A new study by a researcher at the University of British Columbia has found that about 25% of single-family detached homes in Vancouver could be demolished and redeveloped by 2030.
The finding is based on architecture professor Joseph Dahmen and mathematician Jens von Bergmann’s forecasting tool dubbed the ‘Vancouver Teardown Index‘, which is based on the relative building value – the calculation of a building’s value relative (RBV) to the overall property value, which takes land value into account.
The index suggests that the lower the value of the structure that sits on the property, the greater the likelihood the house will be torn down and replaced with a new structure.
“If RBVs continue to slide, one-quarter of all single-family homes will be torn down between now and 2030, replaced by new single-family houses that seek to maximize size,” said von Bergmann.
“It’s not clear how that will help affordability. We should ask ourselves how to replace these teardowns with more units of ground-oriented, family-friendly homes on each lot.”
Dahmen adds that when a structure is worth 60% to 70% of the total value of the property, it is “considered healthy.” However, the probability of a demolition and new-build soars when a building is worth less than 10% of the total value of the property.
It is estimated that half of single-family detached homes in the city already have RBVs of less than 7.5%.
Both researchers cite an example of a house that was built in 1940 and experienced a steady drop in the value of the house over 75 years, to the extent that it reached a RBV low of 4%. They believe there is a 50-50 chance the new owner of the property will demolish the structure once it is sold and replace it with a new house that aligns with the overall value of the property.
Even renovations performed on an aging structure will not be enough to lift the overall value enough to save the building. Renovations only pushed the value of the property up by $12,000.
By 2014, the property had buyers willing to pay $1.8 million, even though the structure was only worth $68,000. And when the house was demolished and a new structure was in the process of being built, the value of the under-construction property rose to $3.2 million, with $1.1 million attributed towards the shell of the new structure.
The value of the under-construction structure rose again to $1.3 million in the latest assessment, pushing the total value to $4.4 million.