Just when you thought home prices couldn’t get any crazier.
An uninhabitable, fire-ravaged home on a quarter-acre lot in Melrose was recently listed for sale at $600,000. But now, after receiving multiple offers in just two weeks, the seller is raising the price by another $50,000.
“The seller needs that number [$650,000] in order to make a move that he wants to make and stay in the Melrose area,” said Bill Butler, the listing agent with Re/Max Leading Edge. “Otherwise they will just rebuild.”
An online listing for the 504 Lebanon St. house that was the scene of a three-alarm fire in March notes that the 2,690-square-foot building offers a “unique development opportunity.”
And despite the now-dilapidated condition of the home, the family selling it received several offers following a recent open house (in which potential buyers weren’t actually allowed inside). Another open house is scheduled for this coming weekend.
The steep price for a burned-out shell on a modest-size piece of land is a testament to the region’s hot housing market, where chronically low inventory has pushed home and land prices to record highs.
“Land in general is at a premium in Melrose because the community is all built up,” said John Bulman of Brad Hutchinson Real Estate in Melrose, who has a client who made an offer on the Lebanon Street property. “It’s hard to get something below $500,000.”
Butler said the property is zoned for a two-family home, which means a buyer could tear down the current structure and build two condos.
“That location is central in Melrose,” he said. “It’s very close to downtown and public transportation. It’s an ideal location for new construction.”
The house was last sold in 1982 for $65,000, according to Melrose assessment records. The structure itself was valued at $365,000 — before the fire — while the land was valued at $250,000.
At more 11,000 square feet, the lot is “good-sized” for the area, said Paul Morgan of JP Morgan & Co. Real Estate Appraisers and Consultants in Wakefield. His recent appraisal of the town found that over the past three months, homes in Melrose have sold for an average of 8 percent above asking price.
“So that particular property, as a potential two-family development, would have very strong appeal,” he said.
But when factoring in the high cost of construction, the profit margin for a developer could be “very tight” for two new condos on the site if they were priced at between $600,000 and $700,000 a piece, Morgan added.
Bulman said single- and two-family homes in that neighborhood are worth between $550,000 to $900,000.
Most of the offers that came in, Butler said, were from prospective buyers interested in tearing down the house.
He also thinks the condos on the site could sell for $850,000 to $900,000: “There’s very little new construction in Melrose,” he said.
The asking price, coupled with the house’s sorry condition, has attracted some attention online. A Zillow.com post featuring the Melrose house floated toward the top of the Boston subreddit page on Thursday with the headline, “Boston Real Estate Market in a Nutshell: Home Destroyed By Fire For Sale — $600K.” One commenter wrote, “We’re really pushing the concept of what a ‘sellers market’ is to the limit around here.”
Butler attributed the market’s competitiveness to variety of factors.
“We’re still in the middle of a historic real estate market with very little inventory and outstanding demand,” he said. “Now we have companies like GE and Amazon moving in. The tech sector is thriving in Boston, education has always been strong — we’re in a situation where there’s just not enough housing to meet the demand.”
Melrose, about 7 miles from Boston, is also an ideal commuter suburb, Butler said.
“We’re an extremely walkable city with a thriving main street and downtown area with gourmet restaurants, shopping, and excellent schools,” he said.
As for the property’s eventual selling price?
“We’ll see what the market bears,” Butler said. “If [the owner] doesn’t get the number, he’ll rebuild.”