Three Things We Need To Do To Develop a Healthy Housing Stock

Mariel Wolfson
2012 Meyer Fellow

Our new working paper explores healthy home concerns and behaviors among American homeowners and renters. We show that both groups are interested in improving the indoor environmental health of their homes, but face myriad challenges to doing so. Below, we highlight three important steps we can take toward improving the health of our housing stock.

1. Demonstrate and Respond to Consumer Demand

Healthy housing is becoming more than a niche market. Nearly one in four households in our survey had some concern about health-related issues in their homes, and more than 20% acknowledged uncertainty about whether their homes might contain health risks. Nearly half of American homeowners responding to our survey have some level of interest in healthy home issues. In fact, 60% had already taken action – even if minor – to create a healthier indoor environment at home.

Notes: Sample size is 529.  Households that expressed some basic level of healthy housing concern were asked, "Which general category(ies) best describes your concern about the impact of your home on your household’s health? "Source: JCHS tabulations of Healthy Home Owner Survey, The Farnsworth Group.

The leading concern among respondents was indoor air quality (IAQ). As outlined in our paper, the most important action we can take to improve residential IAQ is to reduce indoor emissions, including the pollution that comes from heating and cooking, as well as from chemicals that are off-gassed by our furnishings, carpets, paint, and the materials used in constructing our homes. It is therefore critical that both consumers and building professionals have more options for non-toxic/less-toxic materials and products.

In a recent example, Home Depot and Lowe’s announced that they would stop selling flooring containing phthalates, a category of chemicals believed to disrupt human hormones. This “retailer gatekeeping” is one way to start shifting away from hazardous products and toward safer ones. As consumer demand grows and is recognized, forward-thinking manufacturers, retailers, and service providers who make healthy building a priority will be in a strong position to serve this market What’s good for health and the environment will also be good for business.

Notes: Sample size is 465. Households that expressed some basic interest in ‘invisible’ healthy housing issues were asked, “Among the healthy home issues that concern your household, please select up to three of them that generate the most concern."
Source: JCHS tabulations of Healthy Home Owner Survey, The Farnsworth Group.

2. Demystify the Problem

One encouraging conclusion of our working paper is that both homeowners and renters are interested in making their homes healthier, especially by improving indoor air quality and water quality. However, these same consumers report that information – including a lack of time to research options – is an obstacle to taking action. They are suspicious of spurious environmental and health claims (“greenwashing”) and aren’t sure where to turn for trustworthy, science-based information on healthy home products and services.

This problem is amplified when the potential project – remediation, remodel or replacement – is costly in terms of money, time, and energy. A homeowner concerned about potential mold or unhealthy insulation might be just as worried and confused about whether remediating the problem can guarantee a healthier home or improve symptoms such as asthma or allergies.

Another dimension of this problem is the sheer volume and complexity of scientific information on indoor air and environmental quality. Cutting-edge research – including such topics such as indoor microbiomes and chemical interactions with moisture and UV light – is truly fascinating. However, it is not actionable for the average consumer.

Moreover, as interesting as research on emerging issues is, it is important that we not lose sight of older yet persistent healthy housing concerns that have affected our housing stock for generations. In fact, the Lumber Liquidators disaster of 2015 was due to high levels of formaldehyde, one of the first three major indoor air pollutants that were identified back in the 1970s, along with radon and combustion pollution from heating and cooking. These are still serious healthy housing issues, as is lead paint. The Lawrence Berkeley National Laboratory has been a leader in indoor air quality research since the 1970s and offers a wealth of resources (designed for the public) on these issues.

Both our survey and the American Housing Survey show that numerous Americans still face basic structural integrity/safety problems in their homes, including insufficient insulation/weatherization, inadequate heating/cooling, electrical and plumbing problems, and pests. More attention to solving basic problems like these would go a long way toward making our housing stock healthier (for example, by helping to reduce the infiltration of outdoor air pollution, particularly in neighborhoods located near highways, airports, or industries.) While increased attention to chemicals and emerging issues is a positive development, we don’t want to neglect these critical basic issues.

Notes: Sample size is 414. Households that expressed some basic intention to act on specific healthy housing projects were asked, “Among the following healthy home actions your household has taken, plans to undertake or would like to undertake, please indicate how the related health issue(s) and/or risks(s) came to your household’s attention.”
Source: JCHS tabulations of Healthy Home Owner Survey, The Farnsworth Group.

3. Educate and Train Professionals on Solutions

Ever since the oil crisis of the 1970s, demand for energy-efficient homes has grown and building professionals have responded accordingly. Now, the construction/homebuilding/remodeling industry should do the same for healthy home concerns. As discussed in Point #1 above, consumers want their homes to contain fewer toxic materials and have good indoor environmental quality overall, but they need trustworthy expertise, services and information from the industry. Because energy efficiency and indoor environmental/air quality are so intertwined, this creates a natural opportunity for knowledgeable contractors to help their clients integrate both energy and IAQ concerns into upgrade/remodeling projects.

Building professionals who have relevant expertise – which includes knowledge of healthier/non-toxic materials and practices – will have a distinct competitive advantage both with individual homeowners and owners of multifamily buildings. Our paper shows that renters want healthier options, just as they want “green” units.

Fortunately, there is a growing number of initiatives that work to help building professionals develop this expertise, such as Healthy Housing Solutions, which offers training courses, as well as the National Center for Healthy Housing, the Healthy Building Network, the Perkins and Will Transparency project , and the Green and Healthy Homes Initiative. The Department of Housing and Urban Development’s strategy for action is another valuable resource.

Going forward, we hope that a focus on these three areas might go a long way towards improving the nation’s housing stock and the experience of the housing consumer, while also improving the nation’s overall health.

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Read the full paper at Challenges and Opportunities in Creating Healthy Homes: Helping Consumers Make Informed Decisions by Mariel Wolfson and Elizabeth La Jeunesse

Great Recession Increased Fragmentation in Remodeling Industry

Abbe Will
Research Analyst

During the last industry downturn, home remodeling contractors experienced increased fragmentation due to especially large growth in small and self-employed remodelers. Additionally, concentration gains that were achieved by larger-scale firms in the industry upturn were reversed somewhat—all according to recently acquired tabulations of the U.S. Census Bureau’s 2012 Economic Census and Nonemployer Statistics. Conducted once every five years, the Economic Census measures payroll business activity at the industry level, while the Nonemployer Statistics capture similar data for businesses with no paid employees. Special tabulations of the Economic Census and Nonemployer Statistics done for the Joint Center’s Remodeling Futures Program specifically isolate residential construction businesses—either general (i.e. full-service and design/build) or special trade (e.g. HVAC/plumbing, electrical, painting, and roofing)—who have more than half of receipts from remodeling and repair activity.

According to Joint Center estimates from these data sources, the number of residential remodeling contractors reached 716,000 by 2012, up from 652,000 at the peak of the market in 2007 (Figure 1). General remodelers increased their ranks over 12% to 263,000, and special trade remodelers increased 8.5% to 450,000. Overall, the total number of contractors serving the remodeling industry increased almost 10% from 2007. Most of this growth, however, was driven by increases in self-employed remodelers, who saw double digit growth between 2007 and 2012—about 11% for special trades and nearly 17% for general remodelers. The number of payroll contractors grew only 3.5% during this same period.


Notes: Includes residential remodeling establishments with more than 50% of receipts from remodeling activity including maintenance and repair. Self-employed remodeling contractors include those with annual revenues of at least $25,000 assuming those with smaller receipts are most likely part-time, partially retired, or “hobby” contractors where remodeling is likely not their main source of income.
Sources: JCHS estimates using unpublished tabulations from US Census Bureau, Economic Censuses of Construction and Nonemployer Statistics.

The self-employed already made up a large share of home improvement businesses before the boom and bust—about 62% in 2002—and by 2012 their share increased to almost 70% of businesses operating in the remodeling industry. Of course, even though self-employed contractors are a growing share of remodeling businesses, they remain very small businesses: 44% had receipts less than $50,000 in 2012 and 29% had receipts between $50,000 and $99,999. Although the number of self-employed remodelers with less than $150,000 in annual receipts* increased 15% from 2007-2012, those with receipts of $150,000 or greater increased only 3%. Indeed, much of the increased fragmentation in remodeling contractors occurred at the smallest end of the revenue spectrum.

Even remodeling contractors with payrolls continue to be dominated by smaller-scale businesses: over half of payroll remodelers generated under $250,000 in revenue in 2012 (Figure 2). However these smaller-scale remodelers only accounted for 10% of total payroll receipts. Larger-scale firms with $1 million or more in revenues made up just 13% of all remodeling payroll businesses in 2012 but were responsible for generating 62% of total industry receipts and accounting for nearly half of industry payroll employees. Although these largest remodeling firms saw a decline in their shares of industry establishments, employment, and receipts from the peak of the market in 2007, they remained well above pre-boom shares of a decade ago in 2002. Even after suffering the worst market declines on record, larger-scale remodeling companies continue to play a dominant role in the market.

Notes: Residential remodeling establishments are defined as general and special trade contracting establishments with more than 50% of receipts from remodeling activity including maintenance and repair. Receipt categories are not inflation-adjusted.
Source: JCHS tabulations of unpublished data from US Census Bureau’s Economic Censuses of Construction.

In fact, when considering the very largest general remodeling companies in terms of value of receipts over the 2002 to 2012 period, the largest 50 firms continued to increase their share of industry receipts. In 2002, the 50 largest remodelers accounted for 5% of all industry receipts generated by general remodelers with payrolls. This share jumped to 7.9% by 2007 as the market boomed, but even during the industry collapse, the top remodelers were still able to increase their market share to 8.5% of total receipts. The average value of residential remodeling receipts for the top 50 general remodelers with payrolls was over $85 million in 2012, which at first might sound unrealistically high given that the average general remodeling firm had under $650,000 in revenue that year, but could be explained with even just one significant outlier skewing the concentration figures.

Ultimately, these recent data releases provide important updates on the evolving structure of the remodeling contracting industry and a more complete understanding of the impact of the Great Recession. The remodeling industry experienced increased fragmentation during the market downturn, especially among smaller contractors. Larger-scale firms did lose some of their concentration gains of the boom years, but there is evidence that the remodeling industry continued to concentrate at the very top of the market. The top 50 largest companies increased their share of industry receipts even during the downturn, a considerable advantage of scale. Further analysis of the changing composition and organization of remodeling contracting firms over the past business cycle will be included in a research note to be published later this year.

*receipt categories not adjusted for inflation

New Population Data from U.S. Census Reveals Increasing Migration to Sunnier Regions

by Sonali Mathur

Research Assistant

Last week, the U.S Census Bureau released new population estimates and its analysis of components of population change for counties and metro areas. This data includes total population estimates for July 1, 2015, total population change, changes in population due to natural increase, and domestic and international migration between July 1, 2014 and July 1, 2015.

We can see that domestic migration continues on a post-recession path of recovery and with it, long-term patterns of growth and movement to the Sunbelt, slowed by the downturn, are reappearing. Suburban counties in the South are once again attracting the most movers, while northern, largely Midwestern counties are experiencing the greatest population losses.

According to this latest release, the Houston, Dallas, Atlanta, Phoenix and New York metro areas rounded the top five for net population growth. In Texas, the metro areas of Houston and Dallas-Fort Worth saw population growth of 159,000 and 145,000 residents respectively over the past year. Two other metros in Texas—Austin-Round Rock and San Antonio—each grew by 50,000 people, putting them among the top growing metros in the nation. Collectively, these four metros added 412,000 in population. In all, Texas was home to 4 of top 16 metros in terms of population growth, in keeping with state-level data released late last year that showed Texas as the state with the most population growth followed by Florida, California, Georgia, and Washington. Among the top 100 metros, in percentage terms the Cape Coral-Fort Myers, FL Metro Area saw the highest population gain of 3.3%.

In all, 96 metros lost population over the past year. Among the top 100 metros, the biggest net population loss was in the Chicago area where the population dropped by 6,200, followed by Pittsburgh which lost 5,000 people.

The micropolitan areas saw a net growth of 27,000 with more than half (a total of 261) micro areas gaining population, four of which added more than 2000 people.

At the county level, population growth was also skewed to the south and west with the top 30 counties for total population growth being located in either the South or the West. The top three for net population gains were first Harris County, Texas and Maricopa County, Arizona, followed by Los Angeles County, California. Counties with the largest population losses were Cook County, Illinois which had a net negative population change of nearly 10,500, and Wayne County, Michigan, which had a net negative population change of nearly 6,700 people.

In percentage terms, among counties that had a total of more than 100,000 people in 2015, the top counties that gained the most population growth are in Texas, Hays county (5.2%) and Comal County (4.5%), while the counties that lost the most are San Juan County, NM (-4.2%) and Hardin County, KY (-1.8%). Though these counties with highest percentage losses are in the South and West, overall the counties with largest net losses were overwhelmingly in the Midwest and Northeast, and the ones with the biggest net gains were concentrated in the South.

In addition to overall gains and losses in population in metros and counties, the population estimates data also show components of growth in terms of net gains and losses from international immigration as well as domestic migration, which allow us to see what parts of the country are attracting people from around the country and those that are losing population moving to other areas.

As for domestic migration, top ten counties with highest net inflows were in the Sunbelt states of Arizona, Nevada, Florida and Texas. Maricopa County, Arizona saw the highest net domestic inflow, which was 48% of the net population change in the county. Clark County, Nevada saw the second highest net domestic inflow, which was 54% of the net population change in the county. Lee County, Florida moved up to the third spot from the ninth in 2014 for net domestic inflow, which was 92 % of the net population change in the county.

Los Angeles County, California followed by Cook County, Illinois saw the most net domestic outflow for the second year in a row.

In general, counties and metros that were attractive to domestic migrants also had high levels of international immigration. However, some counties that saw high international immigration, such as Los Angeles County, Miami-Dade County, and Queens County, also saw high domestic out migration. Indeed, in many areas gains from international immigration staved off potentially larger population losses due to domestic migration.

The map below shows the changes in population for each county between July 2014 and July 2015. Click on a county to display its data. Select a tab to map percent change in population, net international immigration or net domestic migration. [May take a few seconds to load. Click on the (i) in the upper right to reveal color key information.]




Detailed explanation of the census bureau methodology.

Socialize: http://arcg.is/1pYaNfM

Home Conversions – and Reconversions – Expected to Generate More Remodeling Activity

Kermit Baker
Senior Research Fellow

During the housing bust, and continuing into this housing recovery, large numbers of owner-occupied homes have been converted to rental units. Distressed owner-occupied homes that were foreclosed or sold as short-sales often ended up as rentals because, given the weakness in the housing market and broader economy, few households were looking to buy or were able to buy. Private investors often bought up homes built for owner-occupancy once they saw the strong demand for rentals and the rising rents that these homes commanded.

Once the housing market settles and the demand for homeownership begins to pick up, it is likely that many of these homes will filter back into the owner-occupied housing stock. What will this process look like, and how much modification will be undertaken after this transition occurs? To begin to think about this issue, the Joint Center looked at homes that have already gone through this process; namely owner-occupied homes that have been converted to rentals, and then converted back to owner-occupancy.

While this phenomenon didn’t get much attention until the recent housing crash, it turns out to be fairly common. Starting with owner-occupied homes in 1995 from the American Housing Survey, we tracked these homes for the next 20 years to see which ones changed tenure. Almost a quarter (23.4%) of homes in this 1995 cohort was converted to a rental at least once over this period. While multifamily condos were the most likely type of owner-occupied home to be converted – over half of these condos was rented at least once over this period – so were over a third of single-family attached and manufactured homes, as were over 20% of single-family detached homes.

Note: Sample composed of owner-occupied units in 1995 that were occupied in at least 7/10 surveys from 1995-2013. 

Source: JCHS tabulations of HUD, 1995-2013 American Housing Surveys

Typically, homes that were converted to rentals were somewhat less desirable than homes that were continuously owner-occupied over this period. On average, they 

• are older – pre-1940 homes were 50% more likely to be converted than homes built after 1990,
• have a lower value – homes valued at $100,000 or less were twice as likely to be converted as homes valued at $200,000 or more,
• and are more likely to be located in central cities.

No doubt reflecting the lower value of these homes, spending on home improvement projects was generally lower. For the periods that they were owner-occupied, spending on homes that would be converted to rentals averaged 10% to 15% less than the average for all owner-occupied homes.

The pattern of home improvement spending on converted homes is particularly interesting. For homes that were converted to rentals and then converted back to homeownership, spending on home improvement projects was over 20% below average prior to being converted to a rental unit, and almost 20% above average after that same rental unit was converted back to homeownership.

Notes: Rental sample composed of occupied units in 1995 that were occupied in at least 7/10 surveys from 1995-2013 and were owner-occupied in at least two surveys before first rental period and after last rental period. Average spending is calculated for years in which the unit was owner-occupied. Broader sample composed of occupied units in 1995 that were occupied in at least 7/10 surveys from 1995-2013 and were owner-occupied in at least one survey. 
Source: JCHS tabulations of HUD, 1995-2013 American Housing Surveys

It may be that owners were underinvesting knowing that the home would be converted to a rental, or just the opposite – that the home was converted to a rental because it was in poor enough condition that a sale was difficult. Likewise, after reconversion to an owner-occupied home, higher spending may reflect the need to fix it up after a period of renting, or that the new owner wanted to upgrade the home or customize it to the household’s needs.

There are over four million more rental units now than there were in 2010, and over eight million more than there were in 2005. As many of these rental units return to the owner-occupied stock, we’ll see a boost in home improvement spending. On average, almost $1,000 more is spent per year on home improvements for a home that is converted from renting to owning as compared to a home converted from owning to renting. For every million rentals converted back to homeownership, therefore, there is expected to be almost a billion dollars more spent each year on home improvement activity. 

Millennial Housing Issues in Perspective: Visualizing Cohort Trends in Population Size, Household Numbers, Ownership and Renting

George Masnick
Senior Research Fellow

Today’s 41 million young adults age 25-34 have been slow to move into independent household formation and homeownership. Exactly how slowly and why, and what the future likely holds for these individuals over the next decade, is the subject of much debate. The magnitude of delayed household formation and homeownership can perhaps be better appreciated if we directly compare this young cohort of adults with the cohorts that preceded them in the age structure. The four figures below track the different cohorts’ trends between 2003 and 2013 in population size, total households, owner households and renter households as measured by the American Housing Survey.

Population Size

Figure 1 shows population size of five different 10-year birth cohorts. The youngest cohort (born 1979-1988) remained fairly constant in size between 2003 and 2013 at about 41 million. This number is slightly larger than the next oldest cohort (born 1969-1978), but not as big as the cohort born 1959-1968, which includes younger baby boomers.

The cohorts born from 1959-1968 and 1969-1978 increased slightly in size over the 2003-2013 period due to migration from abroad, underscoring the fact that cohort size among young and middle-age adults can still grow as we go forward. Why the 1979-1988 birth cohort did not also increase in size between 2003 and 2013 (it actually declined by about 300,000) is likely due to the effects of the Great Recession having had a bigger impact on 25-34 year-old immigration. The growth in the total number of annual undocumented immigrants actually turned negative during this period, and slow job growth in construction and manufacturing also had a large impact on slowing overall immigration into the under 35 age groups.

U.S. immigration law still promotes family re-unification as one of its core principles, and this provision was less impacted by the economic downturn than employment driven immigration, and probably resulted in a more sustained immigration of 35-44 and 45-54 year olds. In addition, undocumented immigrants in these age groups were more likely to have lived here longer and have children born in the U.S., so they were less likely to have left the country during the Great Recession.

From 2003-2013, the two oldest cohorts between age 55-64 and 65-74 lost population due to mortality. The oldest (born 1939-1948) declined by 22 percent and the next oldest (born 1949-1958) lost 11 percent of its population.

Number of Households

Figure 2 shows parallel cohort trends in the number of households produced by the population in Figure 1. Three things are noteworthy. First, most of a cohort’s contribution to household growth occurs as it moves from age group 15-24 to 25-34, as is visible in the sharp upturn in households among the leftmost (youngest) cohort in Figure 2. Second, the cohort born 1969-1978 (red line) appears to have formed fewer households in 2013 at age 35-44 relative to older baby boomers at the same age than its population size might have predicted. The 1969-1978 cohort is not on track to attain the household numbers achieved by the 1959-1968 and 1949-1958 cohorts (green and purple lines). Third, the two oldest cohorts, although having lost a significant share of their populations from mortality, did not reduce their household numbers proportionally.

Lower levels of household formation in the youngest two cohorts when compared to baby boomers are somewhat expected because they contain higher shares of both foreign born and minority native born, each of which have lower rates of forming independent households. They are also cohorts that have experienced delayed marriage and fertility among the native-born non-minority population, making independent household formation for the youngest members of the cohort as a whole even less likely. But if members of these cohorts are simply postponing marriage and family formation, household formation for many is also being postponed, so future upward movement in household trajectories when cohorts are still under age 45 is likely.

The fact that household numbers after age 55 do not drop as quickly as population numbers is because married couples head most households in older age groups, and if one spouse dies, the household generally survives. In addition, divorce in middle and old age generally turns one household into two, partly offsetting deaths that occur to persons who live alone. After age 75, losses from mortality increase dramatically, so it will not be until after 2020 for the oldest baby boomers, and after 2030 for the youngest and largest baby boomer cohort that significant declines in older owner households take place.

Owner and Renter Household Trends

Decomposing the cohort trends in total household numbers into owners and renters further refines our understanding of the demographic underpinnings of recent household and housing market dynamics. The youngest cohort’s shortfall in household formation, as it moved into the 25-34 age group, was especially severe on the owner side, as shown in Figure 3.

In spite of having a noticeably larger population at age 25-34 compared to the next oldest cohort (red line), and a slightly larger number of total households at the same age, owner households were almost a million fewer. In addition, this next oldest cohort also shows levels of owner household formation well below what was achieved by the cohort born 1959-1968 (green line) when it was age 35-44 in 2003. Finally, the 1959-1968 cohort had slightly fewer owners in 2013 than the next oldest cohort (purple line) at age 45-54 despite having both 4+ million more people and 1.2 million more total households. But we must not lose sight of the fact that the older 1959-1968 and 1949-1958 cohorts aged into their 40s and 50s during a very different economic period (1993-2003) with better income growth, looser mortgage lending standards and more affordable newly built housing. The number of owner households that these older cohorts achieved at ages 25-34, 35-44, and 45-54 might not be a proper benchmark by which to judge the progress of today’s younger cohorts.

Figure 4 shows that in 2013, the number of renters in the youngest cohort at age 25-34 was significantly larger than the number of owners (11 million compared to 8 million). This compares to much greater parity between the number of owners and renters in the next oldest cohort when it was age 25-34. Although the number of owners in the youngest cohort was well below the number of renters in 2013, the increase in owners between 2003 and 2013 was still larger than the increase in renters.

Looking forward, the 1979-1988 cohort is going to add many more owners over the next 10 years, while at the same time its number of renters should decline when the cohort moves between ages 25-34 and 35-44, given historical cohort transitions. In fact, this youngest cohort should continue to add owners and lose renters over the next three decades until it reaches ages 55-64. Of course, the exact numbers of owner additions will be determined by the state of the economy, by income trends, by housing prices and mortgage interest rates, and by lending practices of banks and mortgage companies. To a certain extent, future homeowner numbers will also be determined by future demographic trends in marriage, fertility, immigration and mortality that affect this age group, but these are less likely to involve significant departures from recent historical levels and are more predictable.

By examining the cohort trends in the numbers of population, households, owners and renters in the way we have, we gain a greater appreciation of the degree to which millennials have been slow to form owner households. But we also find that the next older cohort, born 1969-1978, is also well below levels achieved by baby boomers when they were the same ages. There remains room for much upward movement in owner household formation for these two youngest cohorts. However, it is unlikely that these cohorts will ever reach the 16 million owner households achieved by each 10-year baby boomer cohort without significant reductions in the obstacles they now face in becoming and remaining homeowners. Still, we should look forward to continued gains in owner household formation for the two youngest cohorts as they move into their 40s and 50s over the next decade and beyond.