Impact of Changes in Household Composition on Home Improvement Decisions

W00-6: Though total spending on residential renovation and repair activities is approaching $200 billion a year, spending by homeowners and rental property owners on improvements and repairs to the stock of existing housing units has received little attention in the academic literature. Historically, studies have focused heavily on the static characteristics of the housing unit (age, value, size, location) and of the occupants (age, income, household composition). This paper extends this inquiry by incorporating dynamic factors that influence home improvement decisions (changes in the composition of the household, prior period spending on home improvements), and relates these characteristics to the set of housing space-oriented improvements that might be expected to be influenced by these dynamic elements. The results of these enhancements are encouraging. Additions of household members are significantly related to home improvement activity, particularly for do-ityourself projects undertaken by members of the household. Also, the overall performance of the model is enhanced with the inclusion of these variables. Additional refinements of this approach would further increase our understanding of the factors determining home improvement decisions…