The Cost to Repair America’s Housing Stock—and Which Homes Need It the Most

Title:
The Cost to Repair America’s Housing Stock—and Which Homes Need It the Most
Author:
Eileen Divringi, Eliza Wallace, Keith Wardrip, and Elizabeth Nash
Source:
Publication Date:
2019
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Affordability and housing quality are the foundations of housing stability, but low-income households often have to sacrifice one for the other. Research suggests living in poor-quality housing can lead to health hazards, safety concerns, financial degradation, and residential instability. So, who is most likely to live in poor-quality housing, and how much would it cost to address the repair needs of the most vulnerable households? This study from the Federal Reserve Bank of Philadelphia and PolicyMap helps answer these questions.

Using housing-quality data from the American Housing Survey (AHS) and repair-cost estimates provided by Gordian, a firm that specializes in construction costs, researchers analyzed the prevalence of and the cost to repair housing-quality issues among homeowners and renters across the United States. To conduct the analysis, researchers used the AHS data to create a list of housing-problem scenarios and linked those scenarios with their appropriate, cost-effective repairs. Researchers aggregated these housing-quality scenarios and their respective repair costs at the unit, metropolitan statistical area, regional, and national level. Though the methodology helps estimate the scale and severity of household-level home repairs, the data present a couple limitations. First, the AHS data do not account for unobservable factors like indoor air quality, lead exposure, and water contamination that would require significant additional repairs. Second, the cost index likely understates the needs in multifamily buildings because the AHS only collects data specific to individual units and not to buildings as a whole.

To further understand the nuance of the country’s home repair needs, researchers conducted a cluster analysis to create unique household typologies for homeowners and renters based on their household income, building age, the number of years a household lived in a property (for owners only), and the structure type (for renters only). These typologies provide a useful frame to target programmatic and policy decisions for specific household and building types.

Key findings

Overall:

  • National repair costs: It would have cost the US $126.9 billion in 2018 to repair all housing deficiencies nationwide, with an average repair cost of $2,920 per household with repair needs. Of that, it would cost $25.3 billion to repair the homes of low-income homeowners and $25.5 billion to repair the homes of low-income renters.
  • Households with the highest rates of repair needs: Nationally, 35.8 percent of occupied housing units needed at least one repair in 2017. Repair needs were most common among Native American households (47.7 percent), single mothers with children (46.8 percent), households living in manufactured housing (45.5 percent), and people living below the federal poverty line (42.9 percent). Latinx, Black, and renter households also reported high rates of repair needs (39.9 percent, 39.6 percent, and 39.5 percent, respectively).
  • Repair costs per household: Among households with repair needs, nearly 40 percent of households had repair costs of less than $1,000, and only 18.0 percent of households reported repair needs of more than $5,000. Similar to repair needs, median repair costs were most expensive among Native American households ($2,570), single mothers with children ($1,599), households living in manufactured housing ($1,743), people with incomes below the federal poverty line ($1,556), and households living in single family housing ($1,502).
  • Common repair needs: The most common repair issues included cracks or holes in walls or ceilings (15.2 percent), roof leaks (14.0 percent), cracked or crumbling foundations (11.4 percent), and signs of roaches at least weekly in the past 12 months (10.2 percent).
  • Repair trends over time: Between 2015 and 2017, aggregate home repair costs decreased because more repairs were made during that time period than new problems emerged. Research suggests this trend was driven by a strengthening housing market and a surge in home repairs as the effects of the recession wore off.

Renters’ repair needs

  • Nationally, low-income households living in older single-family units accounted for the largest share of aggregate repair costs (19.8 percent), even though they make up only 12.3 percent of renter households with repair needs. Middle- and upper-income households in older single-family units and low-income households in moderate-age multifamily units also accounted for large shares of the aggregate repair costs (14.7 percent and 14.1 percent respectively).
  • The median cost of repair was highest among low-income households in older single-family units ($2,096) and middle- and upper-income households in older single-family units ($1,601).

Homeowners’ repair needs

  • Almost 70 percent of the aggregate repair costs for owner-occupied units were concentrated among middle- and upper-income households. However, units occupied by low-income households accounted for an outsize share of aggregate repair costs (25.3 percent of households with repair needs but 30.9 percent of aggregate repair costs).
  • The median cost of repair was highest among low-income medium-term homeowners in older units ($2,004) and low-income long-term homeowners in moderate-age units ($1,844).
  • Low-income, older homeowners had the highest average repair cost across all groups ($4,187) and the second-highest median repair cost ($1,844). These costs may be significantly understated, as these homeowners may require additional adaptive modifications in order to create a safe living environment. Households in this group were disproportionately likely to identify as Black, more than one-quarter of these units were in nonmetropolitan areas, and more than two-fifths were in the South.

Policy implications

  • The authors suggest that housing policies aimed at improving the quality of the rental housing stock, such as intensive code enforcement, should be carefully designed to avert or mitigate the potential harms of displacing vulnerable tenants.
  • Most low-income renters with repair needs live in small buildings that are likely owned by “mom and pop” landlords who may lack the money and management expertise to conduct regular maintenance and repairs. Technical assistance and financial incentives directed at well-intentioned property owners could help low-income renters get the repairs they need.
  • Housing policies that improve the quality of renter and owners’ homes can improve the health of residents. Evidence suggests such policies focused on the most vulnerable households provide the strongest public health benefits.

 

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