For those living in Lincoln Park today, it may be difficult to imagine that a mere 200 years ago the area was primarily forest with stretches of grassland. Located just north of Old Town, this vibrant community has seen a myriad of changes over the past nearly 200 years. From its early days as a trading post and location of the first post office in Chicago to the establishment of the park in honor of an assassinated president to the rebuilding of the area after the devastating Great Fire of 1871, Lincoln Park has always been a desirable place to be.
Despite the widespread recognition of Lincoln Park, it is actually quite a small neighborhood, consisting of only 3.2 miles from North Avenue on the south to Diversey Avenue on the north, with Lake Michigan on the east and the Chicago River on the west. At the peak of the real estate market in 2007, Forbes magazine named one block bounded by Burling Street, Orchard Street, Willow Street and Armitage Avenue as the most expensive block in Chicago.
Not much has changed since 2007. Lincoln Park consistently has more sales of single family detached home sales exceeding $1,000,000 than any surrounding Chicago neighborhood by a wide margin. At the peak of the market in 2007, there were 150 sales of detached homes exceeding $1,000,000 and the average sales price was $1,899,507 according to multiple listing data analyzed from MRED (Midwest Real Estate Data).
Fast-forward to 2013, a rebounding economy and a limited supply of homes for sale have pushed average days on market to nearly half of 2007 levels. In 2007, the average days on market before a property went under contract was 96 and through the first seven months of 2013, the average has dropped to 55 days, or a 42 percent decline. As the marketing times have precipitously dropped, the 2013 average sale price in Lincoln Park of $1,821,290 has been approaching pre-crash levels. With 87 sales of million dollar homes to date, Lincoln Park is on track to tie the previous record of 150 homes sales in 2007 exceeding $1,000,000.
So, what if you cannot bring home one of these Lincoln Park million dollar babies, is all hope lost?
Surprisingly, the answer is no. In 2007, there were only 34 sales of detached homes which sold for less than $1,000,000. By comparison, there have already been 32 sales in 2013. Looking at the PahRoo Million Dollar Ratio (defined as the number of homes which sold for more than $1,000,000 divided by the number of homes which sold for less than $1,000,000), in 2007 the Lincoln Park ratio was 4.4. This meant that for every 4.4 homes which sold for more than $1,000,000, there was only 1 which sold for less than one million dollars or 18% of the homes in this market were pre-million.
In 2013, the Lincoln Park ratio has declined from a previous high of 4.4 homes to 2.7 homes. So if you’re a prospective home buyer in Lincoln Park, despite the near-record-high sales prices of 2013 being driven by the construction and re-sale of luxury single family homes, you have a greater opportunity to acquire a home for less than $1,000,000 today than in 2007. These pre-million dollar home sales account for 27 percent of the Lincoln Park detached single family market.
Don’t expect this opportunity to buy a pre-million dollar baby to last long! Ask any realtor in Lincoln Park and they’ll speak of bidding wars, less than one week of market time and cash offers. It’s extremely competitive out there right now.
Guest Blogger Michael Hobbs, (SRA, LEED, GA), president, PahRoo Appraisal & Consultancy is covering the ‘State of Chicago Real Estate’ in a series of posts. For more information, he can be reached at 773.388.0003 or MillionDollarRatio@PahRoo.com.