1. Housing Value, Costs, and Measures of Physical Adequacy American Housing Survey User Conference March 8, 2011 Paul Emrath VP-Survey and Housing Policy Research National Association of Home Builders

2. 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.

3. 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.

4. 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)

5. 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)

6. 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

7. 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

8. 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

9. 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

10. 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 heaters  cooking stove  no main heating equipment

11. Alternate Definitions of Inadequacy in Single-Family Model

12. Alternate Definitions of Inadequacy in Multifamily Model

13. Number of Housing Units Classified as Inadequate Under Alternative Definitions OccupiedNon-Seasonal Vacant Single-FamilyMultifamilySingle-FamilyMultifamily AHS severely inadequate 991,358744,60600 1.3%2.9%0.0% AHS moderately or severely inadequate 2,727,4942,607,39200 3.5%10.1%0.0% Inadequate under new definition 6,733,0072,153,8901,104,633397,619 8.5%8.3%19.4%8.9% Total housing units79,133,30725,920,3445,707,5674,449,398

14. Distribution of Housing Units by Year Built

15. Distribution of Housing Units by Geography

16. 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% AMI769,19738,605106,118 30 to 50% AMI762,5092,5080 50 to 80% AMI976,51100 80 to 120% AMI1,100,11300 120% AMI or more1,421,42000 Total5,029,75141,113106,118 AMI = Area Median Family Income

17. 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% AMI1,165,37755,057231,845 30 to 50% AMI805,81400 50 to 80% AMI752,66300 80 to 120% AMI428,96000 120% AMI or more270,19800 Total3,423,01355,057231,845 AMI = Area Median Family Income

18. Household Type Distribution

19. 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.

20. 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.

21. Questions about this presentation? contact Paul Emrath Vice President Survey and Housing Policy Research National Association of Home Builders 1-800-368-5242 x8449 pemrath@nahb.org