Special Report NATIONAL ASSOCIATION OF HOME BUILDERS N. H. ROGG-DIRECTOR OF ECONOMICS AND POLICY PLANNING MICHAEL SUMICHRAST-ASSOCIATE ECONOMICS DIRECTOR NORMAN FARQUHAR-ASSISTANT ECONOMICS DIRECTOR Special Report 63-10 August 30, 1963 UPKEEP AND IMPROVEMENTS IN RESIDENTIAL AND NONRESIDENTIAL CONSTRUCTION ... ... for every dollar we spend on new construction TWO-THIRDS OF THE EXPENDITURES ARE ON RESIDENTIAL PROPERTIES ... We pay about UPKEEP AND IMPROVEMENT OF PROPERTIES TOTAL EXPENDITURES, 1962 (MILLIONS OF DOLLARS) For sale by NAHB, 1625 L Street, N. W., Washington 6, D. C. - Price $2.00 UPKEEP AND IMPROVEMENTS IN RESIDENTIAL AND NONRESIDENTIAL CONSTRUCTION This special report concerns itself with estimating the volume of upkeep and improvements of residential and nonresidential properties and with estimating that portion of the market done by builders. By upkeep we mean maintenance and repair expenditures; by improvements we mean additions, alterations and replacements. In the residential field, the Bureau of the Census provides us with a good tool--the C50 Series--showing the extent of residential upkeep and improvements. In the nonresidential field, the size of upkeep is derived from data published by the Bureau of the Census, in Construction Review. There is, however, no information available about the scope of the nonresidential improvement market. It is conceivably a substantial market, but how large nobody knows. Also the extent of the market where a professional man participates is known only in the residential field. In this study we examine the scope of the market and try to fill the gaps found in the nonresidential field. Specifically, we estimate the total improvement market and the portion done by contractors in the nonresidential field. The end result is the estimate of (1) the total scope of the upkeep and improvement market; (2) the portion done by the professional. One more difficulty in this field is the use of loose terms. People referring to remodeling may mean remodeling, alteration and repairs; or those referring to repairs may mean repairs and remodeling. Then, when a total figure of the market is estimated, it varies anywhere from $5 billion to $23 billion, with one enthusiast referring to this as a $70 billion "gold mine." These estimates vary according to the objectives people have in mind, and they add to the confusion which already exists. (1) TOTAL UPKEEP MARKET (A) UPKEEP EXPENDITURES ON RESIDENTIAL PROPERTIES. In 1962, upkeep on residential properties accounted for 44% of the total expenditures, while 56% was spent on improvements. In that year we spent more than $5 billion for upkeep or repair and maintenance of our homes. Of the $5 billion, $2.2 billion (over 43%) was spent on painting, while $1.3 billion was spent on various items from the repairing of switches, to caulking of doors, and to the repairing of swimming pools. Nearly $700 million was spent on plumbing items, such as repairing of clogged drains, cleaning septic tanks, replacing faucets, changing pipes, etc. Roofing repairs accounted for $333 million and included not only roof shingle replacements, but also caulking of leaky roofs, and repairs of gutters, downspouts and flashings. A total of $333 million was expended on heating and central air-conditioning, while $256 million was spent on floor repairs. Painting. About 35% of all maintenance and repair painting jobs are done by homeowners themselves. Out of the remaining 65%, however, not all is sublet to contractors: 5% of the expenditure is actually paid to contractors for labor only, while another 5% is for partial supply of labor and materials. This leaves little over 51% for professional people to do. Plumbing. While about $2 out of $3 spent on painting is paid to the hired contractor, nearly 80 cents of every dollar is paid to the professional man in plumbing repairs and maintenance. Still, 16% of the people buy their own material and do the plumbing jobs themselves. Roofing. About one-fifth of all work was done by the homeowners, without using outside help, and nearly 70% was done by professional roofers. Heating and Air-Conditioning. This is one field where only a small fraction of jobs is done by the homeowners: over 90% is directly subcontracted. Apparently this area is still considered out of bounds for an average do-ityourselfer. Flooring. Here the expenditure resembles that of painting. About 60% is given to professional floormen, and the rest is done by the "man around the house." Other Jobs. Most of the work done by do-it-yourself methods is in this category: nearly 60 cents of every dollar spent. This, of course, is not unusual. Most of the odd maintenance jobs are done without professional help and constitute part of the accepted "pleasure" or "burden" of the homeownership --depending on the individual philosophical outlook. TABLE 2 PERCENTAGE EXPENDITURE OF HOMEOWNERS FOR UPKEEP, 1962, BY TYPE OF WORK How Much of the Upkeep Dollar For the Professional? Assuming the proportion spent on owner-occupied properties with 1 - 4 housing units is the same as for all housing units (there is no breakdown for properties with 4 units and over), we can say that roughly $3.2 billion dollars or 63% was paid in 1962 to professionals for maintenance and repairs on all residential properties. Table 3 on the next page will give the actual estimated breakdown. (B) UPKEEP EXPENDITURES ON NONRESIDENTIAL PROPERTIES. We have estimated about $5 billion dollars of expenditures for upkeep on nonresidential buildings in 1962. In addition, upkeep on other properties can be estimated at $7.8 billion* Of course, not all of these expenditures are made on structures and not all are done by contract. Using the experience of the Inter-industry Study done by the Department of Labor, we estimate that about 41% of the $5 billion dollars spent on nonresidential buildings was paid for jobs contracted out. Out of the $7.8 billion dollars spent on farm buildings, public utilities, military, conservation and development, and others, about 15% ($1.170 billion) was spent on structures. Of this amount, about 25% ($295 million) was done by contractors. Besides that, about $956,500,000 was spent on upkeep on other than structures--done by contract. We can sum this up in this way (see Appendix for details): |