Americans shopping for real estate don't necessarily have the pickings when it comes to a home's age. New data from RealtyTrac's Aging Home Analysis shows that more than 70% of single-family U.S. homes were built before 1990.
And when looking at 2013 sales to day, 60% of transactions this year were for homes built prior to 1990—a figure that doesn't bode well for homebuyers wanting newer properties. But there is room for househunters to find bargains.
"The high percentage of homes that are at least 20 years old and likely in need of some major repairs is eye-opening," said Jake Adger, chief economist at RealtyTrac. "However, given the low inventory of homes available for sale in today’s market, this challenge of aging U.S. housing supply can also be an opportunity for buyers looking for a bargain and homeowners looking to update their living space and improve the value of their homes."
The likelihood of purchasing an older home varies based on location. Homes older than 1990 represented more than 80% of the year-to-date sales in 14 states, including Louisiana, Vermont, Wisconsin, Michigan, New Mexico, Kentucky, New Jersey, New York, Rhode Island, Illinois, West Virginia, Connecticut, Massachusetts, and Pennsylvania.
On the other hand, older homes made up less than 40% of the 2013 sales in Utah and Nevada.
Older homes come with more benefits than just higher inventory, with homes selling at cheaper price points.
Homes built in 1990 or later sold at an average price of $256,292 in 2013, compared to $233,221 for homes built before 1990.
In order to offset the technical troubles that could come with buying an older home, the Federal Housing Administration’s 203(k) program can help homebuyers finance the purchase along with repairs.
"Many consumers may not realize the FHA 203(k) program allows them to roll in the cost of both minor and major rehab into the purchase financing or a refinancing," said Dennis Walsh, CEO of REBuildUSA. “This means the entire layout of these older homes can be changed to fit more with modern tastes and sensibilities.”
Aging homes are more inclined to need major repairs, with washing machines, dishwashers, carpet and duct work maintaining a short life expectancy of 10 years.
"As the nation’s housing inventory continues to age, homeowners should consider using programs to invest in modifications and repairs to their homes," said Michael Mahon, executive vice president and broker at HER Realtors. "The FHA 203(k) loan program is a great example of how community and housing redevelopment efforts can provide a higher rate of return on equity for homeowners."
