Aging Housing Stock and Land Availability Segments Country in Housing Needs

Friday, March 9, 2018 by Zelman & Associates

Filed under: home improvement homebuilding macro housing

As of 2017, we estimate that there were approximately 124 million households spread across the country, represented by single-family homes (68%), 5-plus unit multi-family buildings (18%), duplexes to quadplexes (8%) and manufactured housing (6%). As has been discussed more broadly of late, these households are approximately 43 years old, up notably from 35 years in 2000 and 31 years in 1990.

The age of the housing stock is often referenced as it relates to home improvement demand, but we believe that the analysis can be taken to another level. First, we note that the age of housing stock varies dramatically by the type of housing. For example, single-family homes are 44 years old, slightly older than average, and 5-plus unit multi-family buildings (40 years) are modestly younger than average, but manufactured housing is materially younger (29 years) and 2-4 unit multi-family buildings are significantly older (53 years). The variance partly relates to the durability of construction but is also influenced by geography.

For example, single-family homes are more likely in the Midwest and South, multi-family exposure is led by the Northeast and West and manufactured housing is heavily concentrated in the South. With these four regions being developed at different points in the country’s history, it stands to reason that the age of housing stock also differs. Looking specifically at single-family households, the average age in the Northeast (55 years) and Midwest (50 years) is far in excess of the West (41 years) and South (38 years).

How might this impact housing? First, older housing stock naturally requires more maintenance, driving a disproportionate share of home improvement spending to the Northeast and Midwest. Second, greater land density and early development in these markets also restricts the availability of large land parcels that are ideal for production homebuilding. In 2017, we estimate that 75% of single-family new construction was by production homebuilders, but this ranged from 83% in the West and 78% in the South to 60% in the Midwest and 59% in the Northeast.

Summarizing it from the angle of building products suppliers, we would estimate that the Northeast and Midwest portions of the country represent approximately 50% of home improvement spending but 35-40% of custom homebuilding activity and only 20% of production builder demand. We believe that skew is intuitive after thinking through the dynamics, but it is not often discussed when national trends are dissected.

Aging Housing Stock and Land Availability Segments Country in Housing Needs

Looking for More Insightful Content?