Elin Nordegren: Tear Down This Wall

Despite the troubled market, the idea of knocking over an expensive waterfront home on a valuable piece of land, just because you feel like it, remains appealing for those who can afford it. After all, billionaire David Tepper, who runs the giant hedge fund Appaloosa Management, tore down a $43.5 million mansion in Sagaponack, N.Y., last year to build a new house overlooking the Hamptons waterfront.

Or consider the case of Elin Nordegren, the former model and ex-wife of golf star Tiger Woods, who bought and then tore down a $12.3 million mansion along the beach in Palm Beach County, Florida, the Palm Beach Post reported Thursday.

Of course, the super-wealthy are entitled to do what they want with their money (Nordegren’s wealth comes from a reported $100 million divorce settlement from her husband, who admitted to repeated infidelities over their five-year marriage), but one expert in real-estate teardowns said that a demolition of a property this large is unusual.

“It’s an absurd decision to make. The kind of waste involved in a demolition like that is just obscene,” says Justin Hollander, a professor at Tufts University who has written about teardowns. “You can tear down a home that’s worth millions and reuse some of the materials, but there’s absolutely no economic justification for doing something like that.”

More typical reasons for teardowns of valuable property might include a “strong real estate market” situation, in which some neighborhoods show “demand for luxury homes, but the existing homes are more modest,” Mr. Hollander said. Teardowns seemed to fade when the housing market collapsed, but not as much in wealthy enclaves shielded from the pain. This seems to fit Ms. Nordegren’s case: The Palm Beach Post reports that her oceanfront lot is in a development near North Palm Beach with plenty of lavish multi-million dollar listings.

“I’ve had customers go into a home, and they don’t like the kitchen, and next thing you know, they’re tearing down a $5 million home,” John True, a real-estate agent in nearby Juno Beach, Fla., told Developments. He said some people prefer a teardown to a renovation in the wealthy communities near Ms. Nordegren’s house. “If they’re going to spend all this time, get their Bruno Magli shoes a little dusty, they figure, ‘Let’s just tear it down and start it anew.’ It’s mind-boggling.”