Replacement Housing is defined as either new structures or significant renovations that are considerably different in terms of size, scale and price range from others in their immediate vicinity. Remodeling or improvement projects of lesser degree while occurring in substantial numbers are not classified as Replacement Housing.

Replacement Housing activity dates from the late 80s. It was initially driven by above average income earners desiring newer, more modern housing without the drive required by conventional solutions.

Replacement Housing began occurring in Lake Minnetonka, Edina and the Kenwood and Lakes areas of Southwest Minneapolis. It was concentrated on unique sites having views of lakes, woods, waters and golf courses in premium neighborhoods. It targeted older homes whose features and amenities were dated and didn't fit the evolving definition of modern luxury housing. From its beginnings in this high cost arena it has, over 20 years, migrated to move-up price ranges in more diverse and lower cost neighborhoods, tending to flow from west to east in search of lower cost sites.

It is propelled by a re-urbanization movement which has gained strength fuelled by traffic congestion, desire for time savings, convenience and the appeal of a vibrant and diverse urban lifestyle.

It tends to spread in two distinct ways. It possesses a clustering and nucleating tendency that draws others into neighborhoods where it is occurring, reinforcing its patterns and concentrating its effects. This can be clearly seen in the Edina neighborhoods of Rolling Green or Hilldale which are now 50-60 percent new. It also tends

to flow into lower price categories, moving into neighborhoods with weaker housing stock that possess urban amenities and desirability on smaller lots.

In terms of numbers, it is still largely a consumer driven custom market especially at its higher price points, with a much smaller but growing segment of builder 'spec' housing in its lower ranges.

Because of this there is a distinct lack of hard data on its prevalence, price range, site costs, and other considerations needed to properly quantify and understand it. Additionally it is not project- or numbers- driven but occurs on a level of one, typically off normal driving routes, making it largely invisible to casual observance.

Because of its large custom component, much of it is never offered for sale, further limiting public awareness of its prevalence and price points.

As a unique discipline, Replacement Housing is evolving general rules which must be viewed in a neighborhood-specific context. These rules are affected by price ceilings, site costs, demographic profiles and a host of other considerations. At present Replacement Housing is still largely a vernacular movement subject to a fair amount of trial and error as its practitioners and customers try to maximize its advantages. It is, however, more complex than that,

for its evolving precepts are not absolutes, and assumptions made about them can be risky because poor data analysis can focus on the exceptions at the expense of the normative.

It is clear that replacement efforts are rewriting the rules of urban housing, changing the way to think about neighborhoods, housing styles, sizes, price ranges and homebuying, investment and improvement strategies in general.

Those ignorant of these factors will most assuredly pay a price – by building, buying or improving the wrong house in the wrong place for the wrong price. Success will flow to those who know, understand and apply the new rules about neighborhoods, market statistics and demographic patterns enabling them to build, buy or improve the right home in the right place for the right price.