Love them or hate them, ‘teardowns’ are reshaping Charlotte neighborhoods at record pace

A tide of teardowns is reshaping Charlotte’s older neighborhoods and moving into new areas, as buyers willing to pay a premium for more central locations demolish smaller houses and build bigger – sometimes much bigger – homes on the same lot.

The trend is spreading, developers said, into neighborhoods like Villa Heights, Wilmore and Sedgefield, as lots in areas that have been teardown hotspots for years grow ever more expensive.

“The demand for new construction is there,” said Keith Wesolowski, vice president of Ram Construction. His company has rebuilt swaths of Dilworth, such as Magnolia and Springdale avenues. “We haven’t seen it slow down yet.”

For some, teardowns represent progress, modernizing neighborhoods, improving the houses and reviving interest in close-in communities instead of sprawling suburbs. For others, the new houses are gaudy impositions, changing the character of long-established communities and looming imposingly over their neighbors.

Across Charlotte, the teardowns show no signs of slowing. The number of single-family demolition permits in Charlotte has jumped more than 200 percent in recent years, from about 140 in 2012 to about 440 in 2016. They’re on track to hit nearly 500 this year.

In neighborhoods like Dilworth, Myers Park and Cotswold, nearly entire streets of older bungalows, ranch houses and one-story mill-style homes have been razed. In their place, the new houses that pop up are often twice as large – 3,000 to 4,000 square feet, or more – with the energy efficiency, open floor plans, high ceilings and modern fixtures buyers demand.

Neighborhoods south of uptown, stretching from Dilworth down the Providence Road corridor, saw some of the highest concentrations of demolitions, according to an Observer analysis. Since 2012, county officials have issued about 150 demolition permits to developers and homeowners in Dilworth, for instance. They issued about 115 for the Wendover/Costwold area and more than 70 for Myers Park.

“The next band out is just hot,” said Jim Burbank, chairman of homebuilder Saussy Burbank. They’re building more than a dozen new houses this year on lots where smaller houses were demolished.

But Burbank said prices in those neighborhoods are getting so high – and properties that are good candidates for teardowns so scarce – that the market is getting tougher.

“They’re getting harder to find...If a house is worth $500,000 as it is, there’s a tipping point in there,” he said. “It’s tough to tear that down, build something new and be competitive.”

Tearing down and replacing houses can change the look and feel of a neighborhood, as newer, larger homes take up significantly more space on each lot. Some builders pay attention to design and work to make the new houses fit into an area, while others cut down mature trees, build street-facing garages and use modern designs that clash with surrounding homes.

One particularly controversial practice is razing one house and then dividing the lot for two single-family houses, or even townhouses. Furious neighbors convinced Charlotte City Council to vote down a plan in March that would have let a developer tear down five single-family houses on Sharon Lane and build 18 townhouses in their place.

Mary Frances Parker, president of the Cotswold Neighborhood Association, said developers in her neighborhood are splitting up lots to build two houses, where before there was just one. Too many large trees are being lost as well, she said.

“There’s a central character to the neighborhood – that’s large lots with mature trees,” she said. And while Parker said well-designed new houses can enhance the neighborhood, she worries that too many of the new houses don’t fit that definition.

“They look like subdivision homes, but they’re in a nice, mature neighborhood,” she said. The new houses and subdivided lots are causing too many people to park on the street as well, blocking sidewalks and making it harder to get around.

“There’s no yard and no garage – if there, it’s front-loading,” she said. “That’s not traditional to this neighborhood at all.”

‘Hasn’t really slowed down’

The reason for the surge in teardowns is simple, real estate professionals say: More buyers want to live closer to Charlotte’s center, and since there aren’t new lots to build on, they’re willing to pay a premium to buy an existing house they plan to demolish. The prices in areas such as Dilworth mean the lot itself can be more valuable than an older house sitting on it.

“They still want that lot. That lot just has a house on it already,” said Jason Black, vice president at W.C. Black and Sons. He said his crews are demolishing about three houses a week, a pace that’s been increasing for years as the wave of teardowns builds.

“It hasn’t really slowed down,” he said.

By contrast, you won’t see many teardowns in the neighborhoods near Interstate 485, where there’s still open land to develop. In some areas by the loop, developers have taken out fewer than five single-family demolition permits since 2012.

Across Charlotte, the market for all houses remains tight, as supply hasn’t kept up with the post-recession return of demand. According to the Charlotte Regional Realtor Association, there’s only about 1.6 months of supply on the market inside the Charlotte city limits – well below the four to six months that’s typical of a balanced market. The median sales price for a Charlotte house jumped 9.4 percent in June compared to the same month a year ago, to $244,000.

Developers who buy houses in older neighborhoods to knock them down are confident they’ll find buyers before the new houses are built.

“I see very little market risk to any kind of infill project,” said Burbank.

Ram Construction has been putting up 3,000- to 4,000 square-foot houses throughout Dilworth in place of smaller homes that dated to the 1940s. One they demolished recently was a Sears catalog-purchased house that dated to 1942 – the pieces still numbered for the buyer to install.

Wesolowski said buyers for Ram Construction’s last three houses all cited the same reason for wanting to move closer to uptown: They were tired of long commutes from the suburbs.

“Their reasoning was all because of the traffic,” he said. The buyers were from Waxhaw, Ballantyne and Concord. “That’s driving it.”

He said buyers who can afford it usually want to build from scratch rather than renovate an older house that may have low ceilings, sagging floors, closed-off floor plans, fewer bathrooms than buyers want, outdated electrical systems and leaky windows. Even an extensive remodeling can’t fix all of those problems and completely remake a house from a different era.

When Matthew Connolly and Anthony Moore founded Pike Properties in 2008, they bought older houses to remodel and resell. For the last three years, their business has become predominantly new construction, and they’ve shifted to buying older ranch houses, largely in Cotswold, where they can knock down and build anew. They build about 15 to 20 houses a year, and Pike Properties has sold a big chunk of them to doctors frustrated with their commutes and looking for quick access to Carolinas Medical Center and Novant Health.

Moore said buyers won’t consider houses without features such as a full bedroom downstairs and a bonus room, costly to add in a renovation.

“Some of these items that seem minor, they’re deal killers,” he said. “They want new construction.”

But in the hottest neighborhoods, rising prices are making it harder for buyers to make the math work, Wesolowski said.

“Because of the lot acquisition prices being driven up so much, it’s tough for someone to buy a lot for $400,000 and then build 4,800 square feet,” he said.

“We have people coming in saying ‘We want to be in Dilworth in the nines ($900,000-range),’” Wesolowski said. “The new construction is north of a million, for the most part.”

That’s leading to more people willing to accept the trade-offs that come with renovating old houses, he said.

“You may not be able to have the exact layout you want, vs. being new,” Wesolowski said. But if someone can’t afford the $1 million or more a teardown and new home would cost, “a $200,000 to $400,000 renovation might make sense on an older house at that stage.”

Some teardowns anger neighbors

Tom Low, a Charlotte architect and urban planner, said new houses on teardown lots often make longtime residents scratch their heads and wonder “What happened here?”

“When you ask them, they just say ‘It’s so big,’” said Low. “I think subconsciously what they’re saying is ‘It’s just ugly.’”

Parker, the Cotswold association president, said neighbors should have more say over what gets built next door. Charlotte lacks the power to review designs for single-family houses in most circumstances. And unless the project needs a rezoning (generally required only if the developer is building something besides another single-family house) neighbors don’t have a voice in the process.

“There should be mechanisms for neighborhoods to deal with this type of thing,” she said.

Connolly, of Pike Properties, said they’ve taken steps in Cotswold to try to blend new houses with the existing one-story, brick ranches next door. On two-story houses, for instance, they’ll bring the roof line down to the first level so they don’t appear to loom over their shorter neighbors. He said high lot prices drive the choice to subdivide a property.

“(Sellers) are asking a huge premium for these lots,” said Connolly.

That leaves two choices for developers, Connolly said: Subdivide a lot to build two houses to recoup the expense and make a profit, or make the deal profitable by building one enormous house on the existing lot. Neither one might make neighbors happy, but Connolly said two more proportional houses fit better in the neighborhood than one “monstrosity” on the existing lot.

“Then you end up with this McMansion effect,” he said.

Joe Padilla, executive director of the Real Estate & Building Industry Coalition, a Charlotte-based lobbying group, said neighborhoods that aren’t refreshed with new housing risk deteriorating.

“That’s really the way these neighborhoods are going to stay relevant,” said Padilla. “I think a lot of people are scared of change and don’t want change. But the alternative is a lot worse.”

In the end, Connolly said, Charlotte’s teardown boom stems from simple supply and demand.

“There is demand for in-town living,” he said. “But there’s no more in-town lots.”

This story was originally published July 19, 2017 at 6:25 PM with the headline "Love them or hate them, ‘teardowns’ are reshaping Charlotte neighborhoods at record pace."