Here is a look at some of the changes and housing projections for the future, drawn from U.S. Census Bureau data, recent surveys by the National Association of Home Builders (NAHB) and a report by Harvard University’s Joint Center for Housing Studies, “The State of the Nation’s Housing 1993.”
– Home ownership. Unless you played the market perfectly, the best investment you could have made 15 or 20 years ago was likely to be a house.
The median price of new homes rose from $55,700 in 1978 to $121,100 in 1992, while existing home prices rose from $48,700 to $103,700 last year.
Despite price increases, the rate of home ownership in the U.S. has remained stable, with 64.6 percent of households owning in 1974 (versus 36 percent renting) and 64.2 percent in 1992.
But in the 25 to 29 age group, affordability is a growing problem. In 1974, 43 percent owned instead of renting; last year only 34 percent owned.
– Housing features. Houses have become bigger and more comfortable. Only 43 percent had central air conditioning in 1972. Now it’s 77 percent.
The percentage of houses with 2 1/2 baths or more increased from 16 to 47 percent and, those with a two-car or larger garage from 42 to 75 percent.
Size has increased from about 1,400 to 1,900 square foot, largely because of the increase in two-story homes, from 18 percent 20 years ago to 47 percent in 1992.
One change builders don’t like: fewer new single-family homes built, from 1,143,000 in 1972 down to 961,000 last year. And that was up from only 838,000 built during what even the government finally decided to call a recession in 1991, the lowest number built in any year since 1946.
– Price breakdowns. Back in 1949 when a typical house cost about $9,500, labor and materials represented 69 percent of the price and lot improvement 11 percent.
By 1992 with a sales price of $121,100, the labor and materials component had shrunk to 53 percent and percentage costs for an improved building lot doubled.
While the price of just about everything on a homeowner’s budget has risen, residential energy costs have continued to decline-by about 30 percent since 1980.
– Materials. A typical 2,085-square-foot house includes more than 13,000 board feet of lumber (a 12-inch length of one-inch thick material), 6,200 square feet of sheathing over the frame, 2,300 feet of siding and over 6,000 feet of drywall or paneling inside.
Aside from the kitchen sink there are three toilets and two bathtubs, 24 doors, 15 cabinets and a slew of appliances all resting on 14 tons of concrete.
– Affordability. Bargain hunters could look to Lima, Ohio, currently ranked the most affordable housing market in the country, with a 94 percent rating on NAHB’s Housing Opportunity Index. Here’s how the rating number is reached:
In Lima, the median income is $37,900 and median home price is $60,000. Working with the prevailing 7.57 percent mortgage interest rate, a family could afford a home costing 3.3 times its annual income, or $125,000. In Lima, over 94 percent of homes sold were priced at or below that figure.
Using the same analysis, the least affordable housing market was San Francisco, where only 14 percent of the homes were sold at a similarly affordable price.
– Second homes. There are between 4 million and 5 million second homes in the country today. Most are used exclusively by the owners but occupied fewer than 30 days of the year.
– The future. Despite census forecasts showing a decrease in the formation of new households, which means fewer houses will be needed, the NAHB projects that 13 to 14 million new homes will be built before year 2000.
Some of the strongest growth areas will be tailored to emerging groups, such as families with grown children still at home who need more built-in privacy.
The NAHB projects that house size will increase by 15 to 25 percent by the turn of the century, and that lot size will decrease, particularly around metropolitan areas where more homes will be built using a space-saving layout called “zero-lot-line,” in which one side yard is eliminated.
What won’t change? Although air conditioning efficiency continues to increase, furnace efficiency already is near its limit with some gas-condensing furnaces now delivering up to 96 cents worth of heat per dollar of fuel consumed.
