You’ve noticed the construction on most blocks of Menlo Park. The port-a-potties, the contractors’ trucks, the shiny new building facades. That’s because today’s biggest trend in new home buying is rebuilding. Buyers want to put their own distinctive mark on their new home, and no longer want to wait years to do so. This recent evolution in home buying means a buyer purchases an older home on a decent lot and then – before moving in – tears that house down to build the dream house they’ve always wanted.
In the past, a buyer would live for years in their home before attempting a remodel. I lived in my home for more than 6 years before taking on a full remodel, and have many friends that did the same. The benefits of waiting to make big changes to your house include making more informed decisions on the property, establishing relationships with neighbors before work starts, and having more time to save up for projects and get costs down. However, buyers these days now have the resources to not only enter into a hot market, but also take on a sizable remodel. The booming economy in the Bay translates to a boom in home construction as well.
The Math Makes Sense
A recent Menlo Park home sale I saw the other day is a great example of this phenomenon: selling for $1.7 million ($400k over asking), this 6,000 square foot lot, 2 bedroom / 1 bath located on a coveted street was immediately torn down to make way for its gorgeous successor. Who would, or could, do this financially? If you have the means, this route makes a lot of sense. Let’s look at the numbers. The house costs $1.7 million and rebuilding a new 3000 sq ft home (at about $350 per sq ft) would cost an additional $1 million. At $2.7 million total, that’s still $300k less than the $3 million spec house down the street.
Why Take on a Rebuild?
The main benefit, besides potentially saving big bucks, is that the new owner gets the exact house they want. Want a chef’s kitchen with an island that seats 10? Crave a separate kids’ wing to distance the noise? Love higher ceilings? This is all possible from the outset with a rebuild. Drawbacks, however, include the time necessary to design and build, not living where you want to live for the first 6-12 months, and potential frustration at the rebuild process. It is rumored that there over one million decisions to be made in the building of a house. But if you’re willing to endure the blood, sweat and tears involved, it makes sense to at least consider the option.
This rebuild strategy isn’t limited to the higher end of the spectrum. The economics can work to your favor just as well as the lower end. And this is why the proliferation of rebuilds is so pervasive throughout the Peninsula, and especially in Menlo Park.
As a long-time local realtor, I have the experience and knowhow to advise my clients on the economics involved in build vs buy. Our neighborhood is highly sought-after, so considering all options in this market make sense– and that’s where I come in.