This paper proposes methodological developments for quantifying the impact of residual axial shortening of first-story steel columns on earthquake loss estimations in steel moment-resisting frame (MRF) buildings. A new formulation is proposed that accounts for the likelihood of having to demolish a steel MRF building due to column residual axial deformations in addition to residual story-drift ratios. The formulation is informed by means of data from a comprehensive survey conducted worldwide to assess the likelihood of steel column repairability due to residual axial shortening. A practical method for quantifying column axial-shortening in parameterized system-level numerical simulations is presented. The proposed approach is illustrated by conducting economic seismic loss estimations in two case-study steel MRF buildings designed in urban California according to the current seismic design practice. It is found that when the ground-motion duration is appreciable, the examined steel MRFs are more prone to column axial-shortening than residual story-drifts at moderate to high seismic intensities. The results suggest that economic losses due to demolition may be underestimated if column residual axial-shortening is neglected from loss estimations. Limitations as well as directions for future research are discussed.