Increasing Vacancy Rate in Older Housing Units

One notable feature revealed by the 1960 Census has been the increase in the vacancy rate in the older housing units. Owners of many of the units built during the apartment boom of the 1920s are finding it increasingly difficult to rent these units as a result of increasing competition from the modern, air conditioned, elevator units now being built. On the other hand, we find many owner-occupied units classified as substandard. In this case, their owners may very well abandon these units or have them torn down and move to better quality housing.

Increasing Land Costs

With the expansion of the downtown regions and the suburban satellite cities, many buildings are being razed to make way for higher density developments, whether they be multifamily units or office buildings. It is not economically feasible to maintain sub-standard low-rent structures on land with much higher potential use. Owners and speculators, realizing this fact, demolish these buildings and convert them into parking lots or some other use until the high rent structures can be erected.

Better Housing Code Enforcement and Higher Housing Standards

Building and housing code officials in recent years have established new codes in the areas which formerly had none and tightened the code restrictions in others. Part of this effort has resulted from increased public pressure to prevent losses from fires and a need to maintain safe and sanitary buildings. Increased Losses Resulting from Fire, Flood and Other Disasters The attached chart shows an upward trend in losses resulting from fires in recent years. It is impossible adequately to measure buildings completely destroyed by fire, but if the total number of fires and total dollar volume of losses are any indication, this definitely has been an important factor in the number of units removed from the housing inventory. As hard as man may try to prevent losses from other causes such as flood, windstorm, airplane disasters, explosions, etc., man still has been unable to control these elements satisfactorily.

CHART I

Estimated Number Of Fires By Years In Buildings And Other Than Buildings, In All United States Communities
Of 2,500 Or More Inhabitants. Estimates For 1942 To 1946 Based On Reports From Fire Chiefs To The President's
Conference On Fire Prevention. Estimates For Later Years Based On Reports From Fire Chiefs Submitted To The
National Board Of Fire Underwriters. Number Of Cities Reporting In 1962-2,778.

Definitions

UNITS LOST THROUGH DEMOLITION

...

refers to units demolished

on the initiative of a public agency or as a result of action on the part of the owner.

UNIT CHANGE BY CONVERSIONS ... This refers to the creation of two or more dwellings from fewer units through structural alteration or change in use. Structural alteration includes such changes as adding a kitchen or installing partitions to form another dwelling unit.

...

UNIT CHANGE BY MERGER Merger refers to the combining of two or more dwelling units into fewer units through structural alteration or change in use. Structural alteration includes such changes as the removal of partitions or the dismantling of kitchen equipment.

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ECONOMIC

Special Report

NATIONAL ASSOCIATION OF HOME BUILDERS N. H. ROGG-DIRECTOR OF ECONOMICS AND POLICY PLANNING MICHAEL SUMICHRAST-ASSOCIATE ECONOMICS DIRECTOR NORMAN FARQUHAR-ASSISTANT ECONOMICS DIRECTOR

Special Report 63-10

August 30, 1963

UPKEEP AND IMPROVEMENTS IN RESIDENTIAL AND NONRESIDENTIAL CONSTRUCTION

...

THIS REPORT COVERS--FOR THE FIRST TIME--RESIDENTIAL AND NONRESIDENTIAL
PROPERTIES we attempted to do the impossible: estimate the improvement
market in the nonresidential field ... a very difficult and complicated task
... but essential for the home building industry ... The result--in a capsule:
THE ANNUAL UPKEEP AND IMPROVEMENT MARKET FOR PROFESSIONAL BUILDERS: $13.1
BILLION DOLLARS. Although the total volume of this market is over $20 billion
dollars, much of the work is done by the homeowners and by the people directly
employed by industries and institutions.
THIS IS A SUBSTANTIAL MARKET:

...

for every dollar we spend on new construction
of private non-farm housing, we pay an additional 71 cents to contractors for
upkeep and improvements.

TWO-THIRDS OF THE EXPENDITURES ARE ON RESIDENTIAL PROPERTIES ... We pay about
$8.3 billion dollars annually to contractors for upkeep and improvements of
residential properties, and only $4.7 billion dollars on nonresidential.
Therefore, residential work accounts for 64% of all paid jobs and is the prime
market for builders in this field.

UPKEEP AND IMPROVEMENT OF PROPERTIES

TOTAL EXPENDITURES, 1962
(MILLIONS OF DOLLARS)

For sale by NAHB, 1625 L Street, N. W., Washington 6, D. C. - Price $2.00

UPKEEP AND IMPROVEMENTS IN RESIDENTIAL AND NONRESIDENTIAL CONSTRUCTION

This special report concerns itself with estimating the volume of upkeep and improvements of residential and nonresidential properties and with estimating that portion of the market done by builders. By upkeep we mean maintenance and repair expenditures; by improvements we mean additions, alterations and replace

ments.

In the residential field, the Bureau of the Census provides us with a good tool--the C50 Series--showing the extent of residential upkeep and improvements. In the nonresidential field, the size of upkeep is derived from data published by the Bureau of the Census, in Construction Review. There is, however, no information available about the scope of the nonresidential improvement market. It is conceivably a substantial market, but how large nobody knows. Also the extent of the market where a professional man participates is known only in the residential field.

In this study we examine the scope of the market and try to fill the gaps found in the nonresidential field. Specifically, we estimate the total improvement market and the portion done by contractors in the nonresidential field. The end result is the estimate of (1) the total scope of the upkeep and improvement market; (2) the portion done by the professional.

One more difficulty in this field is the use of loose terms. People referring to remodeling may mean remodeling, alteration and repairs; or those referring to repairs may mean repairs and remodeling. Then, when a total figure of the market is estimated, it varies anywhere from $5 billion to $23 billion, with one enthusiast referring to this as a $70 billion "gold mine." These estimates vary according to the objectives people have in mind, and they add to the confusion which already exists.