Aging U.S. Homes Require Additional Investment

The pandemic focused attention on our homes as never before, lifting the U.S. remodeling market to an unprecedented height of $567 billion in 2022, according to Improving America’s Housing 2023, a new report released by the Harvard Joint Center for Housing Studies. Despite the enormous boom in remodeling activity, the nation’s homes are older today than at any time ever recorded and in growing need of critical replacements and maintenance. Greater investment is also needed to better prepare against disasters, improve energy efficiency, and meet the accessibility needs of an aging population.

The widespread adoption of remote work, massive growth in home equity and savings, and the aging of the housing stock boosted annual spending on improvements and repairs to owner-occupied homes 24 percent between 2019 and 2021 to $406 billion, or an annual pace of growth more than double the historical average of 5 percent. Although the overwhelming share of improvement funding came from savings, more than one in five projects costing $50,000 or more were paid for with home equity. “Homes are an important source of wealth for most owners, but racial and ethnic disparities in equity gains suggest widening gaps in remodeling activity and housing adequacy,” says Carlos Martín, project director of the Remodeling Futures Program at the Joint Center for Housing Studies. “Greater public funding for retrofits and repairs, as well as expansion of the remodeling workforce, will be vital for addressing inequities.”

During the pandemic, homeowners used their increased time at home to work on DIY projects. Between 2019 and 2021, spending for DIY improvements grew an astonishing 44 percent to a record height of $66 billion. Given that younger and lower-income owners focus relatively more of their improvement dollars on DIY projects, the DIY share of spending is typically larger in more affordable metros.

Nearly two million homeowners age 55 and over pursued projects for accessibility in 2020 and 2021, but many more will need to make these modifications as the number of older adults and multigenerational households increase in the coming decades.

Despite the dramatic growth in remodeling activity during the pandemic, a meaningful share of the housing stock remains in dire need of investment. “While many homes require critical replacements and repairs, those most in need of updates are often occupied by households least able to afford the expense,” says Chris Herbert, managing director of the center. “Deteriorating homes threaten the health and safety of older, lower-income homeowners, while the burden of high improvement and repair costs jeopardizes the current stock of affordable housing.”

Although home remodeling faces many headwinds in the near term, including rising interest rates, declining home sales, and labor and material supply constraints, the market is more reliant on need-to-do projects than during the boom of the mid-2000s. Increasing investments that address the full range of home performance deficiencies should support longer-term growth in home improvement and repair spending. Ultimately, there will always be a need to improve and repair the nation’s homes, and a demand for the industry that fills that need.

Read the full report.

Source: Joint Center for Housing Studies of Harvard University

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