# More on Teardowns

Some more details behind our data story on teardowns.

5 minute read

A little over a year ago we ran some analysis on teardowns of single family homes in the City of Vancouver. We used the City of Vancouver open data to understand why some single family homes got torn down and other’s don’t.

Relying entirely on open data, there were some important questions that could not be answered. So together with Joe Dahmen at UBC’s School Of Architecture And Landscape Architecture we came back to the question and folded in transaction data from BC Assessment to add some more details and rigor.

The result turned out quite similar to what our initial cruder methods came up with, but it lead to some important refinements.

We won’t go into the details of the findings here, you can if you are interested. Instead we will go into a little more details how the analysis was done and what is still missing.

The most critical piece that we added was transaction data, that is which properties got sold in what year. Almost all properties that got torn down were associated with a property transaction in the 4 years around it getting torn down rebuilt.

This allowed us to refine the question from “why did building A get torn own and building B did not” to ask the same question only considering transacted buildings.

Conditioning on the most important determinant of a building getting torn down, the transaction, we could focus in much better on what building-specific parameters are driving teardowns.

## Variables

We had annual assessment data pegged at July 2005 through July 2016, although we excluded the July 2016 data for some parts of the analysis as the value gains that year where quite extraordinary and prices have come down a bit since then. We felt that this most recent assessment may not be a good launching point to project the future from.

Unfortunately, the number of variables for teardowns that we have is quite limited. We only have good data on assessed land values, assessed building values and lot area. For a very small subset of about 500 buildings we also have the building age of the building that got torn down. We have GFA estimates for buildings that got torn down after 2009 through the analysis of LIDAR data that we did, but those estimates are quite crude and again only cover a portion of our time frame.

A crucial variable that we are still missing is the actual time of the building demolition. We inferred this from the time a new building got completed on that property, but this inevitably introduces noise to the data. It makes it difficult to pick the right time to calculate the relative building value. Moreover, there may be the occasional property that got built on vacant land, so nothing got torn down. This was less an issue for the analysis part, where we had ways to filter out such properties, but it did cause some problems with the visualization part of the project. We did filter out some properties manually that we could identify as being built on vacant land within the timeframe of the visualization, namely some properties on Deering Island.

On top of that, the decision to demolish the building was often made long before the building got torn down. Waiting times on demolition permits can be quite long, depending on the property. Having access to building permit data would help sharpen this variable. The word from the friendly open data folks is that the City of Vancouver is working on making these public, maybe an FOI request can help them speed up the process.

## Noise

The most important source of noise in our data is that fact that assessment data is only accurate on average. For particular buildings it can be substantially off. We suspect that this is one of the reasons why for buildings that are assessed to be essentially worthless, the teardown probability tops out at a little above 60%. So someone paying $2.5 million for a house that is worth only$10,000 to move in and live in that house makes absolutely no sense. If the building like this did not get torn down, we hypothesize one of three scenarios:

1. The building was purchased as a pure investment vehicle and rented out until an opportune time to re-develop or sell the property.
2. The assessment grossly undervalued the building.
3. The building was extensively renovated.

We have looked through the data and have found little evidence that scenario 3 is playing out in significant numbers. Extensive renovations show up in assessment data via building value gains and the “year improved”. We don’t have data to assess the other two hypotheses.

## Model

Given that limited variables we trained a handful of models on our data to see how to best predict future teardowns. In all models we used, the relative building value was the single most predictive variable, accounting for well over 80% of explanatory power no matter what methods we used. Moreover, the performance of more complex machine learning models was not markedly better that using a simple logistic regression. Similarly, dropping all other variables except the relative building value only slightly decreased the skill of our model.

One way to improve on our model is to use a proper survival analysis that can better account for data that is only available for certain time frames. For example, teardown early in our time frame suffer from the shortcoming that we don’t have transaction data reaching back far enough to link the teardown to a transaction. Or more to the point, be able to compare it to other transacted properties that didn’t get torn down. Similar problems occur at the end of our time frame, and with variables that are only available in certain sub time frames.

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