Study Projects Major Changes in U.S. Households

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 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.