This is the last of my posts on the real estate market in Chicago's Pilsen neighborhood. It's certainly peculiar the way I have devoted so much virtual ink to this topic but I'm intrigued by the area - trying to change for so long, yet not changing all that much. Last time I focused on what the data tells us about how Pilsen is changing and it confirms that the change is at a snail's pace. This time I'd like to focus on the housing options in the neighborhood so that you can get a sense of just what a strange mixed bag Pilsen homes are and why the data is the way it is.
From the many showings I've had there the first thing that comes to mind - whether it's a single family, condo, or multi-family building - is code violations. There are some pretty scary homes there - places where the owner loaded up on some Home Depot supplies one weekend and set about to do what he didn't know how to do. So there are a lot of bathrooms with floor tile on the walls, cabinets that are installed crooked, pipes that emerge from walls in strange places and disappear into equally strange places, faucets that are loose, bad smells, light fixtures with exposed wires, and foundation problems.
The funny thing is that people talk about wanting to keep affordable housing in Pilsen but this is a big part of the reason why housing is affordable there. The housing stock is falling apart. And there aren't that many architecturally significant buildings there. Here is an example of one such home from the lower end of the spectrum that sold almost a year and a half ago at 913 W 18th Pl. for $150,000.
These are the sales that are keeping the average sales price depressed in Pilsen and create appraisal problems for the rest of the sales as I'll mention later.
Then at the opposite end of the spectrum you have the occasional upper end, new construction home like the SmartTech homes at 1806 and 1808 S Morgan that sold for $499K and $508K respectively a few months back. The slide show below is of 1806 S Morgan with a sliver of 1808 showing up on the left side of the first photo. I represented the buyers of 1808 S Morgan, which is very similar to 1806, except that we negotiated a number of substantial upgrades that made the home much more livable for my buyers - dark floors, white ceiling in the basement, a full basement bath, larger basement bedroom and closet, more kitchen cabinets, double vanity in the shared upstairs bath, etc...
The problem with selling and buying homes like these is that they are outliers in Pilsen and it's damn near impossible to get them to appraise. For instance, prior to the sale of these two SmartTech homes only two homes had closed above $400,000 in more than 3 years and those were other SmartTech homes that had closed around $460,000 in the third quarter 2012. And it's even difficult to get a nicer lower end home to appraise for a similar reason - all the comps are falling apart.
But when you look at the average prices that I graphed in my last post on Pilsen you will see that the average condo/ townhome sells at about the same price as the average single family home. The reason for this is that the condo stock in Pilsen was pretty much built in the last 10 years and it's in much better condition than most of the single family homes that sell there - basically they are like condos in every other part of the city. However, the more expensive ones that have sold recently are all east of Morgan where the income demographic is higher - not really a surprise.
What is a surprise to me is that the townhomes in the Union Row development along the railroad tracks and right next to the overpass in East Pilsen have actually maintained their value amazingly well. I never saw that coming and I'm really scratching my head over it. Only long time readers will remember that I published a rather controversial post about that development more than 4 years ago: Can New Marketing Strategy Sell A Bad Location?
One of the more ambitious new condo developments in Pilsen are two 1900 sq ft duplex units - and a configuration that you don't see very often in Chicago: side by side duplexes - at 1802 S Peoria. They are listed for $479,000 each, only slightly below the two SmartTech homes on Morgan, yet they are 20% smaller. Unfortunately, I have no idea what kind of finishes they will have other than that they will have Bosch appliances. There are no internal photos yet. It will be interesting to watch how these two units sell.
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