If items degenerate wouldn't it make sense to have a professional to repair and maintain an item? Perhaps a professional repair man role should be created. Like in the game Fallout 3 where you have to repair your weapons as you use them and fall into disrepair.
(ooc) In some RPGs, items are semi-randomly destroyed during use, rather than in storage. That could be another alternative, but it seems more likely to intrude at exactly the wrong moment (fighting, etc.) than thinning out stored hoards, which is the intention here.
Another alternative might be to eliminate player houses altogether. Really hadn't anticipated that they'd become used in the way they often are now. Just thinking out loud.