Homeowners facing major repairs or outdated properties often struggle with a crucial decision—should they renovate or opt for a complete teardown? In today’s real estate market, where move-in-ready homes are scarce, many buyers settle for fixer-uppers.
A report from real estate company Clever reveals that while most buyers prefer homes requiring minimal work, nearly a third end up purchasing properties that need substantial improvements. But at what point does it make more sense to demolish rather than renovate?
Tearing down a home offers a fresh start. It allows homeowners to construct a completely new property tailored to modern needs and personal tastes. Kurt Carlton, co-founder and president of New Western, a real estate investment marketplace, points out that while demolishing can sometimes be more affordable than renovating, the actual costs depend on various factors, including location and project specifics.
A new build eliminates the limitations of outdated structures, providing opportunities for contemporary designs and advanced energy efficiency. Renovations, on the other hand, often require working around existing layouts and materials, which might not always align with a homeowner’s vision.
Despite its advantages, demolition isn’t always the simplest solution. Carlton explains that since 2008, constructing new homes has become increasingly complicated due to regulatory requirements, labor shortages, and material costs. Nearly 25% of a new home’s cost now comes from compliance and permitting expenses.
Delays in securing permits and finding skilled workers add to the challenges, making rebuilding from the ground up more difficult than it may initially seem. While demolishing a home offers a clean slate, the process can be riddled with unforeseen obstacles that stretch budgets and timelines.
The choice between demolition and renovation requires careful consideration. Structural integrity is a key factor—if a home has foundational issues or extensive damage, rebuilding might be the safer and more efficient option. Similarly, properties that don’t meet modern building codes may require so many upgrades that a teardown becomes the more practical choice.
Carlton notes that in high-end housing markets, where demand for luxury homes is high, demolition can be a smart investment. However, in urban areas where affordable housing is a pressing issue, renovations are often the better path, as constructing new homes at lower price points has become nearly impossible.
Perhaps the most critical aspect of a successful demolition project is selecting the right builder. Carlton warns that while renovations may uncover existing problems, demolitions introduce new risks. With an older home, issues are generally known and can be addressed. But when building from scratch, unexpected complications can arise. He stresses the importance of thoroughly vetting builders, checking references, and speaking with past clients to understand their experiences. While portfolios may showcase stunning completed projects, they don’t always reveal the challenges encountered along the way. Homeowners who choose demolition must ensure they have a skilled and trustworthy team to navigate the complexities of construction.
Ultimately, the decision to renovate or demolish depends on personal goals, budget constraints, and local market conditions. Some homeowners may prefer a blank slate and a fully customized home, while others might find that renovating an existing structure offers a more cost-effective and manageable solution. By weighing the pros and cons and thoroughly understanding the process, homeowners can make the choice that best suits their long-term needs and lifestyle.
