Demolition crazy in Edina?

When the modest house on the 5400 block of Edina's Brookview Avenue went up for sale this year, five bidders swooped in to compete for the property. Three of the five were developers who wanted to demolish and replace the picturesque 1938 Cape Cod.

The winning bidder paid $549,500 for the 2,000-square-foot house -- and never set foot inside the building.

The house likely will be a teardown, one of dozens of Edina homes that are being knocked down and replaced by something bigger and more modern. With almost five months left in the year, Edina has already set a record for home demolitions at 54. In all of 2011, there were 53 demolitions.

While teardowns are scattered throughout the city, especially around lakes and near creeks, they are concentrated in what real estate agent John Everett calls "old east Edina" -- the South Harriet Park and Morningside neighborhoods in the city's northeast corner.

"South Harriet Park has just gone berserk," Everett said. "That area has a charming neighborhood, the parks are very close, and the key thing is it's within walking distance to the village at 50th and France."

Developer Eric Nelson, one of the owners of the Edina-based home builder Refined LLC, said that this year his firm paid $600,000 for a home near 50th and France and tore it down. Refined bought the property for its 60-by-135-foot lot. A house that is valued at up to $1.7 million is being built there. And it already has a buyer.

Those are simply the economics of residential redevelopment in an old and desirable neighborhood, Nelson said.

In recent years, the city of Edina has lagged behind its projected permit revenue only once, in 2009. This year's teardown activity looks to be the result of pent-up demand, said Steve Kirchman, the city's chief building official.

"We're playing catch-up," he said. Teardowns "appear to be mostly in the northeast quadrant of the city, in the Halifax-Country Club area. Now it's spread to Morningside. ... Builders are going through neighborhoods, knocking on doors and making offers on property."

Nelson said some homeowners who want to sell are contacting developers on their own, not even bothering to list the property with a real estate agent.

"They see what's going on, think 'I'm in the right neighborhood, I don't want to stage the house or paint,'" he said. Often builders bid against each other for the same property.

After loud controversy several years ago over "monster homes," the City Council tightened height and setback rules, and complaints have eased.

The street feels cozy and green, with heavily treed lots and homes that are as close to each other as they are on a Minneapolis street. Charming Cape Cods rub shoulders with a handful of ramblers and split-levels. The big new homes stand out. One looks like an Italian villa. Others have broad faces of brick and gray stone and multiple gables.

Last week, a young mother with a baby on her hip was painting color swatches on the siding of her just-purchased house while kids played in the front yard. People mowed their lawns and walked dogs down the street.

Dale Ross, a stay-at-home dad who lives near the house that was bought sight unseen, was putting new siding on his own 1938 Cape Cod. He's thinking about bumping out the back of his house to give his girls a bigger bedroom.

Ross said he's received letters asking if he's interested in selling the house, where his family has lived for 15 years.

He joked that he's holding out "until the dirt is worth $1.2 million."

He has mixed feelings about the new homes. While it's great that people are updating, he said, he's sad to see the old trees that give the street much of its character sacrificed for big homes.

"I hate to see the quaintness of the old houses go, and the massiveness of the new houses," he said.

Down the street, 30-year-Brookview resident Kathy Buegler lives in a 1940 split-level, across the street from one of the new homes. She shrugs at the new development.

"It is what it is," she said. "Eventually, I think they all will be replaced. It's the beginning of a new era, I think."

Buegler, too, loves the neighborhood, and worries that something is being lost as it transitions. She said the people who buy the expensive new homes tend to be "on the fast track, employment-wise, here for two or three years and then out of here when they're transferred."

Realtor Everett, who lives nearby, said he has mixed feelings about teardowns. Even as he personally profits from real estate that sells within days, he worries that the neighborhood charm that is attracting all the investment could eventually be killed by block after block of big new homes that look very much alike.

"If you lose every one of these charming Cape Cod homes, my worry is we'll end up looking like Chaska," he said. "Some builders are really working hard to incorporate some 1940s charm into the neighborhood, but I talked to one builder who said this is out of control. Edina is the new honey hole for developers who are all coming in and just buying up lots."

Nelson isn't convinced the teardown frenzy will continue forever. He said it all depends on lot prices, the cost of labor and material, and interest rates. Labor costs have increased 20 percent in the past six months, he said, as new construction has spiked. And lot prices are going up.

Two years ago, Refined bought a Morningside lot for $350,000. A year ago, it bought the next-door lot for $385,000. This year, Refined bought a lot two doors down for $425,000. The lots were all the same size.

"Edina is unique, with good schools, good services, good taxes and houses that maintain their value," Nelson said. "But if things get too out-priced, it's trouble, and there will be a slowdown."