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Thread: Teardowns reshape suburbs, and selling strategies

  1. #1
    Cyburbian Plus
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    Teardowns reshape suburbs, and selling strategies

    Headline and Article from the NY Times:
    http://www.nytimes.com/2005/08/21/re...cYOpNffb7JpTeg

    This was their National Perspectives article.

    Highlights:
    a new type of real estate market. A former securities trader, Mr. Hickey envisioned a separate property exchange where sellers could market their properties directly to builders without having to pay a full sales commission or go through the charade of house showings.

    Hence the creation of Xchange Properties, a real estate company specializing solely in teardowns.

    In some communities where Xchange operates, the redevelopment value of teardown properties is triple the sale price of the land and existing house, according to an analysis conducted ....


    Xchange Properties website: http://xchangeproperties.com/
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  2. #2
    Cyburbian thinknik's avatar
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    ..it was only a matter of time.

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    Cyburbian Plus Zoning Goddess's avatar
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    I have had more than one person suggest my house would be a "tear down". It's on 1/2 acre with a pond/privacy behind, a 1200 s.f. '50's ranch. My childhood home, almost 4000 s.f. in a very desirable suburb, was a tear down a few years ago. It sucks. Most of my childhood neighborhood is now gone for the same reason.

  4. #4
    Let's be honest, those 50's ranchers weren't built to last. They were built to house people as cheaply as possible. They're past their planned obsolescence date, they don't fit the requirements of today's buyers and they're sitting on land of extremely high potential value. We're always cheering on infill development, there's some infill development.

  5. #5
    Cyburbian thinknik's avatar
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    Ahem.

    I am wondering if you know what you are JAWing about. I live in a 49 ranch starter house and its built better than the new McMansion see going up down the street.

    In fact, we've got quite a few 3 bottle hurricanes under our belt now...

  6. #6
    Cyburbian Plus Zoning Goddess's avatar
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    Quote Originally posted by jaws
    Let's be honest, those 50's ranchers weren't built to last. They were built to house people as cheaply as possible. .
    You have got to be kidding. Our house that got razed was over 4,000 s.f. with huge windows overlooking a lake, big rooms, and solid enough to withstand many hurricanes without a dent. As were all the houses in our neighborhood. All 50's ranches were not little crackerboxes that would not hold more than 2 people comfortably. I think every generation builds houses they hope to last; who builds for obsolesence?

  7. #7
    Teardowns don't make sense unless the value created by building a new house from scratch is greater than the value created from renovating the existing house. Old buildings built from hard materials with long lifespans tend to be fixed up because they depreciate at a slow rate. Old buildings built from wood depreciate very rapidly, regardless of the worksmanship involved in their construction or the amount of space they provide. Home buyers don't want the risk involved in buying old wooden buildings. Even if the house has survived 3 hurricanes, there's no way to be sure it'll survive the next one.

    You may believe the quality of the new houses replacing them is just as low or even lower, that would be mistaken. The older house might have had the same quality as the new one 50 years ago when it was new. Now that it is old and worn down, and the cost of upkeep is rising, it is of much lower quality. To bring it up to standard requires significant investment, so much investment that you might as well just build a new house.

  8. #8
    Cyburbian thinknik's avatar
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    Originally posted by JAWS:
    "Even if the house has survived 3 hurricanes, there's no way to be sure it'll survive the next one"

    Thinknik: Who said 3 hurricanes? I said "quite a few 3 bottle hurricanes."
    I guess that means you've never been in one.

    Guess we'll just have to wait for the next 3 bottle hurricane to see what the McMansion down the street has got in her compared to my old, worn down, depreciated ranch.

  9. #9
    Cyburbian jread's avatar
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    Quote Originally posted by jaws
    Teardowns don't make sense unless the value created by building a new house from scratch is greater than the value created from renovating the existing house. Old buildings built from hard materials with long lifespans tend to be fixed up because they depreciate at a slow rate. Old buildings built from wood depreciate very rapidly, regardless of the worksmanship involved in their construction or the amount of space they provide. Home buyers don't want the risk involved in buying old wooden buildings. Even if the house has survived 3 hurricanes, there's no way to be sure it'll survive the next one.

    You may believe the quality of the new houses replacing them is just as low or even lower, that would be mistaken. The older house might have had the same quality as the new one 50 years ago when it was new. Now that it is old and worn down, and the cost of upkeep is rising, it is of much lower quality. To bring it up to standard requires significant investment, so much investment that you might as well just build a new house.
    I agree with this to an extent. Some of the older homes I've looked at just didn't compare to the newer ones coming up. Now, I'm not talking about some assembly-line KB Home, but there are many builders who are creating quality homes. The new homes are extremely energy efficient, built using hardy-plank (doesn't burn and termites can't eat it), use much safer and up-to-code electrical and plumbing setups, etc.

    I think that I'd rather have a new home that is built in the same style as the older homes.

  10. #10
    Cyburbian thinknik's avatar
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    Quote Originally posted by jread
    I I think that I'd rather have a new home that is built in the same style as the older homes.
    Oh good, fake 50s ranch style -- hey, I'll take that over a McMansion anyday!

  11. #11
    Cyburbian jread's avatar
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    Quote Originally posted by thinknik
    Oh good, fake 50s ranch style -- hey, I'll take that over a McMansion anyday!
    I think Victorian would be even better... hardwood floors and all

  12. #12

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    Quote Originally posted by thinknik
    Ahem.

    I am wondering if you know what you are JAWing about. I live in a 49 ranch starter house and its built better than the new McMansion see going up down the street.

    In fact, we've got quite a few 3 bottle hurricanes under our belt now...
    I agree. Modern McMansions illustrate very clearly the maxim that money does not always (or often) equal good taste.

  13. #13
    Cyburbian thinknik's avatar
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    Ranch-Mansions vs. Vic-Mansion-torians
    What is our part of the world coming to?

  14. #14

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    Quote Originally posted by jread
    I agree with this to an extent. Some of the older homes I've looked at just didn't compare to the newer ones coming up. Now, I'm not talking about some assembly-line KB Home, but there are many builders who are creating quality homes. The new homes are extremely energy efficient, built using hardy-plank (doesn't burn and termites can't eat it), use much safer and up-to-code electrical and plumbing setups, etc.

    I think that I'd rather have a new home that is built in the same style as the older homes.
    But-even given that, what if the new home is THREE TIMES LARGER than every other house in the neighborhood? What if it now blocks views, denudes a forested lot, and shades the neighbor out? There are reasons for concern by the neighborhood's residents. What if said new home causes a massive increase in tax appreciation for the neighborhood. Even a well-insulated 4000 square foot McMansion will still use more energy, more resources, more everything, than a well-rehabbed, more modest house in keeping with the neighborhood's scale.

    Now, if we were really talking about well-planned, well-designed urbanization of a older suburb, (like the APA guy), that can be a different story. Just bloating the square footage for one family on one lot does not represent an unalloyed blessing.

  15. #15
    Cyburbian thinknik's avatar
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    "What if said new home causes a massive increase in tax appreciation for the neighborhood."

    Can you expand on this statement -- otherwise I would say you are doing pretty good with the list of grievances against the McMansionization of the older and traditional neighborhoods.
    * other stated problems are increased run off and loss of affordable housing, poor conservation.

  16. #16
    Cyburbian jread's avatar
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    Quote Originally posted by BKM
    But-even given that, what if the new home is THREE TIMES LARGER than every other house in the neighborhood? What if it now blocks views, denudes a forested lot, and shades the neighbor out? There are reasons for concern by the neighborhood's residents. What if said new home causes a massive increase in tax appreciation for the neighborhood. Even a well-insulated 4000 square foot McMansion will still use more energy, more resources, more everything, than a well-rehabbed, more modest house in keeping with the neighborhood's scale.
    Now that I definitely have a problem with! I think the new homes should be restricted to the general size/style of the neighborhood around them.

  17. #17

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    Quote Originally posted by thinknik
    "What if said new home causes a massive increase in tax appreciation for the neighborhood."

    Can you expand on this statement -- otherwise I would say you are doing pretty good with the list of grievances against the McMansionization of the older and traditional neighborhoods.
    * other stated problems are increased run off and loss of affordable housing, poor conservation.
    Large, bulky homes demanded by our affluent classes encourage speculative pressures on existing neighborhoods (at least in Metropolitan areas not covered by property tax restrictions like Proposition 13). The increased values can increase taxes.

  18. #18
    Cyburbian Plus Zoning Goddess's avatar
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    Quote Originally posted by thinknik
    "What if said new home causes a massive increase in tax appreciation for the neighborhood."

    Can you expand on this statement -- otherwise I would say you are doing pretty good with the list of grievances against the McMansionization of the older and traditional neighborhoods.
    * other stated problems are increased run off and loss of affordable housing, poor conservation.
    Yeah, of all land uses, single-family homes place a disproportionately large drain on urban services, much greater than commercial, industrial, or office uses. Maybe why so many bedroom suburbs have a hard time financially. Plus, McMansions are butt-ugly (my opinion, sorry).

  19. #19
    Cyburbian thinknik's avatar
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    Ah good.

    So its just an extension of the same dressy dreck we get from the retail sector?
    How appropriate and wise of the National Home Builders Assn.

    But, what do we, the zoner/planner community know about how cities are trying to prevent it?

  20. #20
    Quote Originally posted by BKM
    Large, bulky homes demanded by our affluent classes encourage speculative pressures on existing neighborhoods (at least in Metropolitan areas not covered by property tax restrictions like Proposition 13). The increased values can increase taxes.
    I don't realize how that is a problem. Creating value is the whole point of town planning. People buy houses expecting the value to increase, so by redeveloping a depreciated area you are really fulfilling their wishes.

    If you think taxes are too high, take it up with the taxmen, not the people improving their surroundings.

  21. #21

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    Quote Originally posted by jaws
    I don't realize how that is a problem. Creating value is the whole point of town planning. People buy houses expecting the value to increase, so by redeveloping a depreciated area you are really fulfilling their wishes.

    If you think taxes are too high, take it up with the taxmen, not the people improving their surroundings.
    I'll be sure to let the senior citizen priced out of her home know your sympathy.

  22. #22
    Quote Originally posted by BKM
    I'll be sure to let the senior citizen priced out of her home know your sympathy.
    Let's be perfectly clear. The people upgrading their home are not in any way responsible for that senior citizen facing a tax increase. They don't have the power to increase taxes. The city increased the taxes. The city is responsible for determining what to tax people. They make the appraisals and determine how much to bill people. They didn't have to raise taxes on those senior citizens, they chose to. The choice of pressuring people to sell their homes was made by the city, not the homeowners. And those senior citizens may feel paying higher taxes is not worth keeping their homes, they still get to enjoy the higher value of their home when they sell and move to a location that better fulfills their needs. It's not all cons and no pros.

    What you are describing is akin to extorsion. Imagine a situation where a large man is standing next to a smaller man. The large man tells you that if you do not obey him, he will attack the smaller man. You are not in the wrong here no matter what you do. You can choose to obey or go on your way, but the only person committing something wrong is the extorsionist. You are caught in it against your will.

    Place blame where blame is due. Gentrification does not force people out of their property. Tax appraisers do that.

  23. #23
    Cyburbian thinknik's avatar
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    JAWS: "Creating value is the whole point of town planning."

    You can stop wagging your finger at us now.

    I don't know about others but I did not get into this field of "town planning" with the primary purpose of "creating value " or at least not the kind you are talking about.

    Herein lies the "rub" between you and I JAWS.

    I see the "value" of town planning in a "product" that goes beyond its economic / exchange value.

    Creating "use" value is why I got into planning. I like to think of myself as adding value to a communty people use for homes to live in peace and health, joy. Places people care about -- places where people care about people.

    I think your statment was telling JAWS when you said "the people upgrading their home are not in any way responsible for that senior citizen facing a tax increase."

    Of course they are, the government is people, "we" , you and "I" -- AND the people coming in and tearing down the old houses and building the giganic new big ones.
    We are a community, living together, being civil and respectful to one another especially in our architecture.
    Last edited by thinknik; 24 Aug 2005 at 8:10 AM.

  24. #24
    Unfrozen Caveman Planner mendelman's avatar
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    Here are the major and really only objective problems I see as part of the whole teardown issue: Squeezing out of renters and the potential high tax burden increase for elderly homeonwers on fixed incomes.

    (gentrification isn't really an appliacable term here because that deals mainly with revitalization of previously undesirable places, whereas teardowns are occurring in desirable and stable middle to upper income places).

    thinknik and jaws are both mostly right. Yes it is the community's fault for allowing the tax rates to potentially push out the elderly, but this doesn't mean that the development rights of the individual property owners should be restricted to such a high degree to prevent reinvestment and attainment of the individual's desires.

    If the community (local municipality, really) decides that the teardown trend is not benefiting the general populace then it is the elected official's responsiblity to review and/or modify the development regualtions to mitigate the negative effects (loss of "affordable housing", financial strain on elderly) and not restrict the positive effects (reinvestment in the community, fewer greenfield developments, more tax base for wider community activities)

    Lastly, the affordable housing issue associated with the teardown trend is a bit of a red herring. Where I work, we are having large numbers of teardowns in our neighborhoods and most of the houses being demolished are in the $270,000-$325,000 range, which in our region is not considered to be "affordable". The best method for increaseing the stock of affordable housing would be to relax (within limits) the development barriers preventing the creation of more multi-family developments (townhouses, flat buildings, apartment buildings, etc)
    Last edited by mendelman; 24 Aug 2005 at 11:05 AM.
    I'm sorry. Is my bias showing?

    Let's not be didactic in this profession, because that is a path to disillusion and irrelevancy.

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  25. #25
    Forums Administrator & Gallery Moderator NHPlanner's avatar
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    Quote Originally posted by jaws
    I don't realize how that is a problem. Creating value is the whole point of town planning.
    I disagree. While creating value may be an result of planning, I would not consider it to be the point of planning.

    The point of planning, at least to me in its must direct form, is making places better places to live and work. Anything else is gravy.
    "Growth is inevitable and desirable, but destruction of community character is not. The question is not whether your part of the world is going to change. The question is how." -- Edward T. McMahon, The Conservation Fund

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