Did you actually examine the house? Kinda arrogant to say that just from driving by...
They bought it with the intention of fixing it up and maintaining the historical character, but after digging into it they figure out it would be much more expensive to try to repair everything. There's only so much investigation you can do before you buy a house....you can't exactly tear into walls...
The historical factor is a debatable point. I love historical homes, but I recognize that not every piece of history can be saved (nor should be)....gotta make room for the future.
The house had been on and off the market for a while, so it was unlikely that another suitable buyer was going to come along in the near future to restore it. And even if they had, they might've made the same decision to demolish....