Fred Mohs calls it a rare event: Fifteen houses in the once tony Mansion Hill neighborhood, which sits north of the Capitol Square, are up for sale. "Properties here are typically in the same hands for 50 to 75 years," says Mohs, himself a longtime resident.
Their sudden availability attests to how swiftly the downtown housing market is shifting as UW-Madison students abandon old rental properties for the new student towers closer to campus.
The softened market has prompted student landlord magnate Steve Brown to reposition his real estate portfolio. Last fall, Brown sold five residential dorms to Dallas investors; now he's offering the 15 Mansion Hill properties to raise equity for his investment in the massive University Square redevelopment next to campus, which will include 359 student rental units.
For Mansion Hill residents, the downturn in the student rental market poses an opportunity: Can these time-worn student rental properties, built between 1853 and 1923, be sold as owner-occupied properties? Can they be rehabilitated and restored to their former glory, when Mansion Hill was the city's premier address for 19th century movers and shakers?
Preservation has always been a big issue for Mansion Hill. In 1976, it was designated as Madison's first historic district after an uproar caused by the demolition of several old houses for apartments and insurance offices. Today, Mansion Hill has the city's largest concentration of Victorian homes.
To attract rehabbers, the neighborhood association is sponsoring a walking tour and informational meeting on Aug. 8 at 6:30 p.m., starting at 512 Wisconsin Ave. While the homes won't be open for inspection, interior photos will be available, and attendees will be able to talk with homeowners who've undertaken similar rehabs. And city planning chief Mark Olinger will discuss possible city assistance for buyers.
"We're not looking for kibitzers, but people who might want to take on one of these properties," says Mohs.
Prices for the 15 houses range from about $400,000 to $900,000. But that's just the start. "They all need significant renovations - kitchens, bathrooms, central air conditioning - to make them attractive to permanent residents who want to live downtown," says Mohs.
Sheridan Glen, the former president of the Capitol Neighborhoods Association, estimates that buyers will have to spend between 25% and 40% of the purchase price to turn the properties around: "A house that cost $500,000 might need $200,000 to be fixed up."
For decades, houses like these have been worth far more as student rentals than as single-family homes. Students are notoriously hard on rentals, but not necessarily demanding as to upkeep. Hence these buildings have commanded top dollar when they sold, even though they were in need of substantial improvements.
The conundrum: How can new buyers justify spending big money to upgrade these properties for owner-occupancy when their value as homes might prove to be less than if the buildings were still treated as slightly shabby rentals?
Olinger suggests the "upside down" economics of repairing houses like these might justify the use of city subsides like tax increment financing.
"They're like an old man without health insurance," says Glen. "The houses are just going to keep deteriorating. It's sad. Then someday someone will say: 'These houses are beyond repair. Let's tear them down and build a high-rise.'"