Remodeling Becomes Bigger Issue Up Against Aging Housing Stock
March 18, 2019
As the nation’s housing gets older, the remodeling market is reaching record highs to meet the country’s growing housing needs, according to Improving America’s Housing 2019, a new report released from Harvard University’s Joint Center for Housing Studies. Spending on improvements and repairs to owner-occupied and rental properties reached a record high of nearly $425 billion in 2017, according to the newly released report.
Nearly 80 percent of the nation’s housing stock is at least 20 years old. With new-home construction lagging the last few years, more homeowners are remodeling to make their current home still work for them.
“With new construction slowly recovering from historic lows, 40 percent of the country’s 127 million homes are at least 50 years old,” says Abbe Will, associate projector director in the JCH’s Remodeling Futures Program. “The aging of the housing stock has been a boon to the remodeling industry, with spending surpassing investment in homebuilding every year for over a decade, and contributing 2.2 percent to U.S. economic activity in 2017.”
An uptick in home prices and an aging population are driving spending on home improvement and repairs, the report notes. More homeowners have equity as prices rise and that is giving them incentive to undertake larger remodeling projects. Also, a greater number of older households are adding accessibility modifications to their home to allow them to age in place. Households 55 and over account for half of all improvement spending among homeowners, according to the report.
“Over the next decade, the strong preference of older homeowners to age in place and the increasing difficulty of building affordable housing in many markets will continue to hinder the construction of new homes,” said Kermit Baker, director of the center’s Remodeling Futures Program. “The remodeling industry will therefore retain its critical role in helping the country meet its housing needs.”
In paying for the home improvements, homeowners relied mostly on their own savings. More than half of projects that cost $50,000 or more in 2017 were funded with cash, according to the report.
“Expanding the ability of owners to pay for improvement projects over time—whether through home equity loans or lines of credit, cash-out refinances, or contractor-arranged financing—would not only generate considerable growth in the remodeling industry but also help to preserve and modernize the nation’s aging housing stock,” the report notes.
“Improving America’s Housing 2019,” Harvard University’s Joint Center for Housing Studies (March 12, 2019)
Updated: August 19, 2019