Where Mansions Are Half the Price
Where Mansions Are Half the Price. Image courtesy of xedos4 / FreeDigitalPhotos.net
Some home buyers looking for a discount are eying the historic stock in their area, finding they may possibly be able to fetch a bargain on a historic mansion, The Wall Street Journal reports. In many old industrial cities in the Midwest and Northeast, real estate professionals are reporting an uptick in listings of inexpensive historic homes.
“Typically built during manufacturing boom times, many of these properties fell into disrepair as local economies faltered, giving today’s buyers an opportunity to pick up a palatial abode on the cheap,” the Journal notes.
Luxury will come at different price tags, depending on your location. But in St. Louis’ historic Visitation Park neighborhood, a fully renovated 11,448-square-foot home boasting six bedrooms and four-and-a-half bathrooms is on the market for $649,000. In Detroit, an eight-bedroom, seven-bath 5,605-square-foot Mediterranean-style mansion, built in 1917, is listed for $365,000. In Toledo, Ohio, a 10-bedroom, eight-bathroom 18,198-square-foot Victorian home, built in 1887, is listed for $284,777. The home is even listed on the National Register of Historic Places.
“The places where we see this [kind of property] are in markets that historically had a lot of industry and a lot of money but slower economic growth recently and, therefore, more affordable housing,” Jed Kolko, chief economist at Trulia, told the Journal.
Some buyers are lured to the character of the historic homes. “We love historic homes: the older craftsmanship, the materials, the style, the design — just their personalities,” says Stephen Economy, who purchased a four-bedroom Arts and Crafts-style house for $225,000 in a historic area of Detroit.
But some home owners may purchase these “bargain mansions” and then over-renovate, which can put them at a disadvantage when they go to sell, real estate professionals say. St. Paul, Minn., home owner Ethan de Naray recently listed his six-bedroom 5,500-square-foot home for $849,000 after putting $1.2 million into the home’s renovation. He restored the original details to the homes, from the moldings to the exterior wood shake siding, while also adding in more modern amenities like a movie theater, game room, and bar.
“There are obviously different types of remodels, and I kind of went overboard with this one and put a lot of time and energy into it, and the end result was, I kind of priced myself out [of the market] on some level,” he told the Journal.
Listing agent Jim Seabold of Coldwell Banker Burnet in Minneapolis says there can be big losses from renovating these mansions if home owners overspend. “In some of the larger homes, we’ve seen $2 million losses,” he says, estimating that around 15 percent to 20 percent of the homes in the Summit-University neighborhood there have been “renovated to the point that [the owners] are losing money.”
Source: “Bargain Mansions: Luxury for Less,” The Wall Street Journal (Oct. 3, 2014)
