Thursday, April 3, 2008

Brand New Duplex? Or Turn of the Century House?

A customer recently posed the question:  Should I buy a new duplex-up or a turn-of-the-century SFH?  I'm looking to buy in the Chicago near north area. Both are similarly sized and in good condition, just built a century apart. Which will have better appreciation/resale?

2032 Racine ext1

It's such an interesting question because usually the same buyer would never be considering both at the same time. 

Here in Chicago, the history of the popular neighborhoods is such that they began their lives as working class neighborhoods filled with modest homes that do not lend themselves to modern living.  In the photograph above, this Victorian was the original farm house for the township built in 1889.  Despite its obvious charm, the inside layout was a jumbled mess of rooms that did not make any sense.  The basement was not accessible from inside the house.  Bedrooms were scattered throughout both levels of the home.  Some rooms were long and narrow, others did not have closets.

We were the third listing agents to try to sell this property, and after several months of reaching out to neighborhood residents who might enjoy this superior location in Lincoln Park, we pitched the property to a developer.  The lot was extra long, extra wide, and the zoning was generous (R4) to allow a large condo building to be built.

2032 Racine Condo

We sold the house to the developer for $700,000.  When the condominiums were completed, the developer's agent sold the largest condo - the duplex on the first floor - for $741,000.  This was in 2005.

In 2006, the same condo sold again for $818,000.

I suppose that says volumes about the popularity of condominiums, and of the duplex floor plans.

Based on this anecdotal evidence (as well as a bunch of experience) our advice would be to only purchase the single family house if it's a very good value and is sitting on a parcel of land that a developer would be very interested in when you're ready to sell. 

Otherwise, the popularity and salability of new condominiums can't be beat.