After four years of little action, a resurgent economy coupled with aging homes has more Minnetonka property owners demolishing existing homes and building new ones in their place.
The city has issued 16 residential demolition permits so far this year. That’s the most since 2008, when it issued 35 permits.
The resurgence is even more apparent considering that the 2008 figure includes 15 demolition permits necessary for a Veit and Co. office project on Wilshire Drive. There were 17 home-for-home replacements back then, compared to 14 so far in 2013.
“It’s the economy, of course,” said Julie Wischnack, Minnetonka’s community development director.
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The age of the homes is helping to push the trend along. The average house in Minnetonka was built in the 1960s and doesn’t have the modern amenities that many homebuyers want. There aren’t a lot of newer alternatives in the community.
“If a person wants something new, it’s hard to find on the open market,” Wischnack said.
Remodeling is one option—and it, too, is increasing in popularity. But sometimes it’s more cost-effective to tear down and rebuild.
The increasing number of demolitions isn’t exactly a return to pre-recession days, though. Between 2003 and 2007, crews demolished homes every year so that developers could build condos, townhomes, apartments and other multifamily projects. In all, Minnetonka issued a total of nine permits for such projects during that time. Yet it hasn’t issued any since.
That’s likely because the housing crash hit condos and townhomes especially hard and they haven’t recovered as well as single-family homes. Condos and townhouses were still down 24.2 percent from 2008 levels at the end of 2012 compared to 12.4 percent for single-family homes, according to the Minneapolis Area Association of Realtors’ Annual Report on the Twin Cities Housing Market.
Wischnack noted that Minnetonka isn’t without multi-family developments; developers are just building them on other types of properties than residential. The Duffy Development project at 12708 and 12720 Wayzata Boulevard, for example, is a 60-unit apartment complex on a former commercial site.
It still remains to be seen how far the home demolition trend will continue. Between 2010 and 2030, forecasters expect about two-thirds of homebuyers to be looking to downsize. In Minnetonka, the median size of new homes decreased by 30 percent over the past 10 years. Wischnack thinks some of the bigger homes may prove to be bad investments.
For now, though, an increasing number of properties are getting a makeover. As Wischnack said: “It’s the economy, of course.”