I've written before on the soaring land values in Chicago's East Village and Ukrainian Village. One year ago the highest price paid for a teardown was at 1929 W Erie, which went for $460,000. The 5 bedroom, 3 1/2 bath Noah Properties home built on that lot sold for $1.3 MM in April. Now, one year later, a teardown next door, at 1927 W Erie, just sold for $500,000 - again to Noah Properties - and that's a record price in the neighborhood. At least for a lot zoned RS-3. RT-4 lots will fetch a considerable bit more because you can build a third floor above grade.
They haven't even put up the green fence around the old structure but the new home at 1927 W Erie is already listed with 6 bedrooms and 3 1/2 baths for $1,449,900 (yep, the prices of new homes keeps rising in the area). They are basically cramming 4 bedrooms on the 2nd level, such that the 4th bedroom is only 9 x 9 and the 3rd bedroom only 10 x 10. They are also showing a 3rd floor 8 x 13 "loft". I'm a bit perplexed by this last feature, as the lot is only zoned RS-3. Don't they need a variance to do this? Did they get one?
Oh...and one other thing...it's already under contract. It went under contract in only 2 days, which makes me wonder if this is even a spec home, like most of Noah Properties' homes, or did someone basically commission them to buy this lot and build on it for them?
The 1935 W Erie Mystery
This is a good time to discuss the very weird story of a home just a few doors down from these two at 1935 W Erie. In the past I've written about how sometimes prices just don't make any sense at all. Well, this property is a great example.
Supposedly the building had extensive water and mold damage from the 3 walls of split face block that had never been properly sealed. At a minimum it needed to be totally gutted. My contractor, who saw the place, felt that all the wood framing needed to be ripped out - and likely even the joists. Now keep in mind that, as a solid masonry construction home, you could rip out the wood framing without taking the home down. Removing the joists would be...I assume really, really expensive.
Needless to say this was a short sale and, in light of all the damage, it was listed as needing "SUBSTANTIAL WORK OR TO BE TORN DOWN". When I inquired with the listing agent about it I was told that it needed to be torn down.
It was listed for $299,000 in November of 2014 and went under contract in only 3 days. I assume there would have been multiple bids in light of the fact that lots were going for a lot more than that at the time. However, it took 11 months to close and ended up selling for only $300,000 - several months after 1929 W Erie closed for $460,000.
What exactly happened here? This lot had a 3800 square foot, salvageable structure on it so it looks like it went way too cheaply - even if you determined that it needed to be torn down. And why did it take so long to close?
No surprise the buyer turns around and sells it within days for $460,000 to a developer who then does a major rehab on it. Apparently, they removed all the framing but it's unclear if the joists were removed or not. What we do know is that the home has since been mold tested and given a clean bill of health.
Oh...and this rehabbed house at 1935 W Erie is now listed at $1,290,000 with 5 bedrooms and 3 1/2 baths. My wife and I checked out the open house a couple of weeks ago. I don't like to weigh in on other realtor's current listings unless there is something obviously really wrong or really right with it but you can check out this other almost new home currently available across the street at 1930 W Erie for $1.25 MM.
A Word Of Advice To Current Property Owners In The Neighborhood
The moral of these stories are really simple. If you own a modest single family home or a 2 - 4 unit building in East Village or Ukrainian Village it could now be worth $500,000. If you are looking to sell it your best bet is to actually list it around $500,000 so that you can get the best price possible in a competitive environment. Selling it privately to a developer or pricing it for a quick sale could really cost you in the end.
Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.
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