HUD Examines Barriers to the Rehabilitation of Affordable Housing

According to the 1997 American Housing Survey, the median age of all American housing units is 32 years. Just over one-fourth (27 percent) of the 112.3 million housing units in the United States are 50 years or older, an age at which substantial major rehabilitation of systems and building components is often needed. Thirty-nine percent (about two-fifths) of the 34.1 million central-city housing units are at least 50 years old. By comparison, less than one-fifth (18 percent) of the 54.1 million suburban housing units are 50 years or older.

Rehabilitation of aging housing is a major resource for meeting the Nation's affordable housing needs. Barriers to the Rehabilitation of Affordable Housing, Volume I: Findings and Analysis and Volume II: Case Studies, the result of a cooperative research agreement between HUD and the National Trust for Historic Preservation, examine the major barriers to housing rehabilitation.

The research team, led by David Listokin of Rutgers University, reviewed relevant literature, conducted case studies, and convened study groups of real estate developers, nonprofit leaders, architects, and other professionals who face barriers to affordable housing rehabilitation.

Rehabilitation of affordable housing, which involves existing, older buildings, is generally less predictable and more challenging than new construction. Often, a large gap exists between the costs of renovation and the financial resources available. Sweat equity or phased improvements over time can help bridge the gap. Many communities recognize the economic and social benefits of rehabilitation and use HUD and other public or private resources to address their affordable housing goals. Rehabilitation also helps sustain the useful life of U.S. housing stock.

According to the report, approximately $100 to $200 billion in housing rehabilitation is carried out each year in the United States. This figure approaches the total investment in new housing construction and constitutes approximately 2 percent of the Nation's economic activity. HUD helps to rehabilitate housing through subsidies, regulations, and technical assistance. The Community Development Block Grant and HOME programs assist in the renovation of approximately 200,000 units annually.

Rehabilitation is prevalent in central cities, and almost all of it is done without government intervention or support, although the public sector helps with regulations and, in some cases, subsidies. Rehabilitation is divided into three major categories: minor, moderate, and substantial. Minor rehabilitation involves repairs and improvements such as replacing or refinishing cabinets, fixtures, and finishes. Moderate rehabilitation is more extensive, involving new wiring, heating and cooling systems, cabinets, and finishes. Substantial rehabilitation generally means removing all interior walls and mechanical equipment and installing a new space plan. This study focuses on moderate and substantial rehabilitation.

Developmental barriers to rehabilitation include property acquisition, cost estimation, insurance, financing, and land-use restrictions. Additional barriers to rehabilitation that can arise during the construction phase include hiring qualified workers and complying with the myriad of codes for asbestos, construction, fire safety, accessibility, energy efficiency, lead-based paint, radon, and historic preservation. Occupancy barriers, such as rent control and property taxes, can also impede the rehabilitation of existing housing.

The six case study programs in Volume II were based on the kinds of barriers they highlight, the measure of success achieved in rehabilitation activities, and program type, size, and geographic location. The case study sites—located in Chicago, Massachusetts, Miami, New Haven, Seattle, and Trenton—provide success stories and information that can be valuable to other organizations working to increase affordable housing through rehabilitation.

Barriers to the Rehabilitation of Affordable Housing, Volume I: Findings and Analysis and Volume II: Case Studies are available for $5 each from HUD USER. Use the order form.