All or Nothing at All
The 46 residents of the Ernie Pyle subdivision in Chicago recently sold their 17-acre neighborhood for $16 million. Their attorney estimates they each received about five times the amount their homes would fetch in isolated sales.
Only by selling all of their lots as a single tract of land could they reap this benefit. Other such "assemblages" have succeeded elsewhere in Illinois and in California, Georgia, and Virginia. Many neighborhoods rest on land that is much more valuable to a commercial developer than to the individual homeowners.
Yet developers often have trouble buying enough lots in separate transactions to get the room they need for their projects. If one homeowner in an awkward location holds out, the deal is dead. In an assemblage, the residents themselves remove this potential obstacle. People who are eager to sell—assisted in some cases by a real estate broker—solicit binding commitments from their less-eager neighbors to sell at a certain price. If they get enough commitments to put together a sizeable block of land, they place all the lots on the market as a single property.
In the past, federal and state governments have often employed their eminent domain powers to assist developers in acquiring land from several owners. In 1954, the Supreme Court upheld this practice, interpreting the Fifth Amendment's reference to taking private property for "public use" very broadly. But some legal scholars, including Richard Epstein of the University of Chicago, argue that this liberal interpretation of the government's eminent domain power is wrong. "There is good reason to believe that the received wisdom, which trivializes the public use limitation, is incorrect," he writes in his book Takings.
The increasing number of these residential assemblages (also called "lot pools") might provide further support for the movement toward a narrower eminent domain power. Even supporters of a broad power acknowledge that it conflicts with the notion of private property rights, but they claim this power is essential to the productive development of land. The assemblage phenomenon proves, however, that even a large group of sellers can work together if the price is right.