Latest news with #ImprovingAmerica'sHousing
Yahoo
27-03-2025
- Business
- Yahoo
Fixer Uppers Make Cities Great—At a Price
A new report the the Harvard Joint Center for Housing Studies shows risks faced by homeowners make the proposition of a "cheap old house" a lot less romantic, and a lot more precarious. There's something picturesque about a city of old homes. Charming 1950s bungalows in Los Angeles, 20th-century brownstones in Brooklyn, or a success story from Cheap Old Houses in Orange, Massachusetts—a small town where a $98K house was transformed into a bed and breakfast—are what make cities great. These homeowners preserve unique vernacular architecture, demonstrating a devotion to repair and care for their houses and their communities at large. Yet as housing construction has slowed over the past decades, older homes have dominated not just the real estate market but the housing stock entirely: "Improving America's Housing," a new report by the Harvard Joint Center for Housing Studies released last week, highlights that the average American house is now more than four decades old—by far, the most "senior" our housing stock has ever been. An aspirational vision of vintage living comes to a screeching halt when you remember just how much time, energy, and cash has been infused into these properties to modernize them—or even to keep them standing. As climate change threatens Americans from coast to coast, and the cost of housing becomes more burdensome to those with stagnant wages, the risks faced by homeowners and residents make the proposition of a "cheap old house" a lot less romantic, and a lot more precarious. "Improving America's Housing" is issued every two years and tracks significant changes in the home repair and renovation markets over time, utilizing data from the Department of Housing and Urban Development's American Housing Survey conducted by the Census Bureau. But it's not an industry trend report, says Sophia Wedeen, senior research associate at the JCHS; Rather, "Improving America's Housing" speaks to the renovation market's health, possible causes for fluctuations, and the effects that renovations can have on the housing market at large. While the pandemic fueled a massive growth in renovations, the report reads, Wedeen says that one long-term force driving a continued interest in home improvement (and our aging houses) is a lack of new homes. "The Great Recession really slowed the pace of single family home construction. We haven't been adding as many new units since," she says. "And at the same time over the decades, with the introduction of much stronger building and energy codes, our homes are also lasting longer." It's yielding a housing stock that has grown progressively older: In 2003, the mean American home was 31 years old; by 2023, houses had aged on average another 13 years according to the report. A plethora of old houses becomes an affordability issue, says Wedeen. "We need to increase the [housing] supply because many households don't have the cash on hand to improve their housing conditions, to increase their home value by undertaking these activities that add value to their homes or just maintain existing conditions," she explains. As families inhabit increasingly older homes, the cost of performing repairs or upgrades only increases. Wedeen says that over the course of two decades, homes begin to require more frequent repairs as roofs, HVAC systems, and more begin to wear out. For those built before 1940, costs are especially high: The study shows that those who own houses built before 1940 spend 50 percent more on improvements and repairs than those who own homes built after 2010. For those looking to buy their first home, this means that a less-expensive price tag on an older home could be enticing, but it doesn't include the costs of doing necessary repairs or updates."Across the board, homeowners living in older homes spend much more than homeowners living in newer homes," says Wedeen. "Recent homebuyers consistently outspend homeowners who hadn't bought recently by more than a third." Not only does the study show that lower income households spend less on renovations and repairs, but they spend a higher proportion of their total income on these projects in comparison to higher earners—16 percent versus four percent, respectively. The study also emphasizes that lower income households are particularly vulnerable to the problems of older homes, especially those projects that can affect basic livability. In 2023, more than three percent of homeowners lived in "moderately or severely inadequate homes"—defined by the Department of Housing and Urban Development to describe homes that lack basic infrastructure like hot water, heating or cooling systems, or other major deficiencies. The study notes that, among homes built before 1940, nearly seven percent are considered "inadequate"; homeowners with lower incomes, as well as Black and Hispanic homeowners, are the most likely to live in them. All of these issues are exacerbated by the climate crisis, which is expected to hit lower income families hardest. Not only are Giving Up on Homeowners Insurance? You're Not Alone beyond the means of many, disaster repair expenditures have grown since 2017 ($23 billion was spent on such fixes between 2021 and 2023)—repairs that may also be burdensome for lower income people. "Given that housing quality, and I should say poor housing quality, is linked to so many other health issues, financial instability, and housing instability, it has all of these spillover effects," says Wedeen. "This is a critical issue that needs more attention in the policy space, and certainly should be considered by people who are concerned with housing affordability." What's required is a full commitment at federal and state levels to provide financial support for those most vulnerable to the problems of our aging housing stock. We might love how older homes appear after repairs and replacements, where the love and care is plain to see. But what's hidden are the financial realities—the high prices paid from even the smallest earnings that don't only benefit homeowners themselves, but contribute to entire neighborhoods. Top photo of downtown Cincinnati by Pgiam via Getty Images. Related reading: Giving Up on Homeowners Insurance? You're Not Alone Who Is Optimistic About Buying a Home? Not Younger Americans
Forbes
21-03-2025
- Business
- Forbes
Drastic Change Needed To Slow Climate Risk Valued In Trillions
Climate risk is no longer a distant threat, already forcing millions of people to change where and how they live. It's also resetting real estate and insurance markets and disrupting local governments and the services they provide. A new Zillow report found that trillions of dollars' worth of real estate is at major risk of damage from flood, fire or extreme wind. With risk scores from the climate financial data organization First Street, the report shows a value of $17T of U.S. homes with major wind risk, homes with major fire risk valued at $9.1T, and homes with major flood risk valued at $7T. 'The risk of natural disasters and rising insurance costs are profoundly reshaping the housing market. Home buyers are paying attention,' said Kara Ng, a senior economist at Zillow. 'With trillions of dollars in real estate vulnerable to these risks, informed decision-making for what is the biggest purchase of many buyers' lives has never been more critical.' Yet, it's hard to put a number on. Austin Perez, a senior policy advisor at the National Association of Realtors suggests updating or adjusting building codes to mitigate risk and lower lost costs. 'Real estate markets work well when you have a closing with a buyer and a seller and they understand the cost and there is nothing hidden,' he said. 'It's difficult for a home buyer to understand the loss to the property, so insurance cost risk isn't translating into the sales process. People need to see the full risk rate.' Right now, some are solving by underinsuring, but homeowners cannot recover after a climate event if they only get 50% to rebuild, he said. According to a new report from the Harvard Joint Center for Housing Studies, Improving America's Housing, homeowner spending for disaster repairs has trended up in all regions of the country, totaling $49B in 2022 and 2023, as compared to $16B in 2002 to 2003. This also means that disaster repair spending as a share of total home improvement spend went from an average of 4.4% in the decade before 2004 to 6.4% in the decade since 2013. Climate disaster repair also is one of the top factors influencing the predicted growth in remodeling activity in the next year. Extreme heat is now a climate risk in many parts of the country and brings along with it many potential side effects. First, is the immense fire risk associated with hot, dry areas. Next, is the additional energy load on the grid from air conditioning. 'The load increase is from AC, plus the electrification of everything, electric vehicles, more manufacturing in the U.S., plus data centers and the appetite to develop AI and the running of AI,' said Andrew Bochman, a senior grid strategist at the Idaho National Laboratory at the SXSW Conference. 'And, the grid is tired, old and creaky. It is congested. It has more non-dispatchable that you cannot count on – wind and solar. All have digital components sourced from China. All heavily reliant on China. And security.' That's a lot of risk factors for one system, most that cannot be addressed in a simple way. Plus, while it seems somewhat unimaginable, he also pointed out that just a few months ago, in October 2024, firefighters were fighting wildfires in every one of the 50 United States. Wildfires are happening outside of typical fire seasons and extreme heat is changing a lot of other features in the landscape. 'Utilities are all planning to turn off power so that they don't cause a wildfire,' Bochman said. 'It's a public safety power shutoff where power is turned off for hours at a time when there are dry, windy conditions.' And, just as it is really difficult for consumers to wrap their minds around the dollar impacts of a potential disaster, it's equally difficult for insurance to do the same thing. Will Swan is the director of Energy House Labs at the University of Salford and explains that insurance companies and banks want to know more about what they are insuring to understand the risk and how to mitigate the risks to then create the right business model. 'What is the value of investing in resilience to an insurance company – if they put their money there, how much does it save them down the line?' he said. 'They are much better at responding to disasters when they happen. Risk is about information and it's about what you don't know. The more you know, the more you can manage the risk. Are you just building things that will get far too hot when you are trying to get to net zero?" These are conservative institutions that want and need to have quantifiable validation for business activity, which now is evolving so fast the models are outdated as soon as they become available to be used. 'It's hard to measure how homes will perform in terms of resilience,' Swan said. 'We don't appreciate a model of the places well. If a disaster happens every other year, we rely on old data a lot of the time.' During SXSW, Eric Vermeiran, director of ESG advisory and business development at Nasdaq, said that climate is the number one issue for the biggest investors. 'Only 4% believe that climate risk is being accurately accounted for,' he said. 'Climate is underestimated. Climate change is difficult to model for its physical risks and transition risks, what the economy has to bear to shift to low carbon.' According to the Zillow report, more than 80% of home buyers evaluate climate risk when shopping for a new home. Still, many high-risk areas remain desirable and often have higher home values. Homes with extreme flood risk — a risk score of 9 or 10 — that were for sale in June 2024, had a median list price 22% higher than homes with minor risk scores of 1 or 2. The median list price for homes with extreme fire risk was 49% higher than homes with minor fire risk. Maybe the home values remain high because high income earners can not only self-insure, but they can afford to rebuild, said Bradley Schurman, founder and CEO at design firm Human Change who presented at the recent SXSW conference. The lower income homeowners cannot bounce back. 'Everyone is aware of climate change now, they are just consuming it differently,' he said. 'I cannot express the impact of a 1.6 degree change, but I can express how much a 70% increase in insurance will impact someone. People left behind are on fixed incomes. They aren't paying attention to the data as much as they are paying attention to their pocketbook.' Dale Kunce, regional CEO at American Red Cross, said that the organization has responded 60,000 times in a year to disasters. Specifically after the Los Angeles fires, the organization provided shelter to those who lost their homes. In Altadena, where 16,000 homes were destroyed, two-thirds are underinsured and are not going to rebuild. 'It fractured the community in Los Angeles,' said Kunce. 'When wildfires go through communities, one-third do not return by our estimates.' Migration is reactively and proactively happening. Across the country in Florida, the state isn't looking at a reduction in total population yet, but it is dealing with wealth moving from one community to another. 'The people that are moving now tend to be working-age populations with families,' Schurman said. 'The people largely left behind are lower-income or elderly on fixed incomes. This means that newer inland communities will likely have a strong tax base, while those on the coasts could see their fortunes dwindle. The places that need public services will struggle to provide them.' So, the migration patterns are taking a toll on local economies, short and long term. 'A smart, strategic future will likely involve a mix of mitigation and migration; a one-size-fits-all approach will not work,' he added. 'This means that the governments will need to continue managed retreat for some while, at the same time, encouraging others to build or modify properties for climate resilience.' Cutting-edge technologies such as digital twins, AI, and real-time monitoring can help proactively protect communities and housing for water resilience. Serelle Corn is president at digital construction company Project Controls Cubed and also spoke at the SXSW Conference to the value of digital twins on major projects. 'It takes an immense amount of data and makes it accessible to anyone,' Corn said. "In the 3D models you have your assets. In one digital twin is cost, resources, quantities, and products--the models are so intelligent. It's the future." Digital twin technology also provides the opportunity to bring in more community partners, and can be an effective educational tool. Technologies like digital twins are providing a much needed tool in the toolkit to better protect homes and communities. Design also plays a major role in the process. We will keep developing, even at the risk of depleting natural resources, said Sean Quinn, who serves as the director of regenerative design at global architecture firm HOK. As an expert in regenerative design, he explores how to restore environments and engage people in a unique journey, while also leveraging technology in the service of that natural process. Design practices such as enabling passive solar design for load reduction to optimize the building envelope and integrate into the environment, bringing in natural daylight to reduce energy use, collecting rainwater, are practices to create a positive experience for the health and wellbeing of people in a particular context. 'We look at nature itself and millions of years of evolution for the common goal of environmental stewardship and to enhance a site's ecosystem's performance,' Quinn said. 'Regenerative design brings new life to something that has been depleted. It puts life at the center.' The practice is critical as the urban population increases by more than one million people every week. With that sort of resource limitation, Quinn says we need to go beyond decarbonization, beyond the goal of zero to something more sustainable. Regenerative design practices will reduce the rate we are damaging the environment, and potentially, slow the risk of climate disasters. Greg Witkowski from Kean University points out that it's time to elevate building codes nationally and assign more money to prevention. Places like Charleston, South Carolina, are rezoning for the first time in 50 years to move to higher elevation. 'This is a code issue – low density multifamily really solves for a lot of challenges and it's a local government choice,' he said. 'Philanthropy is playing a larger role, we're starting to see philanthropists fund preparedness.' Climate risk is moving faster than anyone's predictions, but on a positive note, solutions could be coming out faster. Vermeiran said that climatetech is the fastest growing subset of investing, where investment is predicted to grow from today's $2.1T to $4.5T by 2030.
