West Elsdon neighborhood now reaching appreciation acceleration
Member since 2018 · 1k+ posts · 1k+ votes
West Elsdon neighborhood now reaching appreciation acceleration
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Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
4yI think these places will also fall way harder then the market in any form a pull back. For example if Avondale drops 20% I can see Bronzeville, East Garfield Park, East Side, West Elsdon, etc. fall 40-50%. That's what happened in 2008 to east garfield it sold high right before and then got completely destroyed at a much faster rate then north side.
Brighton Park is great and a solid area now with good income buyers/renters moving in you can get $1200 for a 2br pretty easily now when its updated which brings in cashflow at current prices still. I am focusing a lot on that areas as well as Mckinley Park, Bridgeport and Pilsen for a short term rental. I have a client bringing in $3-4k a month off a 2br first floor airbnb in Pilsen.
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- Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes4y
What makes you say West Elsdon will never gentrify? The median price of a 2-4 unit there has gone up 134% since the bottom in 2008 and 150% for all property types from 2012 to today.
- Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes4y
I think these places will also fall way harder then the market in any form a pull back. For example if Avondale drops 20% I can see Bronzeville, East Garfield Park, East Side, West Elsdon, etc. fall 40-50%. That's what happened in 2008 to east garfield it sold high right before and then got completely destroyed at a much faster rate then north side.
Brighton Park is great and a solid area now with good income buyers/renters moving in you can get $1200 for a 2br pretty easily now when its updated which brings in cashflow at current prices still. I am focusing a lot on that areas as well as Mckinley Park, Bridgeport and Pilsen for a short term rental. I have a client bringing in $3-4k a month off a 2br first floor airbnb in Pilsen.
- Member since 2018 · 1k+ posts · 1k+ votes4y
Quote from @Paul De Luca:
What makes you say West Elsdon will never gentrify? The median price of a 2-4 unit there has gone up 134% since the bottom in 2008 and 150% for all property types from 2012 to today.
My definition of "gentrify" is pretty narrow. Gentrification is where it makes economic sense to buy an improved lot at market price, tear down the building, and build new. Examples are Bucktown in the early 1990s, Wicker Park immediately thereafter, and then Logan Square. My property in Bucktown in the early 1990s tripled in value in less than two years, and it was one of those buildings where the first floor was below street level on a narrow lot.
So my test for gentrification is whether you can still make good money by buying an improved lot for the lot itself. West Elsdon will improve, but it's never going to be at the point where people buy for the lot and not the building. You'll see rehabs, but not tear downs.
Price increases of 150% over 10 years (Meaning a dollar then is $2.50 today) is about 9.6 percent a year return on investment. Nice, but not stellar, and certainly not invasion-of-the-gentry territory. Figure in property taxes and you're at a low-end investment grade bond as far as return goes.
My point is that the slope of the line for appreciation in West Elsdon is getting steeper, and it's interesting to watch it happen in real time.
What is your definition of "gentrifying?" - Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes4y
Quote from @John Clark:
Quote from @Paul De Luca:
What makes you say West Elsdon will never gentrify? The median price of a 2-4 unit there has gone up 134% since the bottom in 2008 and 150% for all property types from 2012 to today.
My definition of "gentrify" is pretty narrow. Gentrification is where it makes economic sense to buy an improved lot at market price, tear down the building, and build new. Examples are Bucktown in the early 1990s, Wicker Park immediately thereafter, and then Logan Square. My property in Bucktown in the early 1990s tripled in value in less than two years, and it was one of those buildings where the first floor was below street level on a narrow lot.
So my test for gentrification is whether you can still make good money by buying an improved lot for the lot itself. West Elsdon will improve, but it's never going to be at the point where people buy for the lot and not the building. You'll see rehabs, but not tear downs.
Price increases of 150% over 10 years (Meaning a dollar then is $2.50 today) is about 9.6 percent a year return on investment. Nice, but not stellar, and certainly not invasion-of-the-gentry territory. Figure in property taxes and you're at a low-end investment grade bond as far as return goes.
My point is that the slope of the line for appreciation in West Elsdon is getting steeper, and it's interesting to watch it happen in real time.
What is your definition of "gentrifying?"I don't disagree with your definition but like you said that is a bit narrower than the actual definition:
Gentrification: "the process whereby the character of a poor urban area is changed by wealthier people moving in, improving housing, and attracting new businesses, typically displacing current inhabitants in the process."
- Member since 2018 · 1k+ posts · 1k+ votes4yI have heard of your definition, of course, I just find it too woolly to be of much use, as it allows all and sundry to scream "Gentrification!" (as if it's a bad thing) every time somebody puts a little care and pride into where he lives. It takes away the space needed for "improving" in the continuum of things. At least I can work my definition into a spreadsheet, and I have a riposte to the economic ignoramuses who want static, decaying, unchanging, neighborhoods. To each his own.
Quote from @Paul De Luca:
I don't disagree with your definition but like you said that is a bit narrower than the actual definition:Gentrification: "the process whereby the character of a poor urban area is changed by wealthier people moving in, improving housing, and attracting new businesses, typically displacing current inhabitants in the process."
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C'est la vie. - Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes4y
I agree with John I consider gentrification where you can buy to tear down and make money. Mckinley park/bridgeport/pilsen is there right now and only 5 years or so in with a lot of upside left, brighton park has had more and more new builds but they are still cheaper new builds its getting up there though. I dont foresee it ever being profitable to build spec homes somewhere like west elsdon, just not enough demand and too high of costs to build, maybe one off projects when they get a lot pretty much free or for low income tax credits.
- Chicago · Member since 2022 · 37 posts · 46 votes4y
I'm late to this post but I like the intellectual exercise.
West Elsdon has been a solidly middle class area it's entire existence. The neighborhood never had a "bottom" like Wicker Park or Uptown in the late 80s/early 90s. The economic shape of West Elsdon could be better but it's solidly middle class as far as Chicago neighborhoods go. The values never really dropped that low. The properties are typically pretty well kept.
Polish/Lithuanian population has mostly made way for Hispanic population. The latest census shows this and an ever so slight increase in Asian population as the Asian population has begun expanding southwest along Archer and the surrounding neighborhoods. This can be seen if you are in the neighborhood or take the 62 bus.
It will likely remain a middle class neighborhood for the next 20 years on par with an average rate of appreciation.
- Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes4y
Lots of great information @John Clark. I really appreciate you sharing. I think no matter what all markets and areas cycle all around the city in Chicago.....the difference is when and how much.
Quality Builders4.966 Reviews - Investor · Chicago, IL · Member since 2018 · 352 posts · 176 votes4y
Southwest corner of West Elsdon is right in the flight path from midway. I was actually under contract on a house there earlier this Spring. After we came back for the inspection we realized how oppressive the noise from flights was and canceled the contract. But you're definitely right, prices between Bridgeport and Midway are a gradient, so as prices rise further east it pushes the prices our west higher. I have a couple of people that are looking in Back of the Yards right now and I have seen flips there selling quickly. New demographic coming into any of those properties.
- Chicago · Member since 2022 · 37 posts · 46 votes4y
Quote from @Michael K.:
Southwest corner of West Elsdon is right in the flight path from midway. I was actually under contract on a house there earlier this Spring. After we came back for the inspection we realized how oppressive the noise from flights was and canceled the contract. But you're definitely right, prices between Bridgeport and Midway are a gradient, so as prices rise further east it pushes the prices our west higher. I have a couple of people that are looking in Back of the Yards right now and I have seen flips there selling quickly. New demographic coming into any of those properties.
The southwest area of the city is interesting from a demographic perspective. Much of the bigger developments from Chinatown to Brighton Park come from Chinese outfits and they market their SFHs, condos, and townhomes directly to international buyers. This buyer is typically more economically mobile than a historical SW-side immigrant (Polish, Lithuanian, Mexican, etc.) and may buy in cash. These are some of their projects:
https://hmcrealty.com/projectsI wouldn't expect much positive economic change in the Back of the Yards anytime soon. Perhaps eventually some spillover from slowly improving Canaryville but that is a long way off. The intersection of 47th/Ashland will have some investment from the Invest SouthWest initiative from the city but I haven't seen any construction begin yet. It'd be a mixed income development - - no construction timeline I know of. Here's the info:
- Member since 2018 · 1k+ posts · 1k+ votes4y
Quote from @Michael K.:
Southwest corner of West Elsdon is right in the flight path from midway.
Part of the southwest corner certainly is, but you can get fairly close to Midway without being under the flight path. Remember, the runways are at diagonals: one from 63rd and Cicero to 55th and Central and the other diagonal is 55th and Cicero to 63rd and Central. You can be due East of Midway from 55th to 63rd (West Elsdon ends at 59th, South of that is Westlawn) and until you get pretty close to Midway (a block or so West of Kostner) the airplane noise is tolerable -- meaning it is rarely loud enough to stop a conversation at normal volume.
The $300,000 price resistance level is holding. There were a few outliers that beat it this past year, but most everything fell well short of $300k.Given that interest rates are up, I doubt that the basic bungalow will go above $300,000 until 2024.
What will happen is that people will buy comfortably under $300k, and then put $50k into the houses. The resistance level crumbles, and people will start selling for $350k - $400k in a few years. Improvement, but not gentrification.
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