A core area of West Town, from Ashland to Western and Grand to Chicago, has for more than a decade been a cauldron of high real estate prices, even through the recession. Perhaps more than in any other pocket of town, the engine of appreciation has been new home construction. But can it continue? For the next few years at least, it seems the answer is yes.
Thirty-eight detached house sales were recorded in this 0.5-square-mile section of West Town over the past six months by my own count. More than half were built in the last decade—several since 2012—and 12 sold for more than $1 million. All but one of the million-dollar-plus sales were newer homes. On the other hand, roughly one-third of these sold properties were worker’s cottages fetching less than $500,000—in most cases explicitly marketed for teardown or renovation. This confirms more new-builds are on the way even if these streets are relatively quiet at the moment.
RE/MAX’s Barbara Foy recently sold side-by-side cottages at 1811 and 1813 W. Race Avenue. “I would’ve had 25 offers on each place if they’d been zoned for two-flats not single-families,” Foy says. “As it is, I sold 1813 Race sight unseen…. There are vacant lots being held up here and there including one cluster on this block, but otherwise the focus has turned to teardowns.” Longtime homeowners are getting one or two letters a week in their mailbox urging them to sell, she adds.
In the West Town community area, which includes Wicker Park, East Village, Noble Square, Ukrainian Village, Smith Park, and East Humboldt Park, the median sale price for detached single families was $870,000 in July according to the most recent MRED data available. In the area under examination, the six-month median was $866,000. A larger disparity lies in average market time—49 days in for West Town single-families in July, and 74 for the smaller area over the past six months. New-builds priced between $800,000 and $1 million, and the cheapest of teardowns, did best. The priciest homes sometimes languished.
In 2012, new house sales in this part of West Town were typically in the $700,000s. The success at those prices drove listings into the $800,000s, and by early 2014, the low- to mid-$900,000s. They’ve jumped a notch or two since. “We’re on the verge of another adjustment,” says Staci Slattery, a broker with North-Clybourn Group who is very active in the area. “A spate of post-Labor Day houses not yet built are about to list for $1.2 to $1.3 million. These prices are untested here but, given recent history, I expect the homes will be absorbed like all the others.”
In truth, there have already been two home sales over $1.3 million in the past year—and each landed a contract in days. But Slattery thinks this price point will lead more buyers to evaluate whether to buy new or renovate, and she confesses sticker shock in the price of land on these blocks of West Town. “Four-hundred thousand for a standard lot seems aggressive, but we’ll see.” With scarce vacant land but attractive margins, builders are doing what they can to line up two or three projects at a time. Developers buy lots privately when they can to keep their costs on the DL, and so the prevailing price of land isn’t all that clear.
You have to spend money to make money, and builders who expect to have success at $1.3 million need to bring the heavy masonry, custom millwork, integrated tech features, and top appliances that will set their homes apart from the common $900,000 new-build. “The expectation is that million-dollar homes will have a different look and feel,” says Slattery. At presstime, there were four homes priced at $1.3 million or more in the area in question—three under construction and one a renovation on a double-lot. And for regular folk seeking a home with a yard? Get in the ring with developers and try to chase down a cottage, or take a hard look at neighboring Smith Park or East Humboldt Park. Many already are.