Lake View New Construction – Why Builders Pay $1 MM For Teardowns

A couple of weeks ago I posted on a listing that we sold before it hit the MLS. A builder purchased the building, which sits on a 30 ft wide RT 3.5 lot in Lake View, in one day for a tad over $1 MM with plans to tear it down and likely build a $3 mm home….Which got me to wondering: Just how much upper end Lake View new construction is taking place and where? After all, as my Lake View link above will show you single family home inventory has been skyrocketing there over the last few years.
So, although I plan on doing a more detailed analysis of new construction in Chicago later in the year, I decided to take a quick look at what’s going on with the construction of new single family homes in Lake View. I pulled all the activity from the last 12 months – either sold or currently on the market – and came up with a list of 47 homes ranging in price from $1.2 MM to $3.8 MM. I divided them up into 3 price groupings which I plotted using different colored balloons in the interactive map below:

  • The low priced group ran from $1.2 – 1.6 MM (as if $1.6 MM is “low priced”) and had 14 homes. I plotted these homes in red
  • The medium priced group ran from $1.6 – 2.0 MM and also had 14 homes. I plotted these in yellow.
  • The high priced group ran from $2.0 – 3.8 MM and had 19 homes in it. These were plotted in green.

Please note that you can zoom in and out of the map below, pan, and click on any of the balloons to get a bit of detail on the property. Also note that you can see the legend by clicking the link in the upper left corner of the map and you can also expand to a full size map if you want.

There are a few notable patterns here. All the construction is occurring west of Sheffield/ Clark where the land values are a bit lower. And as you go further west there is even more construction. For instance, there is very little construction occurring east of Racine and just a bit more between Racine and Southport. It’s mostly west of Southport.
Also, interestingly enough there are actually lower priced homes south of Belmont, despite being slightly closer to the city and having a good school. And Ashland still seems to be a bit of an income dividing line after all these years with the more “modestly priced” homes west of Ashland. One of the bigger surprises is that some of the highest priced homes are north of Irving Park – in particular that $3.8 MM home but then again that may have been the only place that they could find a lot as big as that house sits on.
So the question is how much longer this construction boom is going to continue. With inventory rising so dramatically it looks like building in this high end segment of the market is getting riskier and riskier.
#LakeViewRealEstate #ChicagoRealEstate #NewConstruction
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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