Merion Homes bought two dozen rambler-style houses in Northern Virginia's Pimmit Hills community for about $450,000 each, just to knock them down. Now it's selling customized residences three times larger at prices topping $1 million.
“The original homes don't fit today's market,” said Ryan Bensten, 35, a principal of Merion Homes, which he started with his father, Bill. “They don't have enough bedrooms — they're too small.”
Home teardowns are becoming common in U.S. suburbs such as Pimmit Hills, a 65-year-old neighborhood just beyond the borders of the growing Tysons Corner area near Washington. Builders, lured to locations where land is more valuable than the aging housing stock, are transforming communities outside of major employment hubs to take advantage of demand for real estate where schools are decent and commutes are short.
TREND IN TEARDOWNS
Knockdowns across the country are increasing, said Robert Dietz, an economist with the National Association of Home Builders. The trade group estimates that builders tore down and reconstructed about 32,000 homes last year, representing 5% of all single-family housing starts. Beyond the nation's capital, the trend can be found in suburbs of cities from Boston to Minneapolis and Los Angeles.
“It's all about traffic jams — people can have nice houses far out in outer suburbs but the commute time is impossible,” Lawrence Yun, chief economist of the National Association of Realtors, said in a telephone interview. “This is an ongoing process because older-built homes happen to be closer to job centers and may not meet the needs of modern homebuyers.”
HOUSES SELL FOR $4M
More builders are ripping down existing homes because well-located vacant lots are becoming difficult to find and structures in communities close to urban areas are among the oldest. In 2013, about 47% of owner-occupied homes in the U.S. were at least 40 years old, up from 27% in 1991, according to an analysis of Census Bureau data by the homebuilder group.
Last year, 455 single-family homes were demolished in Northern Virginia's Fairfax County, the most in data going back to 2006, according to county records. Almost half were in Pimmit Hills and surrounding neighborhoods, and in nearby McLean.
In McLean — an upscale suburb that's home to former Vice President Dick Cheney, as well as companies such as Freddie Mac and Capital One Financial Corp. — builders are paying more than $1 million for homes they plan to rip down, said Casey Margenau, a broker who has worked in the area for 26 years. The new houses, often finished with stone and fiber-cement siding, sell for about $4 million, he said.
In quiet neighborhoods surrounding Langley High, ranked the second-best public school in Virginia, Mr. Margenau can spot the next targets. He pointed to a one-story brick rancher surrounded by newer homes that were triple the size.
“That one will go,” he said on an overcast Tuesday afternoon last month. “It has a carport — not even a garage.”
The older homes in the community are “functionally obsolete” — the kitchens are enclosed, the ceilings are low, closets and windows are too small, Mr. Margenau said.
The boom in teardowns coincides with a recovery in housing after the worst crash since the 1930s. Purchases of new homes in the U.S. rose 6.8% to a 517,000 annualized pace in April, more than economists projected, the Commerce Department reported Tuesday.
The makeovers have been getting some resistance from residents in areas such as the Boston suburb of Newton and Decatur outside of Atlanta. The Los Angeles City Council is temporarily restricting construction related to teardowns in 20 neighborhoods, including the ritzy enclave of Bel Air.
Supporters say builders are removing deteriorating structures and putting up more energy-efficient houses that add to the tax base. But some residents complain that construction of big and boxy “McMansions” undermine the character of neighborhoods, causing the destruction of trees and the constant buzz of machinery in their ears.
In 2013, the Minneapolis suburb of Edina hired a residential redevelopment coordinator just to enforce teardown rules, including issuing parking tickets and taking citizen complaints. The city of 49,000 residents had 130 demolitions last year, the most in its history, said Cary Teague, community development director.
“We're seeing all kinds of homes getting torn down — '50s-style ramblers are coming down, but also million-dollar homes and four, five or $6 million homes are getting built,” Mr. Teague said.
Suzanne Lanyi Charles, assistant professor of architecture at Boston's Northeastern University, said they're happening in both affluent and cheaper suburbs. In both cases, the new structures are more luxurious because the builder needs to justify the acquisition costs.
That means buyers looking for more affordable options may be pushed to a location with a longer commute, she said.
“Gentrification is common in the central city but it is jumping the city boundary into the suburbs,” said Ms. Charles, who has studied teardowns in Chicago. “One could argue that it's a form of displacement, where the family that would have been able to afford to live in the house that was demolished might not be able to afford the new house.”
Ning Yim, an accountant who lives in Pimmit Hills, said new construction is changing the dynamics of the neighborhood, established in the early 1950s for returning veterans of World War II.
“It was blue-collar, but more middle-class people are moving in,” she said in the driveway in front of her home, one of the older-style properties with an addition in the back.
The bigger homes don't bother her or her family.
“We like it when we see more new houses,” said Quy Phung, Yim's husband. “It brings up the property values.”
The Benstens of Merion Homes, in partnership with Snead Construction, are treating Pimmit Hills like the grand opening of a new housing community. Customers can visit model homes in the neighborhood and are greeted by a salesperson offering a choice of lots and floor plans.
Merion Homes has sold five houses in the community this year and 19 other sites are available. If a buyer signs a contract, they can start construction within a month or two, Ryan Bensten said.
“I'd be overly aggressive in saying that in five years it will be totally transformed,” he said of Pimmit Hills. “But I do think it will look a heck of a lot different.”