Study Projects Major Changes in U.S. Households

by WOHe

Study Projects Major Changes in U.S.
Households


CAMBRIDGE, MA The changing composition of American households over
the next decade should continue to redefine both new home buyers
and residential remodeling consumers, while pushing the value of
home-related construction in the U.S. to new heights.

That’s one of a number of key conclusions expressed in a
recently released report issued by Harvard University’s Joint
Center for Housing Studies. The report entitled The State of the
Nation’s Housing: 2000 pointed to recent strong home sales, high
home ownership rates, strong income growth and favorable housing
affordability as being among the factors that have fueled
significant gains in the value of residential construction.

Although U.S. household growth is expected to slow slightly in
the next 10 years, its changing composition should not only
continue the current growth trend, but should continue to benefit
manufacturers, distributors and retailers of kitchen and bath
products and services, the Joint Center’s report suggests.

Citing the latest Census Bureau population projections, the
Joint Center estimates that an average of 1.17-1.18 million net new
households will be formed annually over the next 10 years, somewhat
less than the 1.2 million households that were added annually in
the last decade.

By 2010, household growth should return to roughly 1.2 million
units annually as more of the “echo boomers” the children of the
baby boomers begin to live independently. Over the next decade,
however, baby boomers (born between 1946 and 1964) will remain the
predominant force in the U.S. population, boosting the number of
households aged 55-64 by nearly 50%, and those aged 45-54 by
18%.

Now in their peak earning years, baby boomers will continue to
demand expensive, amenity-filled homes containing luxury items in
their kitchens and baths, the Joint Center’s report notes.

At the same time, the echo boomers (born since 1977) are now
moving into prime household-formation years, and will lift the
number of households under the age of 25 by 13.6% by 2010. On the
flip side, the number of households aged 35-44 will drop 10.7%, as
the “baby busters” (born between 1965 and ’76) move into this age
range.

Growth in singles
With the sharp increase in households over the age of 55, the
number of married-couple households without minor children at home
and single-person households will each grow 17.5%. Together, these
two types of households 
will make up the vast majority of net additions.

The decrease in middle-aged couples with children at home will
offset the rising number of younger households with children,
causing the total number of families with minor children to fall
slightly. 

The number of people living alone will rise by 5 million, with
increases across almost all age groups. Factors contributing to
this situation include delayed marriage and childbearing among the
young, high divorce rates and low remarriage rates among the
middle-aged, and longer lifespans and increased income support
among the elderly. Higher labor-force participation has also
enabled more women to live independently. 

As a result, single-person households will largely consist of
young, never-married men; middle-aged, divorced women, and elderly
widows. With their growing numbers and rising incomes, one-person
households will begin to exert a stronger influence on housing
markets in the future.

Minority impact
Although the baby boomers remain the dominant force in the housing
market, boomers’ parents are living longer, bolstering the market
for seniors’ housing. At the same time, demographers note that
racial and ethnic minorities which currently represent one-quarter
of all U.S. households will contribute the majority of household
growth over the next decade. By 2010, nearly three in 10 households
will be headed by minorities. 

Younger on average than whites, minorities will add 9.2 million
households under age 50 and lose only 1.7 million households over
that age to death, institutionalization and other causes. And,
thanks to ongoing immigration, the Asian and Hispanic populations
will not experience the same baby bust-related decline in 35-44
year-old households as the white and black populations.

With net increases across all age groups, the number of minority
households will increase by 7.5 million over the next decade. By
comparison, the number of non-Hispanic white households under age
50 will grow by 14 million over the next decade, but nearly 10
million households over that age will be lost.

Other demographics trends worth noting:

  • Hispanics will soon become the nation’s largest minority group,
    accounting for 14.6% of the population in 2010 and playing a more
    substantial role in housing markets.
  • Immigration will account for 27.4% of U.S. population growth
    over the next decade, up slightly over the 1990s.
  • Greater wealth and longevity will enable senior citizens to
    choose from a growing array of housing options, forcing home
    builders and remodelers to build with the special needs of the
    elderly in mind.

Household Wealth Rising: Survey

WASHINGTON, DC
From 1995 to 1998, the proportion of families with incomes of
$50,000 or more rose about one-fifth, while the proportion with
incomes below $10,000 fell about one-sixth, according to a recent
survey of consumer finances conducted by the Federal Reserve
Board.

Stated another way, that finding means that more than one-third
of all American families now have incomes in excess of $50,000 per
year, while just 12.6% have incomes under $10,000.

This spells positive news for a kitchen and bath industry whose
continued growth is largely contingent upon increasing household
wealth and high levels of consumer confidence.

In fact, the Federal Reserve Board found, between 1995 and 1998,
median inflation-adjusted family income either held steady or rose
for all age groups, growing substantially for the 45-to-54 age
group which does the bulk of kitchen and bath remodeling.

Overall, the proportion of families reporting that they saved in
the preceding year rose only slightly between 1995 and 1998. About
56% of all of the households reported saving in 1998, with 62.2% of
all of the homeowners saving that year. 

Continuing a trend since 1989, home ownership rose 1.5% from
1995, reaching 66.2% in 1998. At the same time, the median value of
a primary home among homeowners rose only 4.6% from 1995 to 1998,
to $95,600, the Federal Reserve Board revealed.
In 1998, 12.8% of families had some form of residential real estate
besides a primary residence (second homes, time shares, one- to
four-family rental properties, and other types of residential
property), up from 11.8% in 1995. For families with this kind of
property, the median value of their property rose 22.4% over the
three-year period to $53,100.

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