Approximately one-quarter of detached homes in Vancouver’s red-hot housing market could be torn down between now and 2030, according to a new forecasting tool developed by a UBC researcher and industry collaborator.
This forecasting tool, known as the teardown index, suggests that the lower the value of the residence relative to the value of the overall property (its relative building value, or RBV), the more likely it is the house will be torn down and replaced by a new one.
“An RBV of between 60 per cent and 70 per cent is generally considered healthy for a new building. But when a building is worth less than 10 per cent of the total value of the property, the probability of teardown and replacement increases dramatically,” said Joseph Dahmen, a professor of architecture at the University of British Columbia and a Wall Scholar at UBC’s Peter Wall Institute for Advanced Studies.
For example, the researchers traced the RBV of a house constructed in 1940. As the overall price of property rose over 75 years, its relative building value declined until it hit a low point of four per cent. With such a low RBV, according to Dahmen, there is a 50:50 chance the new owner will tear it down once it is sold, and replace it with a house more in line with the overall value of the property.
Given the recent rapid rise in Vancouver real estate values, half of single-family homes in Vancouver already have RBVs below 7.5 per cent, according to research collaborator and mathematician Jens von Bergmann of MountainMath Software.
“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.”
To develop the tool, researchers used municipal data and B.C. Assessment records on single-family homes bought and sold in Vancouver between 2005 and 2015, comparing land value, building value and lot size with variables such as whether the property was torn down a couple of years before or after the transaction. The complete analysis is available at https://mountainmath.ca/teardowns.
Noting that a quarter of all single-family homes sold in Vancouver proper are torn down and replaced, the researchers are planning to use their findings to assess the projected environmental impact of the new homes.
“As building operations become more efficient, materials will account for an even larger share of overall environmental impacts. Focusing on the materials as well as energy efficiency would improve RBVs while helping to break the cycle of demolition and construction in Vancouver,” said Dahmen.
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