WASHINGTON–It appears the market for home equity loans for home improvements will continue to grow.
According to the latest American Housing Survey (AHS), published by the Department of Housing and Urban Development, the median age of owner-occupied homes is 37 years old, compared to only 27 years old in 1993.
“This aging trend signals a growing market for remodelers, as older structures normally require additional remodeling and renovations,” said the National Association of Homebuilders (NAHB) in its analysis. “It also implies additional demand for more new construction over the long run.”
Approximately two-thirds of owner-occupied homes in the U.S. were built before 1980, with 40% built before 1970. Homes constructed after 2000 account for just 17% of the owner-occupied homes. And newly built owner-occupied homes constructed after 2010 only make up 2% of the housing stock according to the 2013 AHS.
The impact of the aging housing stock can be seen in the age distribution of owner-occupied homes, the NAHB said. The share of housing stock that is over 34 years old in 2013 has increased significantly. It was 57% in 2013, but only 41% in 1993 and 46% in 2003.
In contrast, said the NAHB, the share of new construction during 2013 (i.e. owner-occupied houses less than four years old is 2%) is notably smaller than in 1993 and in 2003, when 6% of homes were built within four years. Clearly, the smaller share of new construction, together with an aging housing stock, represents an opportunity for builders and developers, as housing demand is steadily increasing over time.