Pulte Group Inc. has purchased 45 bank-owned lots in the western suburb of Burr Ridge located south of 79th Street between Country Line and Wolf roads. According to Crain’s, the lots are part of a 52-lot development that was partially built by Westmont-based developer Callaghan Associates before its lender, Midwest Bank & Trust, filed a foreclosure lawsuit against the project in February 2010.
Three months later, regulators shut down Midwest and its assets were sold to FirstMerit Bank. Pulte has agreed to buy the lots from FirstMerit, according to people familiar with the transaction and though a sale price could not be determined, the lots have most recently been listed at $10.5 million.
Pulte plans to build single-family homes ranging from 2,600 to about 3,400 square feet, sources say. Like Callaghan, Pulte also plans to target empty-nesters with features including first-floor master bedroom suites. Prices for the homes will be ranging from about $575,000 to $700,000, a significant drop from Callaghan’s prices, which ranged from about $900,000 up to $1.5 million.
Despite the lower prices, Pulte may still face the challenge plaguing many homebuilders in today’s market: persuading homebuyers to buy new homes when Chicago-area existing-home prices have fallen about 30% from the market’s peak in 2006, according to the Standard & Poor’s/Case-Shiller indices. However, the reduced pricing, combined with the site’s location close to the Stevenson expressway and Burr Ridge restaurants and shopping, could improve Pulte’s chances and bode well for the development, says Beth Burtt of Hinsdale-based Brush Hill Realtors, who is not involved in the sale.
Custom homebuilders with high-end prices dominate Burr Ridge, said Tracy Cross, president of the Schaumburg-based firm. As a result, homes by a large public company that can build cheaper, will appeal to buyers.
“A production builder with Pulte’s discipline will take a more serious view at people’s income and ability to sell their homes, instead of pricing like the go-go days of 2006,” said Cross.
Pulte led homebuilding companies in the Chicago area in sales volume for the first nine months of 2011, with 314 transactions, or almost 14 percent of all units sold, according to residential consulting firm Tracy Cross & Associates Inc. Pulte has also been aggressive about acquisitions in the past 18 months, said Cross, pointing to deals the company has made in distressed townhome developments in Burr Ridge, Arlington Heights and Park Ridge.
Moreover, new construction still appeals to buyers — including empty-nesters and busy professionals — who may not want to do any renovating, said agent Linda Feinstein of Hinsdale-based ERA Team Feinstein LLC.
“I think new will sell there,” said Feinstein.