamber of Commerce. “It’s usually less than two, because it seems like everyone came from Chicago.”

While the real-estate slump hit both sides of the lake hard—some estimate that lakefront prices fell 25% to 35% during the worst of the recession—luxury buyers began returning to Harbor Country last year. Now brokers say high-end inventory is running low. Last year, 25 beachfront properties sold, five times the amount in an average year, brokers say.

In January and February, seven properties priced above $1 million sold or went into contract, says Dan Coffey, a broker with RE/MAX Harbor Country in Union Pier. One sale—a 6,000-square-foot, six-bedroom, six-full-bathroom, shingle-style beach house on 2 acres, with 200 feet of lakefront—topped $4 million, a level not seen since 2005.

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“You can already feel that the market has turned,” says Donna Iwamoto with Coldwell Banker Previews International in New Buffalo, Mich. She and her partner, Karen Strohl, have already sold $25 million in real estate this year.

Harbor Country is considerably more low-key than its Hamptons counterpart. The hub of the region is New Buffalo, an unpretentious beach town 70 miles from the Chicago Loop. An Amtrak line runs on a single track through the center of town, providing connections up to three times a day to Chicago and Detroit.

For regulars, the season gets going when roadside burger place Redamak’s opens March 1, or when visitors start queuing up for ice cream outside Oink’s Dutch Treat. Family traditions thrive, including farmer’s markets, ice-cream socials and a July Fourth children’s bicycle parade.

As with the condos on Chicago’s ritzy Gold Coast, the most prized homes front the lake, and are often set above the shoreline to offer unobstructed views. Many high-end homeowners enjoy their own backyard beaches, or access to a community beach, where on a clear summer evening they can watch a 9 p.m. sunset behind the Chicago skyline.

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The links across the lake go back more than a century. In the early 1900s, the quiet village of Lakeside, north of New Buffalo, became a playground for industrial magnates and University of Chicago professors. Working-class vacationers, too, enjoyed a wooded, breezy refuge from Chicago’s steamy summers. As in the wards of Chicago, ethnic vacation enclaves emerged on the Michigan side as well—Irish Catholics in Grand Beach, Jews in Michiana, Lithuanians in Union Pier. To this day, some of the most expensive homes in the region sit alongside smaller cottages, giving many neighborhoods an eclectic feel—and putting some luxury buyers off.

That is changing. A drive along Lakeside’s most prestigious shore roads finds demolition crews tearing down more-modest homes to make way for sprawling new estates. “It used to be a lot of unheated cottages, and people would arrive Memorial Day and leave Labor Day,” says Gail Lowrie, an associate broker at @properties, one of Chicago’s largest real-estate agencies, which opened a Harbor Country office earlier this year. “No more.”

Stacy Daniels, a retired patent attorney from the Chicago suburbs, and her husband listed their five-bedroom, four-bathroom home in Harbert, with 104 feet of private beach frontage, for $3.495 million. After 11 years, they say they’re ready for a new adventure. Once the home sells, the couple say they may go elsewhere—or just stick around and buy another home to be near their 15 grandchildren.

“If we want to have the culture of the city, we’re just a train ride away,” says Ms. Daniels. “And yet here, you have the quiet and you just feel like you’ve escaped it all.”

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