Older Homes Deter Upgrade of Housing Stock


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The library of articles citing the
alarming lack of new construction continues to grow. Freddie Mac, the Urban Institute
(UI), and John McManus of Builder Pulse
magazine have all written articles about what some of them called a crisis for
the housing industry. UI put the shortfall between supply and demand in 2017 at
350,000 units. Freddie Mac’s economists estimated that the long-term deficit
could be 2.5 to 4.0 million units each year.
McManus went to far as to say
housing may be broken because of the dislocation created by too few houses. Now
the National Association of Home Builders (NAHB) has produced a study about
some of the ramifications.

Paul Emrath focuses on one of them
in an article in NAHB’s Eye on Housing
blog. He points out that, since 2006, builders have failed to match the average
of 1.5 million homes built each year from 1961 through 2000.  The number of homes completed has been below the
number of net new household formations.
outcome of this shortfall has been that homes tend to remain in nations housing
stock and inhabited for longer periods. Because of this he says, attempts to upgrade
housing through new development standards or building codes do not make a lot
of sense.

The Census Bureau’s American
Community Survey (ACS) shows that the number of homes built prior to 1970 has
been declining slowly; there were 52.83 million of them in 2014, and 52.17
million in 2016. This means that only about six of every 1,000 homes built
before 1970 are removed from the housing stock each year, and the Census Bureau
indicates it may be even fewer. Their models show that the number could be less
that one per 1,000 in the Northeast and West regions.



Emrath says loss rates as small as
these are not sustainable; the lower of the Census estimates would imply that
half of new homes built in some regions last 1,000 years. He suggests imagining
that this rate of removal remains and that 1.20 million new homes are built
every year (there were 1.20 million housing starts and 1.15 million completions
in 2017, the highest either number has been in a decade.)  After 20 years, only 16 percent of the nation’s
housing stock would consist of homes that were one to 20 years old while 45
percent would have been built before 1970, 65 percent in the Northeast.



Older homes can be
charming and some homeowners are able to keep them updated and in good repair,
but Emrath reminds that before 1970 there were no codes or
standards for energy efficiency
. Neither did construction have to meet the resiliency
requirements motivated by Hurricane Andrew in 1992 nor the Northridge
earthquake in 1994.  Many code changes
targeting fire safety (such as requirements for smoke alarms, fire separation,
fire blocking, draft stopping, emergency escape openings, electrical circuit
breakers, and capacity and outlet separation) were also implemented
after 1970.

In short, Emrath concludes, “In just
about every way imaginable, new homes are being built to higher standards than
they were in 1970.  So, if you want to improve the built environment, one
of the first things you need to do is figure out simply how to
increase the production of new homes, built to modern standards,
so it becomes possible to retire more of the older ones.”

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