By Melissa Dittmann Tracey, REALTOR® Magazine
More than 70 percent of single-family homes in the country were built prior to 1990, according to RealtyTrac’s Aging Homes Analysis.
“The high percentage of homes that are at least 20 years old and likely in need of some major repairs is eye-opening,” says Jake Adger, RealtyTrac’s chief economist. “However, given the low inventory of homes available for sale in today’s market, this challenge of aging U.S. housing supply can also be an opportunity for buyers looking for a bargain, and home owners looking to update their living space and improve the value of their homes.”
Homes built in 1990 or later sold, on average, for $256,292 in 2013. On the other hand, homes built prior to 1990 sold, on average, for $233,221, RealtyTrac found.
“The lower price point on older homes is not surprising given many are in need of some rehab and are more likely to have maintenance issues,” Adger says. “But this also presents an opportunity for buyers willing to take on that older inventory. Those buyers can purchase at lower price points and face less competition from institutional investors.”
Home owners may have put off home improvement projects during the Great Recession. But home improvement spending has posted declines for decades, and a renewed investment in the existing housing stock is long overdue, according to a study by the Joint Center for Housing Studies of Harvard University. Home improvement spending is expected to surge by double-digits through mid-2014, and the largest number of expenditures is expected to be centered on updating bathrooms and kitchens, according to the Joint Center.
Home improvements can pay off. Remodeling Magazine’s annual Cost vs. Value survey shows just how much certain remodeling projects can payback at resale. Joint Center research also has found that home prices in neighborhoods with higher levels of improvement spending also tend to appreciate overall more rapidly.
Older homes tend to be the target of most of the home improvement expenditures.
Older homes tend to be more prevalent in certain states too. RealtyTrac found that nearly a dozen states have the highest concentration of older housing stock. Homes older than 1990 made up more than 75 percent of 2013 sales in the following 11 states: Michigan, New York, Rhode Island, Massachusetts, Connecticut, Wisconsin, New Jersey, Pennsylvania, Vermont, Illinois, and Wyoming. On the other hand, older homes made up less than 40 percent of sales in Utah, Idaho, Mississippi, and Nevada.