Low inventory levels are making house shopping a challenge for many Americans. One solution gaining in popularity: Tearing down homes in good locations, erecting new and bigger ones in their places.
Of all single-family home starts in 2015, about 7.7%, or 55,000, were teardowns, according to the National Association of Home Builders. That number could very well climb. “Since we expect single-family starts to grow, and a shortage of lots is a widespread problem, teardown starts should increase as well,” said Paul Emrath, vice president for survey and housing policy research for the NAHB.
That has some housing preservationists concerned.
Teardowns became popular in the late 1990s and early 2000s, but largely waned when the housing market crashed about a decade ago. “As the real estate market has picked up around the country, we are seeing it return,” said Jim Lindberg, Denver-based senior director of the National Trust’s Preservation Green Lab. Anecdotally, he’s hearing tales of teardown fever in places including Portland, Ore., Boston, Chicago and Denver.
Often builders snap up properties, tear down and rebuild homes much larger than their predecessors — without a buyer waiting in the wings, he said. By renovating instead, the charm and character of the home can be retained, he and others argue.
Moreover, when new homes aren’t in line with the surrounding structures, communities can suffer, some say. Homes can also be situated too close together when a new house takes up a larger portion of its lot.
The new home is typically three times the value of the old house — at least, said Jean Follett, a historic preservation consultant in Wheaton, Ill.
Still, it’s not difficult to see the case for building new. Many buyers want open floor plans, and houses built before a certain time period typically don’t have them. Older houses also can require electrical rewiring or replacement of the plumbing. Plus, people tend to favor established communities that aren’t in far-flung suburbs, oftentimes in places with large swaths of modest homes — and many times that means tearing down the old to rebuild.
In Chicago, older homes tend to have basements with low ceilings, and sometimes that is the tipping point for considering it a teardown, said Rich Kasper, principal with Conlon, a real-estate company in Chicago. When these homes are rehabbed, the basements can hold back would-be buyers who want these spaces for playrooms and recreation rooms, perhaps an extra bedroom and bath.
“I [was selling] a gut rehab…and the builder did a gorgeous job,” Kasper said. “But of all the showings we had, and a handful of second showings, the people who didn’t move forward, they would say it’s the height of the basement.” The basement was about eight or eight-and-a-half feet tall.
Many buyers also aren’t up for the hassle and unpredictably of renovations, especially if it means living in a home during a months-long remodel. “With two working parents, no one wants to take on fixer uppers,” added Follett. Builders can better estimate costs when they start from scratch, Kasper said.
Blending in with the old
Most experienced builders — and the people who want to buy those new homes — don’t want structures that stick out among other quainter houses on the block, Kasper said. Sure, there are some people who don’t mind being “that guy” with the ultramodern home nestled among a sea of bungalows. But he sees less of that in recent years, perhaps as people look unfavorably on houses that seem out of place.
But even if they blend in on the style front, the new, large homes may not be the most sellable, and in fact may become “white elephants,” Follett said.
“Builders would like to argue that the homes are more [energy] efficient, but they’re still using a huge amount of energy,” she said of the larger, new homes. What’s more, ranch homes are often teardown targets, and those one-story homes can be good for aging homeowners — including the large population of baby boomers, Follett added.
As the issue gains steam, public planning laws are being considered in some places.
In Los Angeles, for example, the “mansionization” problem is being addressed with proposed changes to single family zoning rules, said Adrian Scott Fine, director of advocacy at the Los Angeles Conservancy, a nonprofit organization that aims to preserve historic architecture in Los Angeles County. In addition to square footage caps, one stipulation discourages attached garages, an effort to maintain the natural separation of homes with a driveway.
You can’t fault people for buying the big houses and seeking out neighborhoods with mature trees and existing amenities, Fine said. But for people who have lived in the neighborhoods for years, “they feel like they’re under siege. It’s beyond big house and small house, it’s privacy — they’re looking right into the backyard.”
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