"Why Not Just Tear It Down?" - Page 4

Ranch-style homes are being torn down "because the light is bad" and their ceilings are low. Eichlers are taller, "and Eichlers have much better light," he says.

The economics behind teardowns are simple, Easterday says. "The underlying problem is the valuation of the dirt. It's more expensive than what's on it—especially in Palo Alto."

"The numbers don't make sense to tear down an Eichler in Sunnyvale and build new," he says. "You can't build a 2,800-square-foot home there and get $3 million. The numbers work in Palo Alto, but they don't work in other areas."

As DeLeon explains, that's because, since 2002, "Palo Alto has had the highest growth in real estate values maybe in the country," around 320 percent.

Eichler homes, which are 40 to 65 years old, often would benefit from dual-pane windows, insulation, new roofs, new electric, radiant heat repairs, and more. "For a [four-bed, two-bath] Eichler, it will cost you $35 to $40 grand to do the glass right, for an atrium model, and to replace all the glass," Easterday says, adding, "The age of the home itself makes a rebuild very attractive."

"You do a back-of-the-napkin [calculation] on this, and it's a lot of money. That leads to people saying, 'What's the cost of building something new? I want to build a bigger house.'"

Building a home costs $400 to $425 a square foot, he says.

John Suppes attributes much of the teardown syndrome to buyer demand.

"People want bigger homes," he says. "If you look at the trend since the 1950s, homes get bigger every year."

"I think people have more stuff," he adds. "I think they have more disposable income. I think it's more of a cultural thing. More is more now. Not less is more.

"Maybe they just want bigger because they can. Does that make sense?"

"The reason why Eichler built and was successful in the 1950s was, the average square foot per person in a home then was 300 square feet," Easterday says, noting that many original three-bedroom Eichlers provided 1,200 square feet. "You could have a family of four live very comfortably in those houses.

"Today, the average is 900 square feet per person."

But is that so bad? Many families seeking a better quality of life simply want more space for activities, privacy, to share their homes with multiple generations, and more.