Older homes, new homes and their value
Question: We don’t seem to be building many new homes these days. How much of a problem is the fact that our housing stock is getting older? Answer:
Many things become less usable with age. There isn’t much of a market for televisions from the 1960s or dial telephones. The situation with homes is different. Older homes often gain value over time in part because they remain entirely usable.
The typical existing home is now 40 years old, according to the National Association of Home Builders (NAHB). But age does not mean such homes lack utility or value. In many cases they are the most valuable asset held by individual households and in the past few years their price has increased significantly.
There are several factors that impact the value of older homes.
Location: Major metro areas have expanded as the population has grown. What were once farms and fields are now suburban locations covered with homes, malls and offices. Meanwhile, properties in older areas are often desirable because they involve shorter commutes.
Size: New homes tend to be larger than older properties. The website 24/7 Wall St. points out that homes have grown over time — but not evenly. For instance, according to the site, the typical new home in 1920 had 1,048 square feet and just 800 square feet in 1948. In the first quarter of 2022, according to NAHB, the typical new home had 2,310 square feet.
Warranties: New homes come with construction and system warranties as well as appliance warranties.
Technologies: New homes likely have better insulation, doors and windows. The result can be lower utility costs. New construction standards can have great value in the face of major storms.
Larger lots: Older homes often have larger lots. As zoning laws change such properties can be good candidates for accessory dwelling units, or ADUs. ADUs can be smaller, separate houses built into or next to existing singlefamily homes. Such mini houses can be used by family members, rented out or made into an office area.
Personal preferences: Some people simply prefer older homes because of such reasons as design and location. Also, older homes may have wellestablished lawns and landscaping, and thus attractive curb appeal.
Preferences: With new homes buyers get to choose the colors and configurations they want. Many buyers may prefer older homes, however, and for their designs and traditional construction standards.
It should be said, however, that older homes are not locked into past styles and technologies. There are often opportunities to remodel and renovate. Such upgraded homes can increase property values, especially when combined with established landscaping and advantageous locations. The result is that while a home may have been constructed in 1940, it may also have an effective age of just a few years.