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Neighborhood Renewal: The Decision to Renovate or Tear Down

Regional Science and Urban Economics, Vol. 54, No. 1, 2015

54 Pages Posted: 12 Apr 2014 Last revised: 3 Feb 2017

Henry J. Munneke

University of Georgia - Department of Insurance, Legal Studies, Real Estate

Kiplan S. Womack

UNC Charlotte, Department of Finance, Belk College of Business

Date Written: July 28, 2015

Abstract

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 structural attributes for renovations, land for tear downs, 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.

Keywords: neighborhood renewal, gentrification, redevelopment, renovation, teardown

JEL Classification: R31, R11, R14, R52, R33

Suggested Citation

Munneke, Henry J. and Womack, Kiplan S., Neighborhood Renewal: The Decision to Renovate or Tear Down (July 28, 2015). Regional Science and Urban Economics, Vol. 54, No. 1, 2015 . Available at SSRN: https://ssrn.com/abstract=2423647 or http://dx.doi.org/10.2139/ssrn.2423647

Henry Munneke

University of Georgia - Department of Insurance, Legal Studies, Real Estate ( email )

Athens, GA 30602-6254
United States
(706) 542-0496 (Phone)
(706) 542-4295 (Fax)

Kiplan Womack (Contact Author)

UNC Charlotte, Department of Finance, Belk College of Business ( email )

9201 University City Blvd.
Charlotte, NC 28223
United States
704.687.7584 (Phone)

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