Eye On Housing
Roughly 10.2% of single-family homes started in 2016 qualify as tear-down starts, up from 7.7% in 2015, according to the latest estimates from NAHB. As defined here, a tear-down start means a home built on a site where a previous structure or evidence of a previous structure was present before the new home was started, as reported by the new home’s builder.
Tear-downs are defined this way as a practical matter, this effectively being the only way to produce an estimate. The underlying assumption is that, if a structure had been present on a building site recently, it would usually leave some evidence that a builder should be able to detect. NAHB used the February 2017 survey for the NAHB/Wells Fargo Housing Market Index (HMI) to collect this type of information. The HMI survey is sent to a panel of single-family builders stratified by size and geography.
Because the goal is to estimate the total number of starts attributable to tear-downs, the builders’ answers were weighted by the number of homes they started in 2016. The above figure is based entirely on responses weighted by the builders’ single-family starts.
Applying the weighted percentage of 10.2% to the 2016 total of 781,000 single-family housing starts reported by the Census Bureau produces an estimate of 79,300 single-family tear-down starts—up significantly from the 55,200 in 2015 that NAHB reported last year. Although single-family starts have been relatively flat lately, they were up by about 10% in 2016. So the increase in tear-down starts in 2016 reflects the continued recovery of the single-family housing market, as well as an increase in the reported tear-down percentage.
The 79,300 single-family tear-down starts in 2016 are divided across the four principal Census regions as shown below:
Note that tear-down starts are not the same thing as infill development (i.e., homes built in an already established neighborhood or community). Vacant land is often available within an established community, and a tear-down can easily occur in an outlying area—for example, if an isolated older structure simply becomes obsolete and needs to be replaced.
Thanks NAHB! This is difficult data to come by…as you know most residential builders that teardown and build new are one man/women shops. Most of those builders are not NAHB members and not part of your survey…either way, the major metro markets and their surrounding communities are built up with little or no vacant land. If the consumers want new construction, there’s only one way to get it…..
Thanks,
Brian
I think with the increase on land value in many areas, plus the rapid ageing of older homes relative to newer and renewable materials, it can make sense for many to tear down. Instead of adding extensions or renovations, if you already own the land it can be cheaper to tear down the previous property and start again with a new build. Especially since many building companies are becoming competitive with their pricing.
Where I build in the suburbs north of NYC, all we do is teardowns. There are almost no vacant lots available, all the builders that I know buy old homes and tear them down. The housing stock that my father’s generation built in the 1950’s-70’s is the most desirable to teardown but, the pushback from the community is getting stronger.
Teardowns may seem a good idea for redevelopment of certain spots within areas. But sometimes when the motive of a teardown is to create bigger and better homes for the rich and wealthy then the environmental impact should be considered. The carbon emission implications of teardowns is significant, and taking the renovation instead of removal route can have significantly better results. If single-family homes were replaced by more efficient, more dense multi-unit developments, the shift could contribute to creating more sustainable, affordable, and available housing stock