In the Bay Area, million-dollar homes are torn down to start fresh

Imagine paying $1 million or more for a home -- and then destroying it.

That's what's happening in some upscale Bay Area communities as homeowners and wealthy buyers have no interest in upgrading aging houses but instead want to start from scratch and build all-new custom homes stocked with the latest features.

While the demolition and rebuilding trend is heaviest on the Peninsula and the most affluent parts of Santa Clara County, it extends to East Bay communities as well -- anywhere it makes more sense financially to tear down the existing structure and start fresh. That includes sought-after neighborhoods with no vacant lots, where prices of small, aging 1950s-era houses have soared.

Interviews with architects, contractors and homeowners make clear that tear-downs are becoming more common.

"We're wrecking 3,000-square-foot houses and erecting 14,000-foot houses," said Hal Nelson of O. Nelson & Son excavating and demolition company in Woodside. He said he has 20 tear-downs scheduled in Los Altos, Palo Alto, Menlo Park and Atherton. Business was up 20 percent last year, and up 15 percent in 2012, he said.

Last week, Nelson supervised the destruction of a 2,600-square-foot suburban rancher in Menlo Park as owners James and Teresa Bergeron and their four children watched from across the street.

As an excavator's demolition claw bit into the roof, the Bergeron kids cheered. In the new house, they'll each have their own bedroom.

"It started as a remodel," Teresa Bergeron said. "We were going to add one more bedroom."

They lived in the house for two years trying to make it work. But after finding major termite damage even after a $5,000 tenting, problems with heating and plumbing, and a persistent tobacco smell from a previous owner, they decided to tear it down.

A full-blown remodeling job with a second story would have been just over $1 million, and it wouldn't have been their dream home. Their new 3,551-square-foot home will have four bedrooms and a 1,884-square-foot basement. James Bergeron declined to say how much it will cost.

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In the Bay Area, million-dollar homes are torn down to start fresh