My wife and I have toyed with the idea of buying some new construction there and renting it out to break even on the mortgage, but that is purely a speculation play that it will keep appreciating significantly.

The entire market looks to have been squeezed into speculative buying territory, which I'm not comfortable with.

You're near Chicago, I speculate that there's a ton of space to build your networks in a large urban center like Chicago.Your likely job title will be: assistant project manager, analyst, development associate.Whatever it is, you will be working for a more seasoned project manager or senior project manager.

You basically are doing a spec (meaning you're building speculating someone will buy) , custom home.

Essentially what you are considering is pro forma investing - buying something based on what you or what someone else thinks might be the best possibly scenario, and this is purely speculative at best.

The banks didnt wreck them the market and levered speculators did.

That being appreciation in the short term is speculation, risky and not something you should count on when making a call about doing the deal.  

This smells too much like the real estate bubble we just went through, where price was driven by speculation rather than real numbers.

I am only speculating that because its a free and clear property, they're not dealing with vacancies in an urgent matter?  

The whole point of this thread is that bubbles happen and speculating that high priced real estate will go even higher is dangerous, unless you have an excellent handle on all the factors affecting a market or you have the wherewithal to ride out a bubble burst for several years.