Neighborhood renewal: The decision to renovate or tear down

• Examines the decision to partially redevelop (renovate) or fully redevelop (tear down) single family residential housing.
• Decision differences: structure is important to renovation decisions, tear down decisions focus on the lot.
• Decision similarities: location and neighborhood redevelopment activity are important determinants of both decisions.
• The level of expected renovations decreases the selling price of properties requiring renovations.
• Major renovations are found to be equivalent to teardown sales, where the property is valued only for the underlying land.

Renewal at the neighborhood level is the culmination of redevelopment decisions made at the property level. This study examines the decisions of whether to partially redevelop (renovate) or fully redevelop (tear down) existing improvements. Results from the study reveal the primary determinants of the decision, particularly highlighting the importance of structural attributes for renovations, land for teardowns, and location and prior redevelopment activity for both. Additionally, as a test of a proposition from prior studies, major renovations are found to be equivalent to teardown sales, where the property is valued only for the underlying land. The level of expected renovations is also shown to decrease the selling price of properties requiring renovations.