280 n a h b ECONOMIC Special Report NATIONAL ASSOCIATION OF HOME BUILDERS N. H. ROGG-DIRECTOR OF ECONOMICS AND POLICY PLANNING MICHAEL SUMICHRAST-ASSISTANT ECONOMICS DIRECTOR NORMAN FARQUHAR-ECONOMIC ANALYST Special Report 63-8 July 12, 1963 HOUSING REPLACEMENT DEMAND IN '60s ... ON THE AVERAGE WE WILL LOSE A MINIMUM OF ABOUT 470,000 EXISTING ... 4.7 MILLION HOUSING 1960-1970 THROUGH... FIRE FLOOD DEMOLITION AND OTHER CAUSES. REVISED ESTIMATES REFLECT HIGHER HOUSING This report discusses the losses in the overall housing supply and the probable impact of such losses on the markets for the home building industry. The impact can best be illustrated by the fact that, on the average, in this decade we will lose an estimated 470,000 units every year ... other housing will have to be provided for people formerly housed in demolished units, thus adding to the potential housing demand. In addition to the new households coming into the market and we expect to have about 10 million more in this decade these lost units will account for about one-third of the new needed housing units. This estimate of losses, based on recently available data published by the Bureau of the Census, is somewhat higher than our previous estimates. The new Census data cover the period of 1957-1959 and are published in HC (4) Series, Part 2-1. We are talking about net losses Each year the housing stock increases as a result of the new construction. Offsetting this growth, to some extent, is a loss of units, attributable to factors this report will examine. This loss may be labeled the "net removal rate". This is the term we are using to describe the housing replacement demand. Briefly, the report discusses four sub-categories comprising the removal rate. Then there is presented estimates of net loss broken down by the type of structure for the decade, and finally, some of the reasons for the losses of 1 housing units are discussed. Let us, however, first present an abbreviated summary of projected housing needs for this decade. We estimate the ten years' net removal rate to be at 4.7 million units and an increase in total vacant units of 1.3 million. This adds to a total housing requirement for the decade of 16 million. Allowing for houses already built in 1960-62, and for public housing, farm housing and trailers, we will have to build from now on about 1,500,000 units annually to get to the 16 million housing units by 1970. (This is the same estimate for the decade which NAHB's Economics Department has suggested for some years. However, some of the components of this unchanged total have been revised.) This is the most important part of the loss, amounting in the 1950-1959 period to over 260,000 units annually. This loss is easily definable in enumerating and cannot be, under normal circumstances, double counted or miscounted. The unit can be demolished only once! (This is not true of other changes in inventory, such as conversions or mergers, which could possibly include more errors in enumerating.) During the 1940s the demolition rate was low. During the decade of 1950-1960 the demolition rate doubled to about 260,000 units annually. In the last three years in the 1950s the demolition rate increased to an annual rate of 260,000 units. It should be assumed that the demolitions will continue to increase over the rate of the 1960s. This assumption is based primarily on the changing character of urban development. The low demolition rate of the 1950s was due to the housing shortage that still remained through the early and mid-1950s, and because of the sale house boom; this spread urban development mainly outward requiring little demolition in the central city core to make way for expanding downtown office and business space, or for new apartment buildings. Now, even during the early sixties, a more rapid rate of redevelopment at the fringes of downtown areas is readily visible in almost every major city - with site clearances taking out substantial amounts of low and medium density housing to make room for both business and apartment construction. This rapid spread of the suburbs was accompanied in many cases by inadequate planning, particularly in highway and street development. Consolidating the suburbs and providing adequate thoroughfares and rapid transit will no doubt require considerable demolition. Shopping centers and the like may also require some demolition of housing to provide for expansion and additional parking in order to accommodate increased density. Loss Through Means Other Than Demolition Losses included in this category form a second most important sector of removals. They were estimated at 203,000 units annually in the period of 1957-1959. This category includes a variety of losses, such as through fire, by change in non-residential use, loss of houses which remain standing but are no longer inhabitable, and houses or trailers which are moved. These latter are selfcancelling for the U. S. as a whole, but not for localities as a house lost in this manner from one location, will be a unit gained for some other locality. Table II presents annual losses by means other than demolition for the period of 1957-1959. It is estimated by the Census that the losses by fire, flood, and other casualties run as high as 83,000 annually, while there are over 70,000 units removed by abandonment. Third largest category are units changed from residential to non-residential use and vice versa. Conversion is the process of making additional dwelling units out of the same structure for instance, making two apartments out of a two-story one-family dwelling. Merger is the reverse process. Both of these factors are hard to enumerate and difficult to analyze. The data as presented by the Census have many limitations and should be used with caution. In any event, Census shows that conversions and mergers have a tendency over a period of time to eliminate each other. The relatively small difference (considering the inaccuracy of the estimates) between both figures in the latest period 1957-1959 is not very significant. (Table III) |