Housing Value, Costs, and Measures of Physical Adequacy American Housing Survey User Conference March 8, 2011

Paul EmrathVP-Survey and Housing Policy ResearchNational Association of Home Builders

Housing Value, Costs, and Measures of Physical Adequacy: Motivation

• HUD’s mission includes creating quality affordable homes for all.

• Need to identify units failing a qualify test (avoid sacrificing quality to achieve affordability).

• Need a definition of inadequacy.

• Standard AHS-based definitions exist, indicating physical inadequacy a relatively small problem.

• Many different approaches possible with AHS data & standard definitions have been in place for decades—time to revisit & consider alternatives.

Housing Value, Costs, and Measures of Physical Adequacy: Strategy

• Use 2009 AHS to develop baseline statistical models that explain value / rent.

• Hypothesis: Inadequacy should have depressing effect on value / rent, controlling for other factors.

• Develop a new definition of inadequacy consistent with the hypothesis.

• Compare new & traditional definitions of inadequacy.

• Use AHS data to look at numbers / characteristics of inadequate units.

Baseline Model for Value in Owner-Occupied Single-Family Units: Explanatory Variables

• Region crossed with central city/suburb/ non-metro status

(CA metros a separate “Region”) • Size of unit in sq ft crossed with year built • Lot size• # of full bathrooms • # half bathrooms • # of bedrooms • # of dining rooms• # of family rooms• # of other rooms • presence of a basement crossed with

region• Garage or carport • Fireplace • Central air in Midwest & South regions

• Open spaces within 1/2 block• Community recreational facilities• Gated community

• Waterfront property crossed with region• Property not on waterfront, but body of water

within 1/2 block• Buildings with bars on windows within 1/2

block • Abandoned buildings within 1/2 block• Bad roads within 1/2 block• Neighborhood crime within the past year• Neighborhood w smoke, gas, or bad smells• Neighborhood w heavy street noise / traffic• Trash/litter/junk within 1/2 block (metro)• Trash/litter/junk within 1/2 block (non-metro)• Businesses or institutions within 1/2 block

Factories/industrial structures within 1/2 block • Manufactured housing within 1/2 block

(metro)• Manufactured housing within 1/2 block

(non-metro)

Baseline Model for Rent (Gross Rent minus Fuels) in Multifamily Units: Explanatory Variables

• Region crossed with central city/suburb/ non-metro status

(CA metros a separate “Region”) • Size of unit in sq ft crossed with year built • # of full bathrooms • # half bathrooms • # of bedrooms • # of other rooms • presence full or partial basement crossed

with region• Use of a garage • Working dishwasher in the unit• Working clothes dryer in the unit

• On a floor with access to an elevator• Building with restricted access• Building with 3 floors• Building with 4 to 9 floors• Building with 10 or more floors• 1 floor building with fifty or more units• Community recreational facilities• Waterfront property • Property not on waterfront, but body of water

within 1/2 block• Neighborhood with satisfactory public

transportation• Neighborhood with satisfactory shopping• Trash/litter/junk within 1/2 block (metro)• Trash/litter/junk within 1/2 block (non-metro)

Inadequacy in the AHS: Traditional Definition of “Moderately Inadequate”

1. At least 3 of the following outside water leaks inside water leaks holes in the floor open cracks in the inside walls or ceilings an area of peeling paint larger than 8 x 11 seeing rats recently

2. More than 2 6-plus hour toilet breakdowns

3. Main heating equipment is unvented room heaters

4. Lack of complete kitchen facilities

Inadequacy in the AHS: Traditional Definition of “Severely Inadequate”

1. At least 5 of the conditions in 1. on previous slide

2. Less than 2 full bathrooms without hot and cold running water, or without bathtub or shower, or without a flush toilet, or with shared plumbing

3. Respondent reporting being cold for 24+ hours and at least 2 breakdowns of heating equipment lasting longer than 6 hours

4. Respondent reporting that the household does not use electricity

5. Exposed wiring, plus a lack of electrical outlets in every room, plus fuses that have blown more than twice

Inadequacy in the AHS: Proposed Definition for Single-Family Housing

1. Missing siding

2. Broken windows

3. Holes, cracks, or crumbling in the foundation

4. Sagging roof

5. Holes in the roof

Inadequacy in the AHS: Proposed Definition for Multifamily Housing

1. Lack of a kitchen sink

2. Lack of a bathroom sink

3. Open cracks in the inside walls, or ceilings

4. A breakdown of the sewage system since the last interview

5. Lack of built-in equipment designed to distribute heat throughout the unit in climates with 4,000 of more heating degree days

Inadequacy in the AHS: Proposed Definition for Multifamily Housing

5. Lack of built-in equipment if main heating equipment is any of the following:

vented room heaters burning kerosene, gas or oil

unvented room heaters burning kerosene, gas or oil

portable electric heaterscooking stoveno main heating equipment

Alternate Definitions of Inadequacy in Single-Family Model

Alternate Definitions of Inadequacy in Multifamily Model

Number of Housing Units Classified as Inadequate Under Alternative Definitions

  Occupied Non-Seasonal Vacant

  Single-Family Multifamily Single-Family Multifamily

AHS severely inadequate

991,358 744,606 0 0

1.3% 2.9% 0.0% 0.0%

AHS moderately or severely inadequate

2,727,494 2,607,392 0 0

3.5% 10.1% 0.0% 0.0%

Inadequate under new definition

6,733,007 2,153,890 1,104,633 397,619

8.5% 8.3% 19.4% 8.9%

Total housing units 79,133,307 25,920,344 5,707,567 4,449,398

Distribution of Housing Units by Year Built

0%

5%

10%

15%

20%

25%

30%

35%

Before 1940

1940 to 1949

1950 to 1959

1960 to 1969

1970 to 1979

1980 to 1989

1990 to 1999

2000 to 2004

2005 or later

InadequateAll

Distribution of Housing Units by Geography

0%

5%

10%

15%

20%

25%

30%

35%

40%

Central City Urban Suburb Rural Suburb Urban NonMetro

Rural NonMetro

InadequateAll

Housing Cost Burden for Owners of Units Inadequate Under the New Definition

Household Income Under 30% of Income

30-50% of Income

50% of Income or More

Under 30% AMI 769,197 38,605 106,118

30 to 50% AMI 762,509 2,508 0

50 to 80% AMI 976,511 0 0

80 to 120% AMI 1,100,113 0 0

120% AMI or more 1,421,420 0 0

Total 5,029,751 41,113 106,118

AMI = Area Median Family Income

Housing Cost Burden for Renters of Units Inadequate Under the New Definition

Household Income Under 30% of Income

30-50% of Income

50% of Income or More

Under 30% AMI 1,165,377 55,057 231,845

30 to 50% AMI 805,814 0 0

50 to 80% AMI 752,663 0 0

80 to 120% AMI 428,960 0 0

120% AMI or more 270,198 0 0

Total 3,423,013 55,057 231,845

AMI = Area Median Family Income

Household Type Distribution

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Married couple with children

Other with children

65+ householder with no children

Other without children

InadequateAll

Housing Value, Costs, and Measures of Physical Adequacy: Summary

• Models that estimate value / rent developed using AHS.

• New definition of inadequacy proposed that performs better than traditional definition in models.

• More units than previously thought may be inadequate—especially single‐family.

• Inadequate units tend to be old, have disproportionate share of unmarried households with children.

• Many non-seasonal single-family homes are inadequate.

• Many sections of AHS used in this analysis.

Housing Value, Costs, and Measures of Physical Adequacy: Sections of AHS Used• Sample status, allocation variables (to screen data)• Housing value / costs• Geography / climate• Housing unit characteristics• Neighborhood characteristics• Multifamily building characteristics• Quality indicators• Utilities / heating equipment• Income (household and area)• Household composition• Conclusion:

Many sections of the AHS have practical utility.

Questions about this presentation?

contact

Paul EmrathVice President

Survey and Housing Policy ResearchNational Association of Home Builders

1-800-368-5242 x8449pemrath@nahb.org