Much has been made over the last few years about home sales—specifically new builds versus buying an existing house and which is more affordable. But purchasing a house and living in it are two different things, with the definition of “affordable” being relative, both to the purchasing market and to the literal markets surrounding the house in question. The Harvard Joint Center for Housing Studies (JCHS) has released two reports in as many weeks that, taken together, can be considered a portent of upcoming challenges for the renovation industry.
Last week, the JCHS analyzed the American Housing Survey (AHS) and found that the ability for homeowners to afford the work needed to keep existing houses in livable conditions is often outpaced by the cost of those improvements, and that difference in cost versus income gap seems to grow with the age of the house.
The JCHS analysis points out that though the oldest homes need significant investment, they are disproportionately occupied by owners with the least financial capacity to make repairs, and that among owners of homes built before 1960, those in the highest income quintile spent three times as much on improvements and repairs in 2023 as those in the lowest.
It doesn’t help that, currently, the housing stock is the oldest on record, with a median age of homes running about 44 years in 2023, up from 39 years in 2013, and 28 years in 1993, JCHS officials point out. What the center didn’t mention specifically, but others have, is that more seniors are aging in place. Redfin and Mortgage Point both first wrote about it in 2024, but the situation doesn’t seem to have abated, as it was covered again earlier this year by HomeSite.org, National Mortgage Professional magazine, and Realtor.com.
Added to all of this, the JCHS pointed out, is a prolonged period of underbuilding during the Great Recession (2008) leading to a dearth of new home stock compared to previous decades, plus stricter building codes and as innovations in both construction materials and techniques that have extended the lifespan of homes, keeping them in the stock for longer. The sum of all of these trends is an increased average age of the housing inventory. In 2023, one in four homeowners (22 million households) lived in a home built before 1960.
Despite those innovations, homes still age; components and systems wear with time and use, and homeowner improvement and repair expenditure shifts towards maintenance and replacement projects. In 2023, home maintenance accounted for 22% of total remodeling and repair expenditure on homes built before 1960, whereas 16% of spending on homes built in 2010 or later was for home maintenance that same year. Replacement projects, including windows, are difficult to defer, as they are often essential to maintain safe and decent conditions, JCHS officials suggest. Taken together, the center reports that replacements of exterior and interior home components, systems and equipment accounted for 39% of homeowners’ spending on homes built before 1960, far above the 24% share for homes built in 2010 or later. On the other hand, outside property improvements such as fencing, landscaping, and recreational structures (sheds, pools) accounted for a third of total remodeling and repair investment in newer homes, more than triple the 10% share for pre-1960 homes. Room additions and outside attachments such as porches were also a bigger focus of investment in newer homes, at 15%, compared to just 8% of remodeling and repair investment in older homes.
And there’s no significant change on the horizon, either. This week, the JCHS released its latest Leading Indicator of Remodeling Activity (LIRA), which the organization says reports that annual spending on home improvements and repairs is expected to continue losing momentum through mid-2027. They are predicting that year-over-year growth in renovation and repair spending is expected to slow to just 0.5% in the second quarter of 2027. The JCHS staff points to reduced housing starts and broader economic uncertainty as factors that are limiting stronger gains in remodeling spending and say it will take home sales rebounding from current levels for remodeling expenditures to increase.