Wealthy millennials are spending millions to knock down beautiful homes in the NYC suburbs to build mansions as housing wars rage on.

Just across the Hudson River from New York City, sit suburban communities like Ridgewood, New Jersey with beautiful century-old Victorian and Tudor-style homes. Many of these historic adobes won’t last long: Wealthy millennials are tearing them down in favor of larger, modern homes.

Priscilla Reynolds, a sales associate based in New Jersey, represented a seller who sold their Ridgewood home for $2 million to a millennial couple from New York City. He listed the center hall colonial in March of last year and wasn’t too surprised when he learned the couple wanted to tear it down. The couple, probably in their mid-30s, Reynolds guessed, have since collapsed and are in the process of rebuilding. They even experienced problems with lot coverage, possibly because they wanted to build a large house in place of what was once a property under 4,000 square feet, Reynolds said. luck.

Christina Gibbons, a real estate broker with a team based in Ridgewood, primarily serves Bergen County, which is just outside of New York City. Following the pandemic, he noted that buyers from New York City have more to spend, and they want to live in these so-called desirable locations with easy commutes. Sometimes that means buying a house only to knock it down. But it doesn’t always cost $2 million for the original purchase of the property, instead it’s probably closer to a million dollars. That’s because the property value and the earth grew, largely because of how tight the inventory is and the lack of vacant land in these markets. Gibbons said the half-acre of land on the west side of Ridgewood “could be close to a million dollars real quick, no matter what’s on it, so people have to spend more to tear them down.” Gibbons represented a buyer who closed on a property on West Ridgewood Avenue about two months ago for $900,000, and after tearing it down they built a more than 4,000-square-foot home, which is twice the size. -on the original “very old Victorian.” property that sits on the lot, Gibbons said. He added that when their house is finished, it will likely be worth $3 million.

On another occasion, Gibbons worked with a couple in their early 30s with children who had moved from New York City. They bought a colonial-style home in Ridgewood, in the summer of 2020 for nearly $1 million with “every intention of tearing it down,” Gibbons said. The couple even rented for a year in the same neighborhood while their house was being built, so that their children could go to school and they could manage the project. The couple just moved into their finished, very modern home last summer—in what Gibbons calls “your typical New York story.”

But the teardowns go beyond Ridgewood. Although they tend to be more expensive and larger in places like this. as It’s fortune previously reported, knockdowns are occurring across New Jersey, as “desperation becomes a bigger part of the market,” Curtis Counts, a New Jersey-based real estate sales associate, said earlier. He shares examples of teardowns in Scotch Plains and Atlantic Highlands, and as Gibbons suggests, the trend is centered on location and preference, with money to back it up. Although in Counts’ cases, they weren’t multimillion-dollar, or even million-dollar, knockdowns.

Matthew Bizzarro, broker and owner of his own real estate agency serving New York City and Westchester, says luck that demolition buyers “are willing to just buy the house to get a lot and then knock it down and build the house they want.” This is especially true of wealthy buyers—and he’s seen quite a bit of it. And also because inventory is tight, buyers “have to get creative to get the space they want, and if they’re motivated enough or have the funds to do it, sometimes that means buying a house you can’t afford and…knock it down and start over.” again,” Bizzarro said. And because this process isn’t cheap, it’s often Gen Xers and older millennials who have already bought their first homes who do it—or buyers with family money, Bizzarro said.

“It is clear that they have a bank, do they have a bank because they earn money? Or do they have a bank because it’s just family money,” he said. Either way, buyers are “paying a premium to buy a house and to knock it down and build it,” Bizzarro said. There is a general consensus that more often than not, buyers have to buy a subpar house to get the land. Dealers know that, and it gives them leverage.

Bizzarro is working with a client right now who is looking for a home in Westchester, but everything on the market is too small for their family, in their view. So his client is considering buying a house to knock it down and build a new one. They are very good, said Bizzarro, and there is already a place in the city that they are selling. However, the knockdowns he sees are closer to the million dollar mark, which is easier to get your head around because you’re knocking down one house and paying to build another.

Bergen County real estate agent, Joshua Baris, spoke luck that since the houses in these markets have been built for a long time, they must be demolished. His parents’ home in Englewood Cliffs, NJ, which they bought in the 70s, sits on a third of an acre of land. Whenever they ask if they need to redo the kitchen or anything else inside the house, he just tells them if you want because “whoever buys your house, no matter what you put in it , drop it.”

“There are very, very few parcels of land available in the suburbs of New York and New Jersey,” Baris said. “I don’t know anybody, where they don’t have a house, and it’s going to be an old house…and they’re just going to tear it down.” It’s really the value of the land, not necessarily the value of the house, Baris said.

Baris later shared that he knew of a potential buyer who offered nearly $7 million to the current homeowners of an Englewood property, only to have it turned down. The buyer liked the location but wanted a more contemporary home—Los Angeles style. The current owners of the house refused his offer, because they had just bought the house a few years ago for more than what he offered.

These buyers want something new, Gibbons said luck, and they can handle it. Even if they want new houses, they are not ready to compromise on the location, and in doing so, they are taking on a big project. Teardowns are expensive and time consuming. To knock down a house and rebuild it, you need to hire architects and engineers, in addition to your general contractor, consider zoning restrictions, and do a lot of testing. “Just getting to the knockdown phase at home is very expensive,” Gibbons said.

But these knockdowns can sometimes tell the difference “between home prices and who can afford them,” Reynolds said. Thus, this segment of buyers are not looking for affordable housing, instead they are overpaying for the housing they want. “It’s not ‘I’m so grateful to have a house’ or ‘yay we can afford a house now,’ as much as we want to afford the house we want – we want to afford the house we want, ” Reynolds said luck.

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