Teardowns Squeeze New Homes into Connecticut Neighborhoods

By Joe Taylor Jr.
Local Lender Columnist
Nov 3, 2006
In states like Connecticut, where demand for new homes is high but space is tight, a growing number of homeowners are skipping complex renovation plans in favor of tearing down obsolete or aging homes. These "teardown" projects offer homeowners the opportunity to enjoy a brand-new home, with most construction costs financed by existing mortgage lenders.

It's an intriguing notion, but if you're a Connecticut homeowner, do your homework first. Many Connecticut towns and cities regulate the kind of home you can build as part of a teardown project. For instance, one historic neighborhood in Greenwich restricts homes to a maximum size of 3,900 square feet. Officials say that these codes prevent mortgage holders from building oversize homes on smaller lots, which can decrease neighboring property values.

Connecticut Residents Raise Teardown Concerns

Despite interest from homeowners and developers in pursuing teardown projects, neighbors and homeowners' associations are nervous about the trend. Teardown advocates in Connecticut claim that these projects eliminate older homes before they become eyesores. Opponents argue that extended construction threatens historic integrity while creating stressful noise and dust. Getting your neighbors' approval is essential to a successful teardown.

If you're considering a teardown project in Connecticut or elsewhere, start by speaking with your mortgage lender and a reputable real estate agent. They can give you an idea of whether your project will make for a profitable investment or simply a more comfortable living space. While you may need to take out a construction loan at an interest rate slightly above market, you can usually convert that loan into a lower-cost, fixed-rate mortgage once the building is complete.

Sources
Boston Globe
CNN
FDIC
Forbes
Real Estate Journal

About the Author
Joe Taylor Jr. has covered business and finance news for Financial Times Television and CNBC. He coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.