Though the nation's housing stock is often thought of as static, it is anything but, according to the latest research from the Joint Center for Housing Studies at Harvard University.

With current owners spending upwards of $135 billion a year on their homes, the stable of houses in this country is undergoing a constant rejuvenation. Rather than move to new digs, home owners enhance the quality of their castles by adding bedrooms, finishing attics or basements or transforming unused rooms into offices or play areas.

Actually, total spending on remodeling now approaches $180 billion, or roughly the same amount that's spent on new construction every year, the report says. Home owners account for only 75 percent of that amount. But their spending on home improvements stimulates spending of $100 billion or so more on home furnishings, appliances, lawn and garden products and the like.

In each of the past 15 years, Harvard says, about a million owners spent more than $10,000 on such major interior alterations as kitchen or bathroom make overs or an addition of some kind.

That means that in any given year, about 1.5 percent of all owner-occupied dwellings -- about the same share of units added to the stock each year by new construction -- undergo significant modification. And as a result, the study found, the overall quality of our homes has risen markedly.

Between 1985 and 1999, almost 15 percent of all existing homes grew by one or more bedrooms, 20 percent gained another bath, and nearly 25 percent saw other rooms added. Thus, the average size of houses increased from 1,580 to 1,700 square feet.

But just as important to the country's housing stock is what we do to our homes is what we don't do, the study adds.

When we decide to withhold our investment dollars because our places aren't worth fixing, these units become even less and less desirable over time until they are finally taken out of the pool. In any given year, roughly 250,000 houses are demolished. And in that they are replaced by new construction, that, too, contributes to an overall improvement of the inventory.

"While demolitions may have a negative impact on the fabric of a neighborhood," the report says, "they nevertheless have a generally positive impact on overall housing quality."

The nature of the nation's housing stock also is improved when a large home is split into two or more living units. Likewise, it also is enriched when two or more smaller units are merged into a single, larger dwelling, or when non-residential space is converted into housing.

According to estimates by the Joint Center, at least 170,000 housing units are converted annually in one way or another at a cost of $2 billion to $3 billion.

While this process expands the supply of more desirable housing, it does not produce a net gain in the housing inventory because the number of units lost through merger tend to offset those gained through splits. Similarly, the gains made through conversions are offset by losses through residential to non-res conversions.

Still, the study says, there is some evidence that this process serves to spare the at-risk portion of the housing stock and return it to more valuable use.

For more articles by Lew Sichelman, please press here.

Published: April 9, 2001

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