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I live in the Chicago suburbs, which had teardown issues a few years before Boston did; the town I live in now has a 30% teardown total, and it still continues today, albiet at a slower rate than the 100 a year that occurred during the boom of 2006 and 2007 here. In order to deal with the issue of the ratio of the size of the homes to the lots, which caused some of the earlier teardowns to dwarf the older homes around them, our town enacted a moratorium similar to what it sounds like Newton is doing. Ultimately, the lot to home size ratio was establlshed, with variance requests going to the zoning board with only hardship exceptions being granted for larger homes. While there may have been pent up demand after the moritorium was over, the sanity in the uniform size of allowable homes was worth it, and the homes now being built fit in well with the surrounding homes.
Some of the aldermen thought 1 year was too short of a time period and 15 months would be better.
I don't know enough about Newton's zoning codes to guess why it has taken them so long to address this issue. It's not like it's the first building pandemonium we've had in Massachusetts...so why is it an issue today?
Density is such a hot topic in Boston -- I'm already seeing this as a hot topic in Dorchester over the past year--yes, the same Dorchester so many slam on C-D!
The second is the issue of affordability, but restricting the building value isn't going to help when it's the lot that's so expensive. A $50k house on a $500k lot doesn't make much economic sense (and I know there are people who want just that, but clearly there aren't enough). It's not as if these builders are tearing houses down because they're evil and they hate modest houses--they're doing it because they know someone is going to pay them top dollar. The real problem is that there are more people willing to pay $1m to live in Newton than there are $1m houses in Newton, so the of course the people only able to pay $500k are going to get squeezed out.
The houses being torn down are hardly $50k homes on $500k square foot lots. Yes, the lots are expensive, and no one is suggesting that expensive towns will suddenly become more affordable. The issue is that builders have profit margins to worry about and seem to build close what is the maximum allowable structure size, which don't end up fitting well on the lot sizes. Homeowners that buy the homes are more likely to put new homes that more aesthetical fit the lot size and neighborhood, if not simply do a renovation and expansion. Some realtors work closely with builders to find and sell homes for teardown profits and large commissions. Meanwhile, there are plenty of buyers for the existing home who might be happy do a smaller renovation and expansion.
Quote:
Originally Posted by MikePRU
They all do as far as I know but some would argue that they are too permissive in towns like Newton. The building code in Wellesley is far more restrictive and that's why it's being cited in the discussion.
Most towns do not have the sort of restrictions like Wellesley does, or that prevent small homes being replaced with homes 4 times as large. All town's certainly have building codes, but they lag behind the teardown issue. The teardown situation is happening mostly in towns that have the hottest markets where it is profitable to do so. Inventory is very limited, so to some degree builders buying these properties are determining what is coming to market. People who are able to buy homes and tear them down before builders do are not doing so with profit in mind, so they seem to build homes that fit better on the property.
The main issue here is that most downs don't have restrictions based on existing home size, which is why the teardowns end up being far larger than the old homes and the neighboring homes. Sure, there are restrictions that say you can't put a 5 story building in a residential neighborhood, but a 3 story 5000 square foot home close to a bunch of 2 story 2000 square foot still presents some problems which are not addressed by current bylaws.
The houses being torn down are hardly $50k homes on $500k square foot lots. Yes, the lots are expensive, and no one is suggesting that expensive towns will suddenly become more affordable. The issue is that builders have profit margins to worry about and seem to build close what is the maximum allowable structure size, which don't end up fitting well on the lot sizes. Homeowners that buy the homes are more likely to put new homes that more aesthetical fit the lot size and neighborhood, if not simply do a renovation and expansion. Some realtors work closely with builders to find and sell homes for teardown profits and large commissions. Meanwhile, there are plenty of buyers for the existing home who might be happy do a smaller renovation and expansion.
The point is: there would be no profit if there weren't someone willing to buy the now larger (and much more expensive) house. If the aesthetics of the neighborhood or lot size were important to buyers, builders would follow them. I don't see why these builders are being demonized for providing a product people want.
If there are "plenty of buyers for the existing homes" then how are they getting sold to these developers? It's because the developers are willing to pay more, which is remarkable because they're just paying for the lot and the people they're competing against are paying for the lot and the house. They're only willing to pay that much more because they're able to sell for that much more, even after factoring in the cost of demolition and a complete rebuild.
The person who has $1m to spend on a house is generally going to trump the person who has $500k. That's what's happening now and that's why teardowns tend to beat out keeping the old, small house on the expensive lot.
The point is: there would be no profit if there weren't someone willing to buy the now larger (and much more expensive) house. If the aesthetics of the neighborhood or lot size were important to buyers, builders would follow them. I don't see why these builders are being demonized for providing a product people want.
If there are "plenty of buyers for the existing homes" then how are they getting sold to these developers? It's because the developers are willing to pay more, which is remarkable because they're just paying for the lot and the people they're competing against are paying for the lot and the house. They're only willing to pay that much more because they're able to sell for that much more, even after factoring in the cost of demolition and a complete rebuild.
The person who has $1m to spend on a house is generally going to trump the person who has $500k. That's what's happening now and that's why teardowns tend to beat out keeping the old, small house on the expensive lot.
It's not just the aesthetic of the new home being built, it's how the home fits in to the rest of the neighborhood, which builders generally don't need to worry about, but the rest of the residents of the neighborhood live near them. Wellesley (and a small number of other towns so far) has recognized this, and enacted measures to curtail it.
Also, inventory is so limited, that builders are to some degree controlling what is coming in to the market. Most of the teardown builders are not building homes to specifications for a specific client, they are just building the largest home they are able to sell, even if it's not what a most of the buyers specifically want. A lot of people have to relocate in short order, and have to buy what is available. Instead of buying a smaller home, then expanding it or building a new one that fits their needs, they are to some degree forced to buy what has been put on the market by builders who've built homes large enough to make a profit. There's nothing wrong with builders trying to make money, but many towns think they should have the ability to decide what sort of development they want to allow.
Finally, most of these teardowns are not merely $1m homes, they are often closer to $1.5 replacing a home at a 3rd of the cost. There's less and less middle ground in the market.
Just curious: I grew up in Newton but don't spend much time there anymore - what villages and neighborhoods are seeing this phenomenon of teardowns and snout houses the most? I'm wondering what's getting replaced.
And yeah, that does look ugly, especially since there are so many beautiful homes in Newton. Cheers to the city for trying to put the brakes on this practice.
It's not just the aesthetic of the new home being built, it's how the home fits in to the rest of the neighborhood, which builders generally don't need to worry about, but the rest of the residents of the neighborhood live near them. Wellesley (and a small number of other towns so far) has recognized this, and enacted measures to curtail it.
Also, inventory is so limited, that builders are to some degree controlling what is coming in to the market. Most of the teardown builders are not building homes to specifications for a specific client, they are just building the largest home they are able to sell, even if it's not what a most of the buyers specifically want. A lot of people have to relocate in short order, and have to buy what is available. Instead of buying a smaller home, then expanding it or building a new one that fits their needs, they are to some degree forced to buy what has been put on the market by builders who've built homes large enough to make a profit. There's nothing wrong with builders trying to make money, but many towns think they should have the ability to decide what sort of development they want to allow.
Finally, most of these teardowns are not merely $1m homes, they are often closer to $1.5 replacing a home at a 3rd of the cost. There's less and less middle ground in the market.
Again, I see two separate issues:
1) Houses not fitting on the lot
2) Houses are too expensive
I agree that 1) is a problem and think that it can be addressed by proper zoning laws. I disagree that 2) is a problem that can be solved by the city. Bigger houses are what they build because that's what people are willing to pay for. The houses that are torn down aren't given to builders--they're sold. If people really wanted the smaller houses that were already there, they would outbid the contractors that are going to tear them down.
What you're really complaining about is that builders are driving up prices beyond what people who are willing to settle for a smaller house are able to afford. And it isn't the builders that are setting the prices--it's the people that buy from the builders. These are not the same people who get outbid for the modest houses by builders, they're people with a lot more money looking in a totally different price range.
If people really wanted the smaller houses that were already there, they would outbid the contractors that are going to tear them down.
Unless they couldn't. Having just gone through the buying-a-small-affordable-home process, one of the nerve-wracking aspects was that not only were we competing with other young families like ourselves who wanted a small affordable home in a good neighborhood, we were competing with developers and other flippers who would probably be paying in cash to tear-down and replace with something big and unaffordable.
Often on these boards we lament, "there's no affordable housing in Boston" and some look to developers to fix the problem but often they're causing it, or at least contributing to it.
Also I thought the builders were setting the prices? I thought part of the "big house" problem is that because of the cost of labor and materials builders can't make a profit unless the house is a certain level of big or "luxury". I feel for the builders in this scenario as well (well, some of them...)
Last edited by tribechamy; 08-14-2014 at 07:21 AM..
Reason: typo
1) Houses not fitting on the lot
2) Houses are too expensive
I agree that 1) is a problem and think that it can be addressed by proper zoning laws. I disagree that 2) is a problem that can be solved by the city. Bigger houses are what they build because that's what people are willing to pay for. The houses that are torn down aren't given to builders--they're sold. If people really wanted the smaller houses that were already there, they would outbid the contractors that are going to tear them down.
What you're really complaining about is that builders are driving up prices beyond what people who are willing to settle for a smaller house are able to afford. And it isn't the builders that are setting the prices--it's the people that buy from the builders. These are not the same people who get outbid for the modest houses by builders, they're people with a lot more money looking in a totally different price range.
The argument of the second part is not a complaint that prices are higher, it's more that teardown builders are really creating less of a middle ground in the market due to the push for profits. There's increasingly either less desirable homes small homes or very large new construction. Just because someone doesn't want a small home, doesn't mean they truly want the large home put onto a very small property without much of a yard.
Again, I don't think the second part of the issue is as unrelated to the first part as you think. Inventory is very limited, and not everyone who has a larger budget has the time or inclination to plan ahead to outbid builders so they can build the home they really want.
In other words, sure a 1500 square foot home might be small for a lot of people with larger budgets, and they might prefer a larger newer home around 3000-3500 square feet. However, teardown builders won't make enough profit on a house that size, so they put a 5000 square foot home on a tiny lot. The people with the larger budget don't want to get into a bidding war with a developer for a small home that they are going to teardown anyway, so end up buying the 5000 square foot home without a yard because that's what is available after the builder has outbid everyone else.
Obviously that scenario doesn't apply to everyone, but you can't really ignore the difference between what teardown builders build, and the new homes that families with larger budgets build to their specification.
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