Study Projects Major Changes in U.S. Households
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
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.
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
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.