The frequency of teardowns — situations where an older home is purchased and demolished to make way for a newer, large residence — is increasing, specifically in Chicago.

According to a recent release by Re/Max, construction permits were issued for nearly 2,100 new single-family homes in the Chicago area during the first four months of 2015, with teardowns paving the way. This permit volume represents a 54 percent increase when compared to the same period in 2013.

Because of the lack of vacant land in many Chicago neighborhoods and suburbs, buyers are acquiring older wood-frame homes or two-unit buildings with plans to level them. These types of properties are selling anywhere from $600,000 to $1 million, according to Re/Max.

remax home sales chicago

In the past, families who would live in the new home following construction completed most teardowns. Today it’s often builders who are responsible for the majority of teardown activity, as these groups are growing more confident in demand for new homes and seeking sought-after sites.

Builders seeking residences to demolish usually follow strict financial guidelines but will make an all-cash purchase if the price is right. According to Re/Max, the majority of properties listed by its Chicago agents that are viewed as a potential teardown have generated multiple cash offers from homebuilders and developers.

The new homes replacing teardowns tend to have common characteristics. Most range from 2,500 to 4,500 square feet and could include a finished basement, four or five bedrooms, three or more baths, a large family room, 9- or 10-foot ceilings, or a three-car garage.

The exterior typically is brick or a brick and stone combo. New homes built as part of a teardown are also roughly 20 percent smaller in square footage than a decade ago.

Distressed properties or aging homes are the most common candidates for teardowns. Chicago’s uptick in teardown activity comes at a time when Illinois leads the nation for highest percentage of distressed sales in May.

Of all closings during the month, 18.6 percent involved a distressed property. Other states with high percentages include:

  • Michigan (15 percent)
  • Florida (16.3 percent)
  • Delaware (14.9 percent)

Email Erik Pisor.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
The best event in real estate kicks off next week! Tickets are selling quickly.Register Now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription