Would it be completely unwise to buy high end real estate in an undeveloped neighborhood in Oswego? (Chicago: real estate market, new home)

[krispro6]

We found a house we absolutely LOVE that is a builder/developer model in basically a dead development with only one other house and about 60 wooded lots. The house itself is gorgeous and everything we want. We don't mind being in the woods basically by ourselves (although we hope it will eventually get built out) since it is close to other subdivisions. We like being somewhat in the country and don't want to be in a super developed area like Naperville. The price has come down significantly but is still high given that it's the only house in the neighborhood and is still higher than anything sold in Oswego in the last few years, although the house just doesn't even compare (finishes, attention to detail, etc.) to anything in the nearby area unless you were to go to Naperville. They were originally trying to sell lots for close to $300k (!!!) but I think they are now around $90k. The development is marketed as homes in the price range of $750,000 (down from $950,000) to over $3M! I can't imagine many people building in that range especially given that the school district is just OK. What we like is that the lots are large, with lots of trees, natural surroundings and open space. Are we crazy to even be considering it? Do people think the Oswego real estate market will ever recover or is it too far out there?

[chisub]

I wouldn't do it, but it's also not the type of home I'd be interested in to start out with. A couple questions popped into my head though, not sure if they will help. Where do you and your husband work (chance of changing job location, commute)? Do you have kids (schools are eh like you said, are you OK living in a neighborhood without other kids around)? Is this your first home (nothing like buying in 2007 to live and learn, but at least I feel like we know what we really need in a home going forward)?

I think it's just so hard b/c I would only buy it if it was my forever home and I didn't plan on moving, not just something for the next 7-10 years. I know my friends bought a similar home in far out suburb of Minneapolis and are in much deeper trouble than we are. Heck, even my friends who bought newer homes in Plainfield are in a rougher position than my Naperville friends a couple miles up the road from them.

[krispro6]

We would only do it if we could get the house for considerably less than asking price, but even then we are having trouble determining a "good" price - our realtor was the opposite of helpful. We both work from home therefore we don't have to worry about a commute but you just never know about a job change and I can't say for sure that it would be our forever house since we have only lived in the Midwest for a short period of time. Schools are a concern - we have one child in a private school that we would most likely continue. I thought for sure our kids would be against living in a neighborhood without any other kids, but they seem to like the nature aspect (wood peckers, beaver damns) and it does give us a little more control in arranging play dates versus our kids constantly harassing neighbors. You brought up very good points, all of which we've been wrangling with.

[oddstray]

Are you connected to city utilities, or do you still have septic and/or propane and/or well water? What's the situation for trash pickup? When the area does develop, will you have enough money to pay the assessment for installing city services? Will you wind up paying higher rates by being so far out in the 'sticks'. Will you have issues in winter when your streets aren't plowed? Are your streets paved, or just tarmac'ed? (The street I grew up on in Chicago was just a strip of tarmac until I was seventeen. I was amazed at the difference paving and curbs makes!) Since you work from home, will you need/have Internet access and will it cost you an arm and a leg? Do any of you have health issues that makes distance from health services something to be concerned about?

You might try talking to other realtors. We had one out here, when we were thinking of buying an undeveloped lot, and she was good enough to spend a couple of hours warning us what that might entail - not to discourage us, but to make sure we were informed. So good realtors do exist.

[chisub]

Sounds like you have a lot to consider, good luck! We are in the process of narrowing down our search for our next home as well. We moved out to Aurora/Naperville while my husband worked right off the Metra and then we both ended up working from home since we owned our own businesses. Lo and behold, I sold mine and my husband built his up and now he has an office in Bucktown (so he needs to drive in). We only lived in Chicago for 2 years before we moved out to Aurora, but now we know the area better, even though I still feel pretty lost in the process since there are so many towns/neighborhoods to consider. So while we hope that our next home is going to be the home that we raise our kids in through college (they are 1 and 3 now), I am also thinking resale, resale, resale!

[linicx]

There is no lot worth $300K in an essentially dead subdivision in the sticks. The problem is this: It is a roll of the dice to buy this house.
1. - It is the developer's model home and there is a lot of money tied in it that he wants back.
2. - It is in an undeveloped subdivision. It may never be developed.
3. - It may or may not have a new home warranties that are valid.
4. - Very often roads in those places are not plowed. You could possibly wind up with a 3/4 Ton 4x4 truck with a blade on it so you can plow out your own driveway and street.
5. - You are in the type of isolated area that invites trouble.
6. - The longer a house sets empty, the more problems it can develop from neglect.
7. - The housing market is still unsettled. There is no guarantee the houses in the area will ever meet or exceed what you paid in the next 10 years.

If you can afford to stand in a shower and destroy $750.000 cash then buy your dream house. If you cannot then do not. It is a dicy proposition to get involved with any house in that price range that is in an ungated, isolated, area with no paid 24/7 security

[Aleking]

that area will never come back

The end of sprawl? Kendall County, other outlying areas see little growth - Chicago Sun-Times

[chet everett]

The risks to an individual buyer in a situation where development has stalled are frankly enormous -- you could be stuck for huge property taxes, outsize assessments, potential legal issues on a property that, should you need to sell, will almost certainly result in a major hassle and likely loss.

In short, this is the kind of situation that really is better suited to a another developer buying the finished home and most / all of the undeveloped lots to serve as a springboard to "repositioning" the whole subdivision -- maybe there is a possibility that the right kind of developer could change the mix / price point and/or get the kind of amenities (private or government funded) to attract enough interest that the whole project could again make economic sense.

I have seen too many stalled developments result in the "early adopters" ending up embroiled in litigation in a futile effort to have the rest of the lots built out as originally envisioned -- that is almost certainly NOT a possibility. Whether the original developer can restart building efforts or another plan is approved odds are that the woods and other features that currently make the area attractive to the OP are going to be targeted as something that needs to "re-imagined". Fact is that the "over exuberance" of too many builders over the past decade has resulted in many such "high end" developments that were, even at peak demand, out of step with market realities. Towns like Barrington and other areas with a whole lot more history / record of desirsbility going for them spawned developers' dreams that failed to acknowledge the limits of employment and commuting times... Factor in the completley messed-up property tax situation that basically every town in Illinois faces and buying an overpriced home in an area without the employment base / commercial real estate to help shoulder that burden and the magnitude of these "white elephant clubs" means any sane homeowner should stay away...

[krispro6]

Thanks everyone for the great insight. I agree it is quite a dicey proposition. I hadn't thought about security being an issue!

[almost3am]

Well, I should be careful to respond as Oswego is a bit too far out for me, but if I were you I would be very careful. I always worry about resale, and that could be difficult in the next 5 years. As Chet said, the subdivision will likely not develop as originally planned, we are at a major crossroad in real estate, so previous visions should be discounted. While Naperville is not your type of location, it seems it has more appeal to similar buyers in your position...but, maybe they can't get the same sq footage you can get in Oswego. Schools are often a concern, and while the physical building of Oswego's high school is beautiful, pay attention to performance.

Anyway, if you plan on sticking around for the long term, it may be fine, but if resale is a concern I would look elsewhere. It is a really hard time to buy high end in areas that are not super popular, imo.