Demolish old house and build a better one
Hi all — We’re not finding any good lots in convenient neighborhoods. They’re all built out.
So we’re thinking about buying a cheaper house, demolishing it, and building a new one in its place. Have any of you gone this route? Lessons?
Advantages: Energy efficiency, comfort, roominess, and getting exactly what I want in terms of insulation, wiring, networking, etc. Also, this route creates more options on the buy side, e.g. ratty foreclosures and fixer-ups are now an option…
Disadvantages: Cost, probably. Time, compared to just buying some stupid house that is already built. What else?
I don’t like old houses in general. They tend to be ridiculously inefficient, uncomfortable, and low tech. I think landfills are fabulous, so I have no problem with sending a bunch of debris to one. I actually think a lot of houses should be torn down and replaced with much improved ones, just like that federal program that encouraged people to junk their old, high-polluting cars (was it called “Cash for clunkers?”)
I’m a bit concerned by the challenge of quality control and defect detection with a new build — I’ve seen and heard of a lot of defects in new home construction these days. In any case, what do you think?
Interesting article on this: https://www.realtor.com/advice/buy/lessons-from-tearing-down-my-house/
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Replies
It really depends on what the existing house is.
It also makes a big difference in cost if you can use the existing foundation. If you can work within that footprint without more foundation work, you can save a fair bit.
If it is a ballon framed clap board clad house, demoing it and re-build is cheaper than trying to get it energy efficient.
All brick is a bit different. Tearing down and rebuilding brick is not cheap, generally you want to re-use as much of that and only demo the rear wall to extend.
Around me there are a lot of mid century cinder-block+double brick mini bungalows. Those are built like a tank and can easily take 3 stories. With those it is those it is cheaper to build on top.
Thanks, I didn't think about the materials the house is made of, brick vs. balloon frame, etc. We're looking at both Tucson and Las Vegas – long story. Tucson is typically either wood frame + stucco, brick, or slump block. I'm not sure whether slump block is a thing elsewhere in the country. They're like large bricks. A lot of the slump block homes don't even have insulation. It's ridiculous. Vegas is mostly wood frame + stucco or siding.
We'd be true to the community and context as far as style of home, though I think we could do virtually anything for the underlying structure – 2×6 wood frame, steel frame, ThermaSteel, SIC Systems, ICFs, Bautex blocks, etc. Though I wouldn't feel bound to use the same structure or veneer as the old home – e.g. if it was brick, we might not use brick in the new one. It would depend somewhat on the community and context, history, etc.
The lack of wall insulation in warm climate is not as big of an issue. Even an R5 wall gets you most of your energy savings. Block walls are easy to insulate and air seal as you can glue foam over it, strap then re-side.
I'm in the land of full basements, slab on grade is non existent, thus when I say foundation, I'm generally thinking basement. About the only thing missing in older basement construction is exterior water proofing but otherwise most are pretty solid. There is a batch of cinder-block ones from the 60s era that are prone to cracking but that is about it, this is where it helps to have a local contractor's advice.
If the existing basement is not deep enough, one thing that can be done is raise the level of the main floor. This gets you a usable basement without having to underpin.
I don't know enough about slab on grade to comment on reuse vs re-pour.
For full basements, the floor slab is there for bracing the foundation (prevents the soil pressure from pushing the footing in), it doesn't need any post tensioning. Normally it is poured after the foundation done.
Thanks, when you say "foundation" are you referring to the basement *walls*? Foundation in Arizona means the slab, but you seem to be using the two terms as separate things. There won't be a basement in any house we buy in Tucson, or at least the probability is something like .01. The caliche in the soil makes basement construction a major deal. I think basements are rare in Vegas too.
The slump blocks *are* the siding. And the interior. The wall consists only of slump blocks, like in the house photo here: https://www.rcpblock.com/block-slump.html
There is no siding in Tucson except stucco over wood frame. Block walls tend to be raw block, especially if they're old houses.
Are you sure about the R-5? This isn't a warm climate — it's hot, hot, hot. AC bills are huge even in relatively modern, insulated homes, though I think it still costs less than heating in the Northeast and North-central parts of the US, and Canada. I think the outdoor-indoor temperature delta is a bit smaller than northern climes.
For me, foundation is what the walls sit on. So in case of a basement it is the footings+basement walls. For slab on grade, it means footings. The slab is what is between the footings.
Cooling loads are mostly from your roof and windows. R value of walls has very little effect. For example take a single story 2000sqft house with 9' walls. You have ~1700sqft of walls. With an indoor of 70F and outdoor temp of 95F.
With an R5 wall you loose 8.5kBTU. If you go up to R11 (2x4 with batts) that drops down to 4.3kBTU, about 1/2 ton, not that much difference. Instead of insulating the walls, you can probably get more energy savings from better window coatings/shading or a cool roof.
If you want low AC bills, insulate your roof, get a right sized efficient AC unit, keep the ducting inside the house and make sure to air seal. Southern construction seems to be notorious for not having any of the above. Wall insulation is a good thing, but would be very low on my priority list
+1 for trying to use the existing foundation if possible. You’d probably want to have it inspected though, just to be safe. I’d also check any drainage system that may be in place while you have the foundation exposed.
I’d try at least having an “everything goes” style estate sale first. You can often sell pieces of the old house. Old circuit breakers are surprisingly valuable, for example, as are many old switch plates and fixtures. Any money can be used to offset the cost of the new construction, when it helps keep at least a little stuff from going to the landfill.
“I think landfills are fabulous” is going to get some surprised reactions around these parts. About the only good thing about them is that they’re using the methane for electrical generation on many of them now instead of just flaring it off. I’ve always hated seeing anything get flared off, except in emergencies. At least do something useful with the stuff you’re burning!
Bill
Thanks. Good idea on the estate sale – I didn't think of that.
Yeah, I figured my views on landfills (good) and recycling (irrational) would be idiosyncratic here. I'm a social psychologist, and I'll be researching the psychology of environmentalism over the next few years. I think landfills in modern countries are great engineering achievements (and they'll be thoroughly mined – by robots – within the next 50 or 100 years), and I haven't yet encountered any compelling reasons to not fill them. A lot of people seem to just assume they're bad, which is strange. I think the urge to recycle taps a powerful moral intuition against perceived waste, and recycling just feels good for a lot of us.
Back to the house, I didn't think about the foundation. I'm inclined to bust it up and replace it, especially since we want a basement. I'm also interested in geothermal with one of those deep vertical loops, and I'm not sure where that loop would go – under the house or the yard or what. I'd have a lot more confidence in a new foundation that I commissioned and specified vs. one laid down during the Nixon Administration. By the way, do you know if basement foundations are still post tension slabs? With a basement is the foundation still a slab, just lower down?
Quick aside on landfills.
Say you have a piece of material. You have two options:
Recycle it or landfill it.
You say landfills are "good" so mind as well landfill it, no big deal.
It seems to me the big deal comes around when someone is producing a new piece of that material.
Is there a source of recycled material available to produce it from? Or was that piece of material landfilled, requiring new raw materials to be extracted from the earth.
In my mind, recycling is much less about diverting materials from the landfill and much more about reducing the amount of resource intensive extraction and refinement of raw materials that could be replaced with recycled materials. Even better than recycling of course is reusing!
Perhaps you're just overstating your love of landfills to have some fun and ruffle some feathers, but landfilling an entire house when there are plenty of parts in it that can be productively reused or recycled seems pretty silly.
Interesting perspective, thanks. I care about things like clean air and water, and energy efficiency. I don't generally care about what many environmentalists call "resources", or their extraction. I see materials as fundamentally technological creations, not the finite pool of depletable stuff that many environmentalists envision. I think Julian Simon was right in "The Ultimate Resource".
I wasn't exaggerating re: landfills. I think what changed my view maybe 8 or 10 years ago was discovering how little land is used for landfills in modern countries. It's amazing how much they can fit in such a trivial amount of land. A lot of people seem to think that we're going to drown in garbage if we don't recycle -- that's not remotely the case. I forget the exact numbers, but I doubt we'll ever use one ten-thousandth of our land area even with worst-case assumptions.
Humans use technology to process and transform matter into useful things. It can be processed via the long chain of events that we call "recycling", or it can be processed via the long chain of events that begins with recycling former asteroids (e.g. gold mining) or fossils (e.g. oil). I don't have an ethical theory that would give me a reason to prefer any particular type of matter processing. And as I mentioned, landfills are amazing engineering achievements and they work extremely well.
Recycling looks ridiculous when I see these enormous trucks guzzling diesel and polluting the air, crawling incredibly loudly though neighborhoods, **stopping at every house**, picking up morsels of detritus, a few cans here, some newspapers there, etc. Then they truck it to recycling centers where people sift through all the detritus, throwing a lot of it into the trash because it's not recyclable, and then truck it to more specialized processing facilities where all kinds of energy-intensive, elaborate processes are used to break stuff down and make it into something useful. It's a strange ritual from an anthropological perspective. (I recycle lots of stuff since the dumpster is right next to the garbage dumpster in our complex. It costs me nothing (and frustratingly, pays me nothing), and it strangely feels good. I'm always on the verge of ceasing all recycling activity though.)
I grew up in a copper mining town in Arizona, and I like mining a lot. Recycling could be cool too, especially if it was profitable. I've thought of starting a company called Rational Reycling to both highlight how irrational a lot of recycling is, and to develop cool recycling technologies, mostly for metals, HDPE, and PET, which are already some of the more sensible materials to recycle. But I'm a social psychologist, and starting RR would mean giving up social psychology, so I'm unlikely to do it.
For me, it's about which of these two processes result in a lesser accumulation of pollutants that will harm humans in the future.
Greenhouse gas emissions are one example. If you subscribe to the ethical theory that you should try to limit the harm that current humans do to future humans, then trying to limit greenhouse gas emissions seems pretty sensible.
Take glass. Whether or not it's "worth it" to recycle glass to me has to do with the carbon footprint of producing a new glass bottle from recycled glass vs producing a new glass bottle from raw materials. Landfills barely come into the picture at all.
This website https://www.carbonfootprint.com/recycling.html claims that recycling glass is worth it from a CO2 perspective, even after accounting for the emissions of transportation and processing. So despite the fact that it might "look ridiculous" to you, perhaps it isn't! Looks can be deceiving!
I'm not a recycling expert, and I don't know if the numbers on carbonfootprint.com are correct, but just for the sake of argument, let's assume they are. So grain of salt and all that.
I don't disagree that some things that we recycle may not be worth recycling from a sustainability perspective, but I hope your studies on the psychology of recycling take some time to untangle the complex web of what the value of recycling is, rather than jumping straight to the conclusion that it's all about landfills.
Also, this is an interesting discussion, so thanks for indulging my slightly off-topic thread here :D
Recycling glass saves a LOT of energy compared to making it from scratch. Some plastics are pretty good for recycling too. Paper isn’t such a good material to recycle, even though for many it’s the BIG recycling candidate. Recycling paper uses more processing resources (bleaching, etc) than making new, unless the recycled paper is going into something like cellulose insulation that needs less processing.
Almost anything you buy with steel in it contains recycled steel. Steel has been recycled heavily by industry for over 100 years. Many other metals are also heavily recycled.
I agree there is a lot of panic and group think with many “environmentalists”, but that doesn’t mean every idea they have is bad. Wouldn’t you agree that trying to be as efficient as possible regarding energy use is a win-win? I don’t mean going full pasivhaus, but going beyond code minimums is usually a pretty good investment, and there are Comfort advantages too. Even if you want to look at things in strictly economic terms, selling off at least the easy stuff in an old house (fixtures, windows, etc) is a win-win. Bulldozing everything and hauling it away really isn’t the only or best option in many cases.
Bill
Interesting. I thought the reasons glass recycling wasn't rational were that it's extremely heavy to transport, and that new production is so cheap given the abundance of raw materials – sand or whatever.
I'm aware of the prevalence of steel recycling. Aluminum is probably the most profitable recycling activity, but steel seems just as common. These are some of the few materials where businesses are willing to pay for recyclables, which says a lot.
If you have lived around mining, then you would know better than most than mined resources are not unlimited. Some materials a literally called "rare earth". That has nothing to do with environmentalism. As you say, even some companies understand rarity and so their price based on supply.
Where I live, quarries dig deeper and deeper so that we can build new. A coworker of mine works for the Big 3 (oil) and they're drilling farther and farther out. Yes Alaska sits on huge reserves. If saving trees and bears doesn't matter, or is an overblown environmental paranoia, what should matter is resources are finite. Hence, just throwing things away, at least many types of things, just doesn't make sense long term: whether for mining, manufacturing, money, or Mother Earth.
Perhaps your disgust with old homes comes from a poor local housing stock. There's not a single home in Vegas that I would ever bother living in, whether old or new, but that's because I simply don't like Vegas. Part of this is knowing our own biases. Not justifying biases with rational sounding statements.
Nor has anyone, that I know of, said on GBA that every old house _must_ be saved. That's ridiculous. Not all old houses are worth saving. But with the same rational: not all new homes are worth building. There is plenty of data that been discussed here and elsewhere that the US will need even more energy production to keep up with the now hefty energy consumption of ever larger new homes -- to heat/cool these new McMansions, not because Americans have more devices. Are we as a country willing to pay the price for that? I don't mean (just) environmentally. I mean pay the increased energy prices as limited resources like coal, natural gas, oil, etc. demand exceeds supply. I remember when gas for our cars was < $1/gallon. Inflation adjusted, current gas prices are still at least $1 more. Data on energy prices are mostly graphs that are 'up and to the right' -- which is good if we were CEOs of the Big 3 and talking revenue, but we're talking expenses so it's bad.
An old, small farmhouse with a solar array added to its roof is more of what we need in this country. And Vegas has a great amount of energy potential from the sun. Anyways, this is GBA afterall. So if you build new, at least build green.
I'm going through a similar process, down to trying to keep the foundation. The existing house is almost 100 years old, it was built by the amateur owner, and has had five major additions, also apparently done by amateur owners.
I have been stripping the house for reuse with my sons. I've been donating as much as possible to a local non-profit that helps with affordable housing (not Habitat for Humanity but similar). It is dismaying how little in a house is reusable. They like kitchen cabinets, bath cabinets and fixtures, HVAC, windows (if they're double glazed), doors and some trim. Insulation is good if it is in good shape, but only about 10% of the insulation seems to be. I had hoped to salvage the wooden floors but they only want pieces of 5' in length which is almost none of it. The newer floors are put down with staples and are almost impossible to get up in one piece. I'm basically done with the interior and have donated two uhaul trucks worth of materials while at the same time putting 24,000 lbs into dumpsters.
If you donate you can take a tax deduction. However, if the value is more than $5,000 you have to get a written appraisal from a licensed appraiser. Be careful with that. There is an organization near me that is very aggressive -- I would almost say they're a scam. They claimed they would give me an appraisal for around $200,000 for the materials in my house. However, they wanted a "donation" of $25-30K to do the salvage and around $3K for the appraisal. Considering that the materials budget for my new house is around $300K it just seemed too good to be true, and the last thing I want is trouble with the IRS.
As I deconstruct the house I just keep uncovering more an more concealed problems, with the mechanical systems but also the building envelope. The insulation is uniformly atrocious. The roof leaks, the siding leaks, the basement leaks. There are big gaps in the building envelope. I don't feel bad about tearing the house down and building a better one.
DC,
Good on you for going to the effort and not just landfilling everything. And yeah, some houses just aren't worth saving.
The problem is largely economics (supply and demand). Depending on the condition of the existing house the value of the house more or less becomes absorbed into the value of the land on which it sits when demolished. This increases your costs of the land which causes a problem with regards to financing and forces you to build a bigger house in order to reduce the cost ratio of land:house to somewhere around 20:80. This is why newer homes in older neighborhoods swell in size and neighbors get angry because they are ignorant of economics.
The alternative is to sink a lot of money into the land which you will never get out when it comes time to sell.
Speaking of ignorant, what are you talking about? Having purchased sevceral properties where the land value is far greater than the structure, I'm pretty confident you made this problem up. Please provide a source to the contrary.
New homes in old neighborhoods swell in size because house prices are largely dictated by a ridiculous $/sf calculation. So for a developer to make lots of profit in the redevelopment biz, they need to buy a small house on expensive land, then replace it with as many square feet as possible to make the sale price as high as possible. So yes there's an economics angle (profit motice), but not the one you described.
I guess you missed it where I prefaced my comment with, "Depending on the condition of the existing house.. ". I commonly see what you experienced in places such as the SF Bay Area.
There are plenty of examples of functionally obsolescent single family homes which have some value but are really better candidates as tear downs. I ran into this issue personally about 4 years ago when I was considering a build. I can't give you specific examples because I would risk loosing my job but here's quick listing and its property record which might help. The listing itself isn't ideal because you can find the same price and condition on 1/3 acre lots.
The below structure has only been unoccupied for about a year and is being marketed as development for multi-family rather than a SFD.
https://www.realtor.com/realestateandhomes-detail/3410-Atlanta-Rd-SE-700_Smyrna_GA_30080_M91617-35658?view=qv
https://qpublic.schneidercorp.com/Application.aspx?AppID=1051&LayerID=23951&PageTypeID=4&PageID=9969&Q=611914817&KeyValue=17070000600
Do you have an idea of what sort of LTC ratio a bank would offer on the same footprint?
Agree with Gary. Never heard of the kind of economic "problem" that you're describing.
As a private seller & buyer -- not an investor or broker or banker -- nobody has told me about building or renovating in terms of the economic or financing complexities of the land. The land has some value, some restrictions like setbacks, permiable area limits, etc; the house to be built or renovated was an "Improvement" to the land, otherwise the land was not an economic or financing factor. No loan officer or broker has said to me: "you must build/buy a bigger house because of the size of the lot". Never happened.
What has happened is a loan officer being delighted that I already owned the land and had title in hand :) I was told that if I had NOT owned the land, the bank would not have financed the entire purchase price of the land. Is that what you're talking about?
Evenso, they had no problem financing a smaller house. And their position made sense. Banks are not in the business of sitting on unimproved land, aka. land without a house, etc.
Perhaps you are coming at this as an investor? An investor builder would want to cram as many housing units into a single lot as possible. But that is a different matter entirely.
"According to Chicago-area teardown real estate specialist Brian Hickey, who heads InfillRE, LLC and Teardown.com, a teardown should be able to support a new house that, when complete, is valued at two to three times the price of the teardown house at acquisition. Put another way, if you can buy an older, functionally obsolete but well-located house for $300,000 and a newly constructed house on the same lot will support a price of $600,000 to $900,000, it may be a suitable candidate."
https://www.newhomesource.com/learn/the-teardown-option-is-it-for-you/
Here's an absurd example. Buy land and build a house for $100k ($20k land, $80k build), prevailing market value is $100k, Tear it down and build an exact copy in its place for $100k ($20k demo, $80k build). That new home isn't now worth $200k. It's still worth $100k but you've now spent $200k ($20k land, $80k initial build, $20k demo, $80 second build).
Make sense?
Yes & no.
Your premise was: "increases your costs of the land which causes a problem with regards to financing and forces you to build a bigger house in order to reduce the cost ratio".
And so I'm sticking to understanding that point.
To use your example:
1) buy old house
2) old house val = $80k
3) land val = $20k
4) demo old house = $20k
5) build new, BIGGER house = $160k*
So a person doing a demo + build #1-5 would need to come up with $280k. Let's assume Banks will finance everything but the land, so $260k financed.
Your position is the upside to a new build is it will command a proffitable price? To use your words: depends on location.
My position still stands with renovate:
1) buy old house
2) old house val = $80k
3) land val = $20k
4) renovate old house = $60k
A person doing a reno of old would need to come up with $160k. Let's assume the Bank will finance everything but the reno, so $100k financed.
My argument is a private buyer / seller as a homeowner is better off renovating an old home simply because their total spend is less. An invester is in a totally different ball game -- they absorb extra debt through other home sales, sit on the sale of the new house longer till asking price comes around, etc.
* $80k for a new build?! Where in the country are you able to build for that price?! It's absurd. Around here, a person can actually get buildable land for $20k, and even more than a 1 acre for that price. Let's assume these #s having rounding errors, that's fine; but they should be REALISTIC!
Tear down and rebuild can make financial sense if you buy in the right neighborhood, the right price and build a big expensive house. To buy at the right price before someone tries to fix up the house to improve its market value.
I saw it happen a lot in my old neighborhood. The new house would sell at about a million they made it work by finding a small house with a big lot and build 2 big houses. It looked like they were golden if they had less than 15% in the lot.
Would I call it green to tear down a old house to build a new one? No but that is me. Most of the houses that were torn down were run down, small and unremarkable building. A few were nice houses but on very big lots or had commercial zoning.
I say it would be a mistake to limit the design of your new house by using the existing foundation. The old foundation is very unlikely to be what people expect in a million dollar house, 9 foot pour height, egress windows, crack free wall, bone dry.
Walta
We looked for something to tear down and build (mobile home that needed to be replaced), ended up buying bare land.
-Advantages to teardown:
-Utilities are in, I just spent 6k on trenching for power, upgrading the transformer and having the utility pull service cable will be another 6k. Septic system+well+ driveway+foundation all add up really quickly.
-Permits are already approved by the county. We wrote a long due diligence period in when making offers on land. Ended up paying for test pits to be dug, and septic permit to be approved before closing. Out here depending on water depth, rock conditions, lot size septic and well can get really expensive.
Building yourself
-house size, foundation, layout are not dictated by what's already there.
Tear down and rebuild can make financial sense if you buy in the right neighborhood, the right price and build a big expensive house. To buy at the right price before someone tries to fix up the house to improve its market value. I saw it happen a lot in my old neighborhood.
The new house would sell at about a million they made it work by finding a small house with a big lot and build 2 big houses. It looked like they were golden if they had less than 15% in the lot.
Would I call it green to tear down a old house to build a new one? No but that is me. Most of the houses that were torn down were run down, small and unremarkable building. A few were nice houses but on very big lots or had commercial zoning.
I say it would be a mistake to limit the design of your new house by using the existing foundation. The old foundation is very unlikely to be what people expect in a million dollar house, 9 foot pour height, egress windows, crack free wall, bone dry.
Walta
I can't speak to the SW market but here in the Twin Cities I have modernized a number of existing homes. The advantages to this is building in an established neighborhood, close in to schools, infrastructure in place, etc. Tearing down a house and rebuilding on the lot must be reflected in the purchase price. The value of the land less the cost to demolish the structure. I would look for a solidly built existing home that can be brought up to modern standards with possibly just some TLC or an addition. A lot of floor plans are basically sound but maybe just lack kitchen space or a bit of living area. Working with an existing home is far more interesting than building new in my opinion and will challenge your creative side. I have added 2nd stories to a couple of ramblers that can make for a very nice home within the current footprint.
Doug,
I agree. The equation is entirely financial, and very simple. Look at what it would cost to buy and renovate an existing house to the level you will be satisfied with. Do the same for demolishing an existing house in a similar area and rebuilding. Then see what the resulting value of either of the options is compared to houses with similar features in the area that needs no work.
Whether we like it or not, a house is an asset, and it rarely make sense to build something that can't be sold for the price of construction.
As I noted above, I'm going through this right now. My rough budget has the cost of framing at 14% of the total cost of construction. The bid includes window installation so maybe 10% for the actual framing.
So if you have a house that needs a new roof, new siding, new windows and doors and a gut rehab on the interior -- everything but the framing -- it's going to cost 90% of the cost of knocking it down and building new. Add in the fact that demolition is more expensive if you're trying to save something and the gap narrows further.
Here in DC, another consideration is that the soft costs -- permitting and associated costs before beginning construction -- can be $100K for a single-family home. Building on an existing foundation reduces some of that.
There's a lot of embodied carbon in an existing house. I think it makes a ton of sense to keep that going whenever possible rather than building a new one (especially if the new one is built with materials that won't last as long as the old one did). But then my perspective comes from having lived most of my life in houses built with old-growth timber, which seems like a real sin to waste.
Deleted
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