$126.9 Billion Needed to Repair Nation’s Housing Stock

Drafty rooms, leaking roofs, rodents and insects: Poor housing quality can lead to poor health outcomes, particularly in children, the elderly, or other vulnerable people. Although housing quality in the United States has improved over time, more than one third of homes are still in need of some kind of repair.

A Federal Reserve Bank of Philadelphia Special Report, authored by a team of researchers at PolicyMap and the Federal Reserve, provides insight into how much investment is needed to repair homes, and who is more likely to need the costliest repairs.

According to the report, $126.9 billion of investment would be needed to fully repair the occupied U.S. housing stock, including $50.8 billion needed for units that house lower-income people. More than 1 in 3 housing units needs some repair, and while the typical cost is estimated to be a relatively modest $1,449, more than 1 in 20 homes need more than $5,000 in repairs.

As part of the study, researchers were able to identify distinct groups of households with repair needs, based on characteristics such as income and age of housing. This typology can help guide the creation of new programs and policies to drive investment to those households in the most need or can help target outreach to the appropriate people for existing programs.

The new typology revealed that low income renters of older single-family units have a higher likelihood to live in housing that need the most expensive repairs. More than one-fourth of these households with repair needs are single women with children. For this group, strengthened code enforcement — a common strategy for reducing housing problems in rental housing — without corresponding tenant protections could further endanger an already housing-insecure group.

Among homeowners, older adults who have owned their homes for a long time have the most expensive average repair costs. This group may be reluctant to add to their monthly payments through traditional home improvement loans, so alternative financing strategies such as grants or loans paid back when the property sells may be beneficial.

The report also shows that needs for investment in home repairs vary across the country. Median repair costs in metropolitan statistical areas for units that need repairs range from $1,053 to $1,927. In some cases, such as San Francisco ($1,927 median repair cost), the high cost of needed repairs is at least partly attributable to the higher local costs of construction. Repair costs are also high in metro areas such as Philadelphia and Chicago (the second and third highest, with $1,707 and $1,685 respectively), where the housing stock is older.

About the data

This study draws from the Census’s American Housing Survey (AHS), which provides data on housing characteristics for a sample of housing units nationwide. The research team used the Public Use File of the AHS, which contains detailed information on certain housing problems such as presence of rats, leaky roofs, and inadequate heating for each surveyed occupied unit. They created a new dataset by estimating housing repair costs for each occupied housing unit in the survey. The research team combined data on these problems with information on housing unit dimensions and systems types (such as whether the unit is on public or well water) to arrive at specific repair scenarios. Finally, experts at Gordian, a company that specializes in construction cost estimation, used average construction costs from their databases to assign repair cost estimates (in 2018 dollars) to each scenario. These repair costs include not only material costs, but also labor and the contractor’s profit margin. For detailed information on the creation of this dataset, read more here.