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To rehab or not to rehab...is this the question? Or how I learned to demo old homes.....

Rehab vs. Demo

  • Rehab it every time and the City needs to get it's act together!

    Votes: 2 28.6%
  • Demo that crap, out with the old and in with the new!

    Votes: 2 28.6%
  • Some other socialist answer........

    Votes: 2 28.6%
  • This study was done by Harvard, so it means NOTHING! Also, why do you hate 'MERICA?

    Votes: 1 14.3%

  • Total voters
    7
  • Poll closed .

The One

Cyburbian
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#1
Take a look at this recent study that suggests a decision to demo should be carefully considered.

http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/w13-12_cleveland_0.pdf

http://clevelandrestoration.org/preserving_landmarks/HarvardStudy.pdf

"In the five neighborhoods where “code only” was economically better than demolition, they determined that, if they reverse-engineered the projects so that the loss on the rehab was the same as the cost of demolition, $10,000, “this often provided for significant upgrades which might include items like a furnace, wiring upgrades, sidewall and attic insulation, or window repairs.”

Meet Code Only vs. Mechanical Upgrades vs. Green Building
 

dvdneal

Cyburbian
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#2
Obviously each case should be looked at for its own merits, but I'm a knock it down and start over kind of guy. If you can remodel for less, then I say go for it.
 

mendelman

Unfrozen Caveman Planner
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#3
Thanks for the links. I'm in NE OH so this study fits my local market (in same region, but much better demos (HH income and RE values), but this study should help with a potential residential rehab plan we're looking to start.
 

kjel

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#4
Thanks for the links. A lot of parallels to Newark and my experience with NSP rehab as well as foreclosure/REO properties.

Whether or not to rehab is a difficult question. It often costs as much, if not even more, than new construction. After being run ragged by my ED wanting to buy everything he saw in my first 6 months on the job, I devised a little tool that gave me a fast answer of whether we should buy something or not for the NSP program. The answer was no 100/100 times so I put the halt on acquiring any more property and just focused on what we already have. I am still sitting here 4 years later with 2 very derelict houses that I have no exit strategy from due to a catastrophic party sewer failure from a 3rd attached house (we own 2 of 3) that the city took 2.5 years to shut down.

I did tear down two houses that it made zero sense to rehabilitate because they were too far gone. My personal home was a gut rehab and very far gone, however if it was not rehabbed it likely would have meant the loss of 3 other homes as it's 1 of 4 attached rowhomes. We also had previously built 10 new homes on the same block so at least there was some already existing value. In our particular market due to the stringent design standards, building new is often much costlier than a rehab.

Old housing stock that has suffered decades of disinvestment is a tough nut to crack. Some of my policy suggestions based on experience:

1. Be flexible with the subsidy or grant amounts. A hard cap, especially if low, won't achieve the desired outcome.
2. Determine minimum standards of rehab. There's a lot of room between code compliant and a home having another 30 years of life. Our organization's philosophy is that a home should at least have the life span of the buyer's 30 year mortgage.
3. Identify concentrated areas of highest need. Clustering projects makes the biggest impact and will help draw in other investors or neighborhood pioneers. Rehab homes where there has already been some activity or there is an ability to rehab 3 or more on the same block.
4. Piggyback on other programs such as CDBG and Weatherization Assistance. Often times a house won't qualify for weatherization dollars because of lead, mold, or a bad roof but if these issues can be remediated through rehab funds they can then qualify.
 

luckless pedestrian

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#5
I think rehab or restore if the building has some historic value - old doesn't necessarily equate to value

if it's a period bungalow, victorian, whatever, the it's worth it - but some older construction was thrown up so evaluate it on a case by case basis to determine if it's worth the money
 
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#6
So... if you get rid of the "blight" by demo'ing the structure, then what?

If the current owner did not maintain the structure, will they maintain the vacant lot—or will it become a vermin-infested community dump? Who will pay for cleanup?

How much will it cost to build something new on the site? Will that be any more economically-viable?

Are we going to see entire blocks in established-but-distressed neighborhoods razed and replaced by high-density, multi-family "PD" rental units?
 

The One

Cyburbian
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#7
Yup

As Darnoldy points out......what you end up with could be much worse than rehabed old homes and low density history:-c
 

mendelman

Unfrozen Caveman Planner
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#8
I read through the study and it makes sense, but is depressing as well. It basically shows that market forces have made certain areas of the Metro effectively worthless.

NE OH and Cuyahoga County in particular is in a stagnate, at best, growth pattern. The market failures of certain portions of the Metro are the result of population stagnation (the 1960 census is effectively the same as the 2010 census). Despite the population holding steady, there is still a lot of money/income/wealth generated within the Metro. This permits the continued moving 'out' of the population and jobs within the Metro from the historical core (Cleveland and central Cuyahoga County). When these dynamics are present there is going to be losers at the bottom end of the housing/jobs intra-metro movement.

And the areas/communities in this study are, unfortunately, the losers in this game. Kind of what a past boss described as "Moving the deck chairs around on the Titanic."

It is just not market feasible to rehab such houses simply due to the costs of materials and labor which are set regionally, nationally or internationally.

Sometimes simply demolishing many/most of the worst properties is the most efficient and effective method. After reading about and experiencing this phenomenon in person professionally for the past 15 years, I can confidently say that a vacant lot is always better than a vacant building.
 
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kjel

Super Moderator
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#9
I read through the study and it makes sense, but is depressing as well. It basically shows that market forces have made certain areas of the Metro effectively worthless.

NE OH and Cuyahoga County in particular is in a stagnate, at best, growth pattern. The market failures of certain portions of the Metro are the result of population stagnation (the 1960 census is effectively the same as the 2010 census). Despite the population holding steady, there is still a lot of money/income/wealth generated within the Metro. This permits the continued moving 'out' of the population and jobs within the Metro from the historical core (Cleveland and central Cuyahoga County). When these dynamics are present there is going to be losers at the bottom end of the housing/jobs intra-metro movement.

And the areas/communities in this study are, unfortunately, the losers in this game. Kind of what a past boss described as "Moving the deck chairs around on the Titanic."

It is just not market feasible to rehab such houses simply due to the costs of materials and labor which are set regionally, nationally or internationally.

Sometimes simply demolishing many/most of the worst properties is the most efficient and effective method. After reading about and experiencing this phenomenon in person professionally for the past 15 years, I can confidently say that a vacant lot is always better than a vacant building.
We look a lot to Cleveland and Cuyahoga county and their experience with predatory lending, the real estate market collapse, population exodus, and abandoned/vacant property issues since there are many parallels between them and Newark. In most instances, I agree that a vacant lot is better than a vacant building.
 
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