Saturday, May 22, 2010

New construction and flips back in Chicago

An infill new construction project is poised to break ground in the Ravenswood Gardens neighborhood in Lincoln Square. This is a pricey area where new construction single family homes on a standard lot can fetch $1M-$1.5M. (Infill is the process of developing vacant or under-used parcels within existing urban areas that are already largely developed).

We've seen a lot of infill new construction, over-taken conversion projects and flip action (I hate the word flip, but people understand it) over the last few months. For the first time in almost two years, we've observed a couple successful flips in tertiary neighborhoods west of downtown where distressed houses can sell for under $100K but can be re-sold for over $300K (Irving Park, Albany Park). Are developers and investors back in?

Personally, I just met with a contractor/developer of two recent successful flips at one of my for sale listings. A lot of these guys have cash... and many are contractors who sat out the bubble and are now realizing their opportunity. While these individual contractor/developers are back in, we see bigger money flowing too in the form of infill new construction in prime city locations on the north side ratcheting up.

Better yet, I think the opportunity to buy and renovate your own personal residence is the way to go, be it a house, town home or condo. We are seeing two-flat buyer clients getting back in to convert the properties into their own single family homes. It's safe to say two-flat prices have probably come down 20% in Lincoln Square, Lakeview and Lincoln Park since 2006 peak prices. Short sales and foreclosures can be bought at higher discounts but generally have several offers and the competition is steep while outcome uncertain.

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