Aging Housing Stock and What It Means for Homebuyers
The aging housing stock in the U.S. represents a wealth of opportunities for homebuyers willing to make upgrades to older homes.
The aging housing stock in the U.S. represents a wealth of opportunities for homebuyers willing to make upgrades to older homes.
Older homes – like older people – are unique, with their own histories to share and stories and quirks accumulated over the years. That’s what gives older houses their charm. But older houses may also need a bit more tender loving care than newer builds.
That’s important for homebuyers to know, because aging housing stock is a major part of the U.S. real estate market. The median age of owner-occupied homes in the U.S. is 39 years, according to the National Association of Home Builders, and 52% of those homes were built before 1980
For homebuyers, aging housing stock represents a wealth of opportunities, if you can get past outdated cosmetics – and you’re up for making some big upgrades.
Buying an older house is one way to escape the wildly competitive housing markets we’ve seen for the past two years, as demand surged amid low interest rates caused by the COVID-19 pandemic.
It may also be an important tool in the kit to ease the current real estate crunch.
In 2021, the Biden administration proposed spending $213 billion toward preserving, retrofitting, or creating millions of homes in an effort to increase affordable housing supply, The Washington Post reported.
The Build Back Better bill, which is being debated by the Senate this month, would reportedly provide funds for the construction and rehabilitation of affordable housing, which could ease the crunch both renters and homebuyers have been feeling as housing prices increased these past two years.
The Build Back Better bill includes the Neighborhood Homes Investment Act (NHIA), which would mandate a federal tax credit to spur investment in renovating and developing one-to-four family units in distressed areas.
If passed, these measures could breathe life into aging housing stock and make homeownership attainable to more Americans.
The median age of owner-occupied homes in the U.S. is 39 years. 52% of those homes were built before 1980.
Updating existing housing stock will prove particularly key in areas with high numbers of older homes.
“The share of aging housing stock, or homes built from 1969 and before accounts for about 36% nationally of owner-occupied housing, [roughly] 29 million homes,” said Gay Cororaton, senior economist at the National Association of Realtors in Washington DC.
However, the number of older homes varies widely throughout the country. She said in New York about 66% of homes qualify as aging housing stock, while Massachusetts has about 57%, and California has about 41%.
In Washington DC, about 80% of owner-occupied housing was built before 1969, she said, though the density of homes in Washington D.C. isn’t apples-to-apples with the rest of the nation.
Whatever Congress decides on Build Back Better, homebuyers don’t have to wait to take advantage of aging housing stock. Buying an older home can be a way to avoid bidding wars and high home prices, provided you know what to look for.
“I don’t find as many challenges to buying older homes as I find people overlook good [home] possibilities,” says Linda Kuklentz, a Realtor with Morganelli Properties in Hellertown, Pa.
New homes have a definite appeal – modern fixtures and amenities, contemporary styles, and less wear-and-tear on appliances, major home systems, and the foundation.
But many older homes were built to last, even if they seem a bit outdated or require some renovating.
That’s why the key to assessing an aging house is to focus on buying a home that is solid and has the needed amenities for everyday living.
Kuklentz advises clients this niche may not have “on-trend upgrades, but they are usually well maintained.”
“Nine out of 10 times, you won’t see granite countertops, and you might see pink or green tile in the bathrooms. But often those major systems – like the roof and furnace – are well maintained,” she explained.
Consider, for instance, a home that goes on the market when its owners decide to downsize in retirement. They’ve lived in the house for 30 years, and they’ve maintained all the major systems in the home.
The one thing they haven’t kept up with is modern decorating trends, and they haven’t replaced the house’s siding in a few years. But the roof was replaced a few years ago, the plumbing works great, and the HVAC system is fairly new.
When you’re buying a home, those elements are a lot more valuable than fresh paint and new siding, because they cost a lot more to fix – and they’re essential to your day-to-day life in the home.
"Nine out of 10 times, you won’t see granite countertops, and you might see pink or green tile in the bathrooms. But often those major systems – like the roof and furnace – are well maintained."
Linda Kuklentz, Realtor
Adding new lighting fixtures and a fresh coat of paint are easy upgrades, as is removing old wallpaper. But these cosmetic issues can still turn off many homebuyers, Kuklentz says.
“Replacing the toilet and vanity is an easy fix that makes a huge difference and isn’t costly,” she said.
But replacing an ancient roof or barely-hanging-on heating system? Those require a lot more work and money.
Besides, Kuklentz points out that as most new homeowners settle into a home, they opt to make changes to personalize it anyway. If you know you’re going to do some work on any home you buy, why not look at older homes that you may be able to buy for a significantly lower price?
If the house you’re buying needs work before you’d want to live there, you may be able to take out a renovation loan that allows you to buy the home and finance renovations in a single mortgage.
Buying a charming older home can be exciting – and scary. There are a lot of unknowns when buying an older house, and they’re often found outside of the trendiest or most in-demand neighborhoods.
Across the country overlooked homes for sale – and those in less than ideal condition – may be located in neighborhoods with property values too low to justify new construction or rehabilitation, according to a White House statement.
That translates to aging housing stock left out in the cold during some homebuying conversations. Sometimes that’s for good reason. An old house that’s fallen into severe disrepair may be more than some homebuyers are willing to take on.
Oftentimes, though, older homes come with pros and cons – just like any property.
Home inspections will reveal any serious concerns and give you a better understanding of what it will take to get the home where you want it.
“Customers should be looking at the big-ticket costs that might arise, such as roof, HVAC, or major appliance replacement,” says Jeff Satre, a branch manager with Fairway Independent Mortgage Corporation in Ashburn, Va. (Fairway owns Home.com.) “A home warranty is highly recommended to cover anything that pops up in the first year of homeownership.”
Home warranties supplement your home insurance coverage and often cover repairs or replacements for major appliances and certain other problems.
Learn more: What Does a Home Warranty Cover and Is It Worth It?
Here are some areas to look out for when visiting properties and during an inspection.
Older homes may have working older systems, such as HVAC and plumbing, that don’t need repair or replacement today, but should be on your radar as likely requiring work in the future.
Kuklentz says she never advises clients to waive property inspections for that reason. Your real estate agent can give you their take on a home, but you want a professional inspector to assess the property and see potential areas where it might break down.
“I’m not an inspector – most Realtors aren’t – and I can’t give someone a guarantee a home won’t need work,” Kuklentz explains.
Robert Pecca, a home inspector in Saylorsburg, Pa., says setting appropriate expectations upfront and understanding the costs of homeownership can go a long way to relieving the homebuying anxiety often associated with buying a piece of the country’s aging housing stock.
While newer homes may require less overall maintenance in the early years of living in them, Pecca recommends setting aside 2 to 3% of the home value per year for maintenance and repairs on an older home.
“Some years you likely won’t have any costs, other years you’ll need a new roof, or water heater, or furnace,” he says.
Pecca says a new roof can run from $3.50 to $5 per square foot or more, depending upon roofing materials, styles, and warranties. For instance, he says a basic roof on a 1,500-square foot ranch home might cost from $4,000 to $6,000 in his five-county Pennsylvania service area, which is in the Northeast Megalopolis. Depending upon the town, city or state, costs could vary widely.
Having multiple roof surfaces, such as peaks or gables, can also drive up the price. So does the amount of roof, or its square footage.
If roof damage is extensive and goes beyond surface materials to include roof decking or sheathing – the wooden frame and boards that make up the surface the shingles and other materials are fastened to – costs can rise substantially
When shopping for appliances like hot water heaters or furnace systems, prospective homebuyers of aging housing stock should keep in mind related or ancillary costs. Those can include electrical work and materials, thermostats, and other hook-ups, as well as old unit removal.
“HVAC (heating, ventilation and air conditioning) units or boilers are the most expensive items” to replace, Pecca says.
When researching a boiler or furnace, many homeowners don’t take those “peripheral components like installation, removal of the old system, connecting to the thermostat, electrical connections, hook ups, and duct work” into account, and those costs add up, he cautions
Also take into account the energy source – whether it’s oil, electric, natural or propane gas and estimate those associated costs, especially when considering a new system installation or switching to a new fuel source.
Ground humidity in a crawlspace or basement can promote mold growth and damage wood, and buyers could miss that important detail without a professional home inspection.
Pecca advises asking an inspector about signs of a failing or leaking roof, onsite well contamination if there’s a well on the property, and signs of mold or other water damage
Pecca says bad foundations can be a cue to run away from an aging housing stock sale.
“The worst thing for a home is a buckling foundation,” he says.
He advises that homes with concrete block foundations were rarely seen before the 1900s, but those homes that do have this type of foundation may be more susceptible to soil expansion and contraction – components that could mean the foundation isn’t solidly rooted.
You can get an inspection specifically for structural concerns. One way to tell if you need one is the paper test.
“If you see an open horizontal crack [in the foundation] and you can put a piece of paper into the crack, you want to have a structural foundation inspection,” Pecca says.
Other foundation details to check include:
“With older homes, the wood structure is built on top of the wood. Many times [onsite] wells were installed directly outside the foundation, or in a back room,” he says.
Ask your inspector whether there are signs of deterioration or rot at key structural points
Here’s the good news if you’re keen to buy a particularly vintage property. Pecca has inspected many homes from the 1800s and said older stone foundations were typically built to last.
“These old stone foundations are generally rock solid,” he says
“Old stone foundations are generally rock solid.”
Robert Pecca, home inspector
Ask your home inspector whether a termite inspection is included in their general inspection. If it’s not, you may want to add on a specialty inspection for termites or other pests that are common in your area.
Subterranean termites are prevalent across the U.S. Formosan termites need warmer climates to survive and thrive – so they’re more often found in the south and southwestern U.S. Termites can do serious damage to the structure of a home, so it’s critical to know whether there have been past infestations and whether they were addressed.
“If there is evidence of a previous termite infestation, you want to know it has been professionally treated. If it has not been treated, there is a high risk they can still be in the area, if not in the home,” Pecca says .
Carpenter ants can also cause significant damage to home structures because they thrive on wood.
Beetles and old house borers are commonly seen in very old homes (think properties built in the 1800s). Telltale exit holes will provide evidence of a previous infestation.
Having a qualified inspector helps address any level of damage, remediation and whether or not the damage is extensive enough to be a deal breaker.
The biggest issue with flooring is making sure it’s stable and not rotting away. If it’s sturdy but scuffed up, there are budget-friendly ways to replace it. Luxury vinyl options can be an affordable alternative to getting hardwood refurbished or newly installed.
An important point to consider with flooring, however, is that older homes may have layers of tile that were laid with asbestos. Disturbing the asbestos during renovations can become hazardous, so you’ll need to hire contractors who are licensed and certified in asbestos removal.
If you’re unsure whether there is asbestos in your flooring or ceiling, you can collect samples yourself and mail them to a lab for testing (don’t forget a mask if you do this!), or hire a company to test for you.
Replacing windows throughout an entire house can be quite costly, so look closely at all windows in the home. If there are problems, you might ask the sellers to lower their price to make up for the cost you’ll incur replacing them. You can also ask that they replace the windows before the sale closes.
“Windows not seated or bulging in their frames should be a red flag. Even if it’s a vacant house, that doesn’t mean you give up your right to negotiate,” Kuklentz says
"Windows not seated or bulging in their frames should be a red flag. Even if it’s a vacant house, that doesn’t mean you give up your right to negotiate."
Linda Kuklentz, Realtor
A general home inspection will provide some information about the home’s wiring and electricity, but if the house is especially old, you may want to consult with an electrician. Older homes weren’t built for the demands of today’s electronics, including multiple TVs, computers, and other devices. You want to make sure the house can handle your day-to-day needs.
Phil Ganz, a senior loan officer with Fairway in Boston and Key Largo, Fla., suggests being aware of knob and tube wiring. Because knob and tube wiring isn’t grounded, it may be incompatible with certain plugs and devices, and it can become a fire hazard. Neither of these are necessarily dealbreakers, and there are workarounds. But it’s important to know whether you’ll need to have the wiring in the house updated or whether you’ll need to re-insulate key areas of the home.
It’s important to learn as much as you can about the materials used in a home’s construction and previous renovations. Ganz suggests finding out whether lead paint was used and the radon levels in the home and area.
If there is lead paint in the home and the seller knows about it, they’re obligated to provide you with information on the dangers of lead paint and how to deal with it safely. They should also provide any information they have about radon levels on the property. You can purchase radon mitigation systems for the home.
If the seller doesn’t have information on lead and radon in the home, you can do tests after you’ve moved in. It is possible to get lead remediation done on the home, though it is expensive. However, lead paint was used in many homes until 1978, so it’s presence is common. But there are ways to avoid contamination, such as ensuring paint is not chipping or that it has been sealed over.
Ganz also suggests finding out whether there are any abandoned oil or septic tanks on the property. Oil tanks must be properly decommissioned according to EPA guidelines, including being filled in and sealed. An abandoned tank that has not been properly dealt with can cause a lender to deny financing for a home.
Many younger homebuyers want to make energy-efficient upgrades to their homes. If this is a priority for you, consider how much it will cost to make those changes and whether the home you’re looking at is equipped for more modern appliances.
Pecca says most large systems, such as full house solar panels, are still years away from going mainstream. Instead he recommends looking for Energy Star rated appliances and products. Small changes, like switching to LED light bulbs, can rack up cost savings over time as well, even in an older home.
Learn more: Young Homeowners Are Keen on Green Remodeling. Here’s How to Get Started
What is the average age of housing stock? The median age of owner-occupied houses in the U.S. is 39. As of 2016, half of the homes in the U.S. had been built prior to 1980.
What state has the oldest housing stock? The areas with the oldest housing stock are concentrated on the East Coast and include Washington, D.C., New York, Massachusetts, and Rhode Island. Pennsylvania and New Jersey also have many older homes. The fact that some of the country’s oldest homes are in these areas is unsurprising, as all but D.C. were among the original 13 colonies. Additionally, Maryland and Virginia both border the nation’s capital and were among the first colonies as well.
What is housing stock? Housing stock refers to the amount or number of existing residential homes in a given area. Housing inventory means the amount of homes listed on the market for sale at any given time.
Aging housing stock is a reality of the U.S. homebuying market. Most homes in the country were built before 1980 – but that doesn’t mean you’re settling for less if you buy an older property. In fact, older homes often have good bones. And the fact that they’re a little outdated can either add to their charm or give you an opportunity to renovate and turn them into your dream home.