New forecasting tool predicts houses at risk of being torn down

According to a new forecasting tool developed by a UBC researcher and industry collaborator, around one-quarter of detached homes in Vancouver’s hot housing market could be demolished between now and 2030.

This forecasting tool, called the teardown index, reveals that the lower the value of the residence relative to the value of the overall property (its relative building value, or RBV), the house is more likely to be torn down and replaced.

“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.

To illustrate this point, the researcher traced the RBV of a house constructed in 1940. It revealed that with the increase in the overall price of the property over 75 years, its relative building value decreased until it hit a low point of 4 percent.

According to Dahmen, with such a low RBV, there is a 50:50 chance the house will be torn down by the new owner, and a new house will be built more in line with the overall price of the property.

According to research collaborator and mathematician Jens von Bergmann of MountainMath Software, with the recent surge in Vancouver real estate values, half of single-family homes in Vancouver have RBVs below 7.5 percent.

“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.”

Given that a quarter of all-single-family homes sold in Vancouver proper are torn down and replaced, researchers are contemplating on using their findings to gauge 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.