Growing demand has created a supply shortage for new custom-built single- family homes in the Lincoln Park/De Paul neighborhoods.
This demand, primarily from younger, affluent professional couples committed to city living, is further feeding a residential real estate boom in the 1980s that has seen Lincoln Park/De Paul property values soar with rehabbed bungalows and brownstones and, since 1983, a surge in new townhouse construction.
”The market for new single-family homes has been forced into other kinds of housing because little or nothing has been offered in the Lincoln Park/De Paul areas,” said Sheldon Paul, president of Merit Development Corp. and the major custom builder operating in the neighborhoods. Since 1984 he has built 16 scattered-site homes priced from $375,000 to $700,000.
Paul has five homes under construction for delivery this year with five more planned, two for 1989 delivery and three for 1990. He is geared to build 15 custom homes a year.
”We`ve discovered a great demand, an unmet need that has provided us with an opportunity,” he said. ”I`m reaching only a small number of potential buyers.”
He cited the recent sale of a 4,600-square-foot home he built on speculation in the west De Paul area. Designed by architect John Gachich, the three-level home is on a 25-by-125-foot lot and has 4 bedrooms, 3 baths, family room, living room, formal and informal dining rooms, laundry room and two-car garage.
”It was on the market for 2 1/2 weeks and sold for $651,000,” he said.
”Five serious buyers vied for the property.”
This doesn`t surprise Alison L. Gold, second vice president for Chase Manhattan of Illinois, which specializes in ”jumbo” residential mortages that range from $250,000 to $1.5 or $2 million.
Paul`s buyers are the customers Gold wants as the loan officer responsible for Gold Coast, Lincoln Park and De Paul mortgages.
”This is a very attractive market with strong demand for custom housing but little supply,” she said.
The fast turnover of Paul`s homes also does not surprise Anna Robertson, a sales associate for Jameson Realty who specializes in Lincoln Park/De Paul residential properties.
”The demand for new custom housing is here but not enough of the product,” she said. ”The market consists primarily of young professionals who want to stay in the city.”
She said existing single-family homes in the area are selling for more than $500,000 and several recently were sold for more than $1 million. Most of the homes have undergone extensive rehab or renovation.
”The higher price ranges are where there`s more activity today,” she said. ”What you get for $400,000 today is an unimproved row house that needs rehab.”
This makes a custom home attractive to buyers, Robertson said.
”Given today`s prices and what Sheldon Paul is offering, his homes are a good buy. Unfortunately, this is all that`s available in new construction.”
Both Paul and Robertson agree that Lincoln Park has ”matured” as a real estate market. While there still is demand for entry-level housing, the growth is from more established, affluent professionals seeking longer-term home ownership.
”This maturation is part of the change in demographics and overall character of the community, not only residentially but in retail and entertainment as well,” he said. ”This change also is reflected in other downtown neighborhoods, especially North Michigan Avenue, the Gold Coast, River North and Clybourn Corridor. All these developments have impacted and upgraded Lincoln Park/De Paul.”
Paul has targeted his prospective buyers carefully and tailored his home sites and designs accordingly.
”The market consists of professionals or entrepreneurs in their 30s or 40s who are city dwellers and want convenient access to downtown and the cultural community,” he said.
”They also want traditional Lincoln Park architecture but with a sophistication and taste not available in new production housing or most existing homes.”
The result, he said, is that custom home builders are not competing with townhouse developers.
”My buyers are people who have delayed buying anything until they`ve found the right house. They don`t want the suburbs, and they`re not into condos.”
Part of the demand for his kind of homes, he said, stems from a practical matter, the reluctance of buyers to build on their own.
”It`s just not feasible for them to find a site, select an architect, hire contractors and endure the hassle.”
Paul`s designs also have found great appeal among home seekers who are responding to the work of architect Gachich, 42. Although no two are alike, there are conceptual similarities.
”I strive for differences, but common to all my homes are three levels, to accommodate the square footage on narrow lots, and a strong sense of openness and light,” Gachich said.
He creates openness with volume ceilings and generous use of space. For natural light, often a problem in city homes, he floods the home with generous window treatment and utilizes center atriums.
”I design from the developer`s program: what buyers he`s trying to reach, the price range and size requirements,” Gachich said. ”The builder sets the guidelines, and I tailor the design accordingly.”
A graduate of University of Illinois-Chicago, Gachich has specialized in residential design since 1984 and has designed 20 custom homes in the Chicago area.
That Gachich has been successful thus far is evident in Paul`s retaining him henceforth as architect for all his homes.
Among new homes being built on speculation by Paul are eight at Dickens and Magnolia Avenues, which he is developing in a joint venture with Lawrence Gerber Investments. They will be ready for delivery this year and next.
Paul`s home prices are competitive for this market, in some cases as much as $300,000 less than others of comparable quality.
”It`s no secret how we do it,” he said. ”The higher price stems from a builder overpaying for the lot and overpaying for the subcontractors. We work with subs of long-standing who appreciate quality work, and I have the ability to secure land at reasonable prices.”
After 20 years as real estate salesman, broker, rehabber and developer, he made the decision to concentrate on custom homes.
”I decided it was worth the risk to build homes on speculation for this market,” he said, ”and so far I have no regrets.”
