American Consumers Newsletter

by Cheryl Russell, Editorial Director, New Strategist Press
June 2015

The Demographics Behind the Decline in Homeownership

IN THIS ISSUE:

1. Hot Trends: THE DEMOGRAPHICS BEHIND THE DECLINE IN HOMEOWNERSHIP, AMERICAN DRIVING SURVEY, RUNNING OUT OF MONEY, and more
2. New Reference Tools: AMERICAN MARKETPLACE, AMERICAN INCOMES, AMERICAN GENERATIONS SERIES: MILLENNIALS, GENERATION X, and BOOMERS

To see Cheryl Russell’s Demo Memo blog, click here.

1. Hot Trends

The Demographics Behind the Decline in Homeownership       

Remember the boom in the housing market–those heady days when even young adults were eager to embrace home buying? Between 1995 and 2005, the homeownership rate of households headed by people aged 25 to 34 climbed from 45 to 50 percent. It seemed like the good times would never end. Then they did. Between 2005 and 2014, the homeownership rate of 25-to-34-year-olds plunged by 10 percentage points to just 40 percent.

 

An investigative report by Rachel Bogardus Drew of the Joint Center for Housing Studies explores the reasons for the decline, and her results show the Great Recession is not entirely to blame. Another factor is the changing demographics of the 25-to-34 age group, with two changes most important…

 

Marriage: The married-couple share of households headed by 25-to-34-year-olds fell from 53 percent in 1995 to just 42 percent in 2014. Because two incomes are often necessary for homeownership, fewer married couples means fewer homeowners among young adults.

 

Minorities: The minority share of households headed by 25-to-34-year-olds climbed from 28 to 40 percent between 1995 and 2014. With their lower homeownership rate and later age of first-time home buying, more Asians, Blacks, and Hispanics means fewer homeowners among young adults.

 

Those demographic factors were also at work during the boom times, but their impact was muted by favorable economic conditions. As the economics went south, so too did the homeownership rate of young adults. “The effect of favorable mortgage terms, affordable housing costs, and increases in income can be stronger drivers of tenure outcomes than socio-demographic characteristics, as evidenced during the housing boom,” concludes the report. But when both the demographics and the economics put the kibosh on home buying, the report notes, “young adult homeownership rates can fall precipitously, as happened after the collapse of the housing market in 2005.”

 

The demographic-economic double whammy may stifle the housing market for years to come.

 

Homeownership Rate of Householders Aged 30-to-34 Falls to Record Low

The homeownership rate of households headed by people aged 30 to 34 fell to an all-time low of 45.8 percent in the first quarter of 2015, according to the Census Bureau. Historically, homeownership became the norm in the 30-to-34 age group–rising above 50 percent. But beginning in 2007, the homeownership rate of 30-to-34-year-olds went into a tailspin. In the second quarter of 2011, the rate fell below 50 percent for the first time. In the past year, the homeownership rate of the age group fell by a steep 1.7 percentage points, suggesting we haven’t seen bottom yet.

 

The new age of first-time home buying is 35 to 39, but even this age group is slipping. The homeownership rate of 35-to-39-year-olds fell to 55.1 percent in the first quarter of 2015–also a record low. Since peaking in the first quarter of 2007, the homeownership rate of 35-to-39-year-olds has fallen by more than 10 percentage points.

 

Nationally, the homeownership rate slipped to 63.7 percent in the first quarter of 2015, down from 64.8 percent a year earlier.

 

Still Not Over the Great Recession

The Great Recession still lingers for many Americans, according to a survey by Transamerica Center for Retirement Studies. When the nation’s workers were asked how they would describe their recovery from the Great Recession, this is what they said…

 

16% fully recovered

40% somewhat recovered

21% not affected by the Great Recession

15% have not yet begun to recover

8% may never recover

 

Of course these figures vary by age, with workers in their forties and fifties most likely to say they have not yet begun or may never recover (27 percent). Workers in their sixties are most likely to say they have fully recovered (20 percent). The biggest difference is in the percentage of workers who say they were not affected by the Great Recession. The figure is highest among workers in their twenties (30 percent) and lowest among workers in their sixties (11 percent).

 

American Driving Survey

American drivers add 29.2 miles a day to their odometer–an average of 10,658 miles a year. They make two trips a day, on average, and spend 46 minutes behind the wheel. These numbers vary by demographic characteristic, according to the American Driving Survey. Sponsored by AAA and developed in partnership with the Urban Institute, the survey examines the demographics of driving.

  • Women make more daily trips than men (2.2 versus 1.9), but men spend more time behind the wheel (51 minutes for men versus 41 minutes for women) and travel greater distances (34 versus 25 miles).
  • Those who spend the most time driving are 30-to-49-year-olds. This age group makes 2.3 trips a day, drives 36 miles, and spends 54 minutes on the road.
  • Americans who live in cities or medium-sized towns average 2.0 trips per day, about the same as the 2.1 trips per day for those who live in the countryside or small towns. But rural and small town residents drive longer distances (34 miles per day) than those who live in cities and medium-sized towns (27 miles). Those miles add up over a year, with rural folks putting an average of 12,264 miles on their odometer each year versus 9,709 for their urban counterparts.
  • On an average day, most drivers drive. Only 32 percent of American drivers did not drive on the survey’s reporting day.

The American Driving Survey examines in detail the driving habits of teenagers aged 16 to 19 and people aged 75 or older. Not surprisingly, the percentage of teens who drive almost every day rises with age, from 25.7 percent among 16-year-olds to 50.5 percent among 19-year-olds. Among people aged 75 or older, 46 percent drive almost every day and 30 percent say they never drive.

 

Worker Confidence in Retirement Rises

Twenty-two percent of workers are very confident they will have enough money for a comfortable retirement, according to the 2015 Retirement Confidence Survey. This figure is up from a record low of 13 percent following the Great Recession. Another 36 percent of workers are somewhat confident they will have enough.

 

But will the retirement plans of today’s workers pan out? The experiences of today’s retirees suggest they may not. Half of retirees in the 2015 survey say they retired earlier than planned, while a smaller 40 percent retired as planned. That’s why the median age at which retirees say they retired (62) has not changed over the decades despite the fact that a growing share of workers plan to stay on the job until age 66-plus or never retire–the figure rising from 15 to 46 percent between 1995 and 2015.

 

Why do retirees leave the work force sooner than expected? Among 2015 retirees who retired earlier than planned, the single biggest reason was a worrisome one–health problems, cited by 60 percent. The second biggest reason (more than one could be cited) was positive: 31 percent were able to afford an earlier retirement. This was followed by downsizing or closure of their company (27 percent), having to care for a family member (22 percent), the desire to do something else (17 percent), and changes in the skills required for their job (10 percent).

 

With half of retirees leaving the workforce sooner than expected, today’s workers need more than a retirement plan. They need a Retirement Plan B.

 

12% Run Out of Money

How many of the oldest Americans run out of money before they die? One in eight, according to a study by the Employee Benefit Research Institute.

 

Using data from the University of Michigan’s Health and Retirement Study, EBRI researchers examined the assets of households in which a household member aged 50 or older had died between the 2010 and 2012 surveys. By age of the household member who died, here is the percentage of households with zero non-housing assets in 2010–before the death of the household member…

 

Households with non-housing assets = zero before death

Aged 50 to 64: 37.2%

Aged 65 to 74: 25.3%

Aged 75 to 84: 18.5%

Aged 85-plus: 20.6%

 

The researchers also looked at total assets to determine the percentage of households with no assets at all before the death of the household member. Here are those numbers by age of the deceased…

 

Households with total assets = zero before death

Aged 50 to 64: 29.8%

Aged 65 to 74: 15.8%

Aged 75 to 84: 10.5%

Aged 85-plus: 12.2%

 

American Generations in 2014

The Millennial generation outnumbered Baby Boomers by more than 3 million in 2014, making it the largest generation by a considerable margin. One in four Americans is a Millennial. Here are the results of a Demo Memo analysis of the Census Bureau’s population estimates, showing the size of each generation in 2014 (and its share of the total population)…

 

Recession (0-4): 19,876,883 (6%)

iGeneration (5-19): 62,258,719 (20%)

Millennial (20-37): 78,511,320 (25%)

Generation X (38-49): 49,318,533 (15%)

Baby Boom (50-68): 75,438,644 (24%)

Older Americans (69+): 33,452,957 (10%)

 

The generations are changing as they age. Between 2010 and 2014, the number of Older Americans fell by 7 million–a substantial 17 percent decline. The Baby-Boom generation is shrinking too, falling by 2 million during those years. In contrast, Generation X’s numbers have been stable. Thanks to immigration, the Millennial generation grew by nearly 2 million between 2010 and 2014. The iGeneration is also expanding because of immigration. The Recession generation, the youngest, is growing the most as each annual crop of newborns joins its ranks.

 

Interest in Politics by Generation

Older Americans are more interested in politics than younger adults. When asked the question, “How interested would you say you personally are in politics?” fewer than half of Millennials and barely half of Gen Xers say they are “very” or “fairly” interested. According to a Demo Memo analysis of the 2014 General Social Survey, here are the numbers…

 

Percent “very” or “fairly” interested in politics

Millennials (20-37): 46%

Generation X (38-49): 51%

Baby Boomers (50-68): 66%

Older Americans (69+): 73%

 

Voting rates by age closely matches those percentages. Here are the voting rates in the 2012 presidential election, according to the Census Bureau

 

Percent voting in 2012 presidential election

Aged 18 to 24: 41%

Aged 25 to 44: 57%

Aged 45 to 64: 68%

Aged 65-plus: 72%

 

City Growth Still Outpaces Rest of Nation

The population of the nation’s 749 largest cities (incorporated places with populations of 50,000 or more in 2014) climbed 4.3 percent between 2010 and 2014, according to the Census Bureau’s population estimates. The remainder of the United States grew by a smaller 2.4 percent during those years. City growth varies little by city size, with large cities of all sizes growing faster than elsewhere.

 

City population growth 2010-2014 by city size

1 million or more: 4.2%

500,000 to 999,999: 5.0%

250,000 to 499,999: 4.3%

200,000 to 249,999: 4.2%

150,000 to 199,999: 3.9%

100,000 to 149,999: 4.2%

50,000 to 99,999: 4.0%

 

A year-over-year analysis of population trends shows a repeating pattern. Between 2010 and 2014, large cities grew 1.0 to 1.1 percent per year. The remainder of the United States grew by a smaller 0.6 percent per year.

 

Population of Frontier and Remote Areas

How many Americans live in frontier and remote areas of the country? That depends on what the words “frontier” and “remote” mean. According to the USDA’s Economic Research Service, there’s more than one meaning. The ERS defines four levels of frontier and remote based on travel time to “high order” goods and services (advanced medical procedures, major household appliances, regional airport hubs–all typically found in urban areas of 50,000 or more people) and travel time to “low order” goods and services (the grocery stores, gas stations, and basic health care found in smaller urban areas).

 

To be defined as living in a Level 1 Frontier and Remote Area (the least remote of the Remote Areas), residents must have to travel at least 60 minutes to reach an urban area of 50,000 or more people. Levels  2, 3, and 4 (each increasingly remote) must meet that criteria and be a certain travel time away from ever smaller urban areas…

 

Level 1: At least 60 minutes of travel to reach an urban area of 50,000-plus

Level 2: At least 45 minutes of travel to reach an urban area of 25,000 to 49,999

Level 3: At least 30 minutes of travel to reach an urban area of 10,000 to 24,999

Level 4: At least 15 minutes of travel to reach an urban area of 2,500 to 9,999

 

Overall, 12.2 million Americans live in Frontier and Remote Areas. Although 52 percent of the land area of the United States is in those areas, only 4 percent of Americans live there. In Wyoming and Montana, the majority of the population lives in remote areas. In five states and the District of Columbia, no one lives in a remote area.

 

Most Hispanics Speak English Proficiently

Although most of the nation’s Hispanics speak Spanish at home, a growing share speak English proficiently. Fully 68 percent of Hispanics aged 5 or older speak English very well, according to a Pew Research Center analysis of 2013 Census Bureau data. This figure is up from the 59 percent who spoke English proficiently in 2000. Here is the language status of Hispanics in 2013…

 

Language status of Hispanics aged 5 or older

26% speak only English at home

41% speak Spanish or another language at home and speak English very well

26% speak Spanish or another language at home and speak English less than very well

7% speak Spanish or another language at home and do not speak English

 

These are a sampling of posts published in the past few weeks in Cheryl Russell’s Demo Memo blog. Please send questions or comments to demographics@newstrategist.com.

BET YOU DIDN’T KNOW

The best-educated Americans are Millennial women. The least educated Americans are women born in the years preceding the baby boom. This is the percentage of women aged 25 or older with a bachelor’s degree by generation…

Millennials: 38.1%
Generation Xers: 36.2%
Baby-Boomers: 30.2%
Older Americans: 19.0%

2. MEET YOUR CUSTOMERS

Here are all new and expanded one-stop resources for understanding American consumers–vital, cost-effective information. Get the answers you need for business success in today’s competitive economy!

 

American Incomes: Demographics of Who Has Money, 10th ed.

The 10th edition of American Incomes: Demographics of Who Has Money is your map to the changing consumer landscape, exploring and explaining the economic status of Americans in the aftermath of the Great Recession. American Incomes looks at household income trends through 2013 by age, household type, race and Hispanic origin, education, region, and work status. It examines trends in the incomes of men and women by a variety of demographic characteristics. It provides data on the wealth of American households, showing the impact of the Great Recession on household assets and debt. The poverty population is also a focus of American Incomes, which includes the following chapters:

Household Incomes This chapter examines trends in household income over the past 13 years. It also presents detailed 2013 household income statistics by age of householder, race and Hispanic origin of householder, type of household, and other important demographic characteristics.

Men’s Incomes Chapter 2 examines trends in men’s incomes and provides detailed 2013 income statistics for men by a variety of demographic characteristics.

Women’s Incomes Chapter 3 examines trends in women’s incomes and provides detailed 2013 income statistics for women by a variety of demographic characteristics.

Wealth The statistics in Chapter 4, from the Federal Reserve Board’s Survey of Consumer Finances, provide a comprehensive portrait of the assets, debts, and net worth of American households by demographic characteristic. This chapter also examines 2007-to-2013 trends in wealth.

Poverty Chapter 5 shows how poverty has grown and reveals the demographics of those who are falling behind. 456 pages.

 

You can see the book’s introduction, table of contents, index, and sample pages on New Strategist’s web site, where you can also download this unique reference tool as a PDF linked to Excel spreadsheets of all data tables.

 

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American Marketplace: Demographics and Spending Patterns, 12th ed.

Quick and easy access is the goal of the new 12th edition of The American Marketplace: Demographics and Spending Patterns. Designed for convenience, The American Marketplace draws on scores of government sources to give you a population profile of the United States in one handy volume. This reference is organized into 11 chapters: attitudes, education, health, housing, income, labor force, living arrangements, population, spending, time use, and wealth.

 

The American Marketplace reveals the latest demographic trends and tells the American story. It examines changing lifestyles in rich detail, from growing racial and ethnic diversity to declining homeownership, from disappearing nuclear families to shifting patterns of household spending, from another baby bust to new attitudes toward gay marriage. New to this edition of The American Marketplace are 2013 population estimates for the nation, states, and metropolitan areas, revealing surprising patterns of growth. The Attitudes chapter has data from the 2012 General Social Survey. The Income chapter, with 2013 income statistics from the 2014 Current Population Survey, reveals the struggle to stay afloat. The Wealth chapter examines net worth in 2013 and the downward trend since the Great Recession. The American Marketplace is a reference tool that will help you cut through the clutter and track the trends. 654 pages.

 

You can see the book’s introduction, table of contents, index, and sample pages on New Strategist’s web site, where you can also download this unique reference tool as a PDF linked to Excel spreadsheets of all data tables.

 

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The American Generations Series

Each of the three volumes in the new American Generations Series provides an in-depth look at the demographic and lifestyle data needed for an understanding of each generation, how it is changing, and what to expect in the future.

 

The Millennials: Americans Born 1977 to 1994

The all new sixth edition of The Millennials is two books in one: it provides a demographic and socioeconomic profile of the Millennial generation, which spanned the ages of 20 to 37 in 2014, and it includes a special supplement on the iGeneration–the population under age 20. In these difficult economic times, perhaps no generation is more important to businesses than Millennials. For those who track generational change, the special supplement on the iGeneration will give you a preview of what is to come. 564 pages.

 

You can see the book’s introduction, table of contents, index, and sample pages on New Strategist’s web site, where you can also download this unique reference tool as a PDF with links to Excel spreadsheets of all data tables.

 

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Generation X: Americans Born 1965 to 1976

The new eighth edition of Generation X tells the story of the small but vital generation spanning the ages of 38 to 49 in 2014. Although their numbers are small, lifestage dictates that Generation X is a vital part of the nation’s commerce and culture. People in their thirties and forties are in the crowded-nest years. They are supposed to be advancing in their careers, their incomes should be growing, and their spending should climb because of the expenses of children and teens. But the generation has been hit hard by the Great Recession and is still struggling to recover. This reference shows you how Gen Xers are coping with these demands and what to expect in the future. 344 pages.

 

You can see the book’s introduction, table of contents, index, and sample pages on New Strategist’s web site, where you can also download this unique reference tool as a PDF with links to Excel spreadsheets of all data tables.

 

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The Baby Boom: Americans Born 1946 to 1964

After more than six decades of breaking the rules established by their elders, the Baby-Boom generation and older Americans are one and the same. In 2014, Boomers spanned the ages from 50 to 68, accounting for 24 percent of the total U.S. population and 71 percent of the population aged 50 or older. The new eighth edition of The Baby Boom: Americans Born 1946 to 1964 includes in its pages, for the first time, a statistical profile of the U.S. population aged 50 or older-absorbing the New Strategist reference Older Americans: A Changed Market into one volume. Boomers already dominate the older market, and they’re transforming it as they take charge. The Baby-Boom is your strategic guide to the generation and how it is changing what it means to be old.

438 pages.

 

You can see the book’s introduction, table of contents, index, and sample pages on New Strategist’s web site, where you can also download this unique reference tool as a PDF with links to Excel spreadsheets of all data tables.

 

PDF with Excel links (978-1-940308-89-0)

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Order all three editions of the newly updated American Generations SeriesThe Millennials, Generation X, and The Baby Boom and save!

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For your convenience, all of New Strategist’s titles are available as searchable single- and multiple-user PDFs linked to spreadsheets of each data table so you can do your own analyses and create PowerPoint presentations.

BET YOU DIDN’T KNOW

Percentage of people aged 15 or older participating in food preparation and cleanup on an average day, by sex…

Men: 42%
Women: 68%