Abstract
Although rehabilitation has become an alternative to new construction in virtually all applicable public policy situations, few guidelines or criteria exist for determining whether rehabilitation or replacement is the most desirable way to improve a given portion of the housing stock. This study develops the idea that the answer depends upon the comparative effects of rehabilitation and new construction on the future maintenance costs, economic life, and shelter amenities of the renewed structure. A model is formulated that determines the feasibility of rehabilitation as compared with new construction and specifies the cost level of renewal that will maximize shelter output per unit of input.

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