Trends in Homeownership: 2011

The 4th quarter results are in and, not surprisingly, the trend in homeownership is down. Here are the numbers for the four quarters of 2011...

1st quarter: 66.4
2nd quarter: 65.9
3rd quarter: 66.3
4th quarter: 66.0

The all-time quarterly peak in the homeownership rate was 69.2 in the 4th quarter of 2004.

As commented on extensively in Calculated Risk, homeownership rates from this survey are disturbingly different--much higher--than the homeownership rate recorded by the 2010 census. The Housing Vacancy Survey estimated an overall homeownership rate in 2010 of 66.8 percent, well above the 65.1 percent rate found by the 2010 census. The Census Bureau is investigating the reasons for the discrepancy and will be issuing a report.

Source: Bureau of the Census, Housing Vacancy Survey

First-Time Homebuyer Watch: 4th Quarter 2011

Homeownership rate of householders aged 30 to 34, fourth quarter 2011: 49.6%

The 4th quarter homeownership rate of householders aged 30 to 34 disappointed again, coming in below the 50 percent threshold. With rates of 50.3, 49.5 (the record low), and 49.9 in the previous three quarters of 2011, the annual rate for this age group (to be released in a few weeks) will be less than 50 percent for the first time since the Census Bureau began to collect these data in 1982.

This matters because the homeownership rate of the 30-to-34 age group is the bellwether for the housing industry. Typically, the majority of householders become homeowners in their early thirties. That may no longer be the case as young adults either can't afford or do not want to buy a home until housing prices bottom out and job security improves.

Before the 2011 decline, the quarterly homeownership rate of 30-to-34-year-olds had fallen below 50 percent only one other time--during the 2nd quarter of 1994, when 49.6 percent of 30-to-34-year-olds owned a home. The figure peaked at 58.0 percent in the 4th quarter of 2004. 

Source: Bureau of the Census, Housing Vacancy Survey

Fighting for Customers

Getting them into your store is only half the battle. Once there, you still have a lot of work to do. Pew's latest research shows just how much--especially if the customer is under age 50. In the past month, 48 percent of cell phone owners used their phone while in a store to call a friend and ask for advice about a purchase or used their phone to look up product reviews online. Here are the percentages by age...

18-49: 63%
30-49: 59%
50-64: 36%
65-plus: 24%

One in four cell phone owners used their phone while in a store to check prices elsewhere. Among those who did, only 35 percent ultimately bought the product from the store. Thirty-seven percent decided not to purchase the product at all, 19 percent bought it online instead, and 8 percent bought the product from another physical store.

Source: Pew Internet & American Life Project, How American Used Their Phones to Assist with Purchasing Decisions this Holiday Season

Slippage or Semantics?

Percentage of Americans who call themselves middle class, by generation...

Older (65+): 60%
Boomers: 41%
Gen Xers: 40%
Millennials: 36%

Source: General Social Survey

Football Fans

When asked which one sport is their favorite, 36 percent of Americans say pro-football. Those most likely to say pro-football are African Americans (48 percent), people aged 30 to 39 (46 percent), and those with some college education (42 percent).

Source: Harris Interactive, Football is America's Favorite Sport as Lead Over Baseball Continues to Grow

The Fall of Print

Americans under age 45 are more likely to get their news from radio than printed newspapers. When asked from which source they get most of their information about current events, people under age 45 are more likely to say radio (10 percent) than newspapers (8 percent). Television is number one (48 percent), following by the Internet (31 percent).

Source: General Social Survey

You Know It's Bad When...

The public thinks more highly of real estate agents and lawyers than members of Congress.

Percent rating honesty/ethical standards high or very high
Real estate agents: 20%
Lawyers: 19%
Congress: 7%

Source: Sourcebook of Criminal Justice Statistics Online

Non-Hispanic Whites Decline in 15 States

In the nation as a whole, the non-Hispanic white population grew by only 1.2 percent between 2000 and 2010. Behind the tiny increase is the fact that non-Hispanic whites declined in 15 states during those years. Here are the states with shrinking numbers of non-Hispanic whites, along with the size of the decline...

California: -5.4%
Connecticut: -3.5%
Illinois: -3.0%
Iowa: -0.3%
Kansas: -0.2%
Louisiana: -2.1%
Maryland: -3.9%
Massachusetts: -4.1%
Michigan: -3.0%
Mississippi: -0.3%
New Jersey: -6.2%
New York: -3.9%
Ohio: -1.9%
Pennsylvania: -2.2%
Rhode Island: -6.3%

Source: Bureau of the Census, American Factfinder

Nonmetros Are Losing People

Nonmetropolitan areas of the United States lost population between 2000 and 2010, their first loss in 30 years. In 2010, only 50 million people remained in the nation's nonmetro areas--down from 55 million in 2000. The last time the nonmetro population declined was in the 1970s.

The Great Recession Spending Decline

The average household spent $48,109 in 2010. After adjusting for inflation, this was 8 percent less than in 2006 when overall household spending peaked. How does this spending decline compare with those in the past?

The Bureau of Labor Statistics has been collecting annual household spending data since 1984, a time period that includes several recessions. Nothing compares with the Great Recession. During 28 years of household spending data collection, there have been year-over-year declines 12 times, which is a substantial proportion. Downturns in household spending are not exceptional. But three things are exceptional about the Great Recession spending decline.

• The Great Recession spending decline is four years old, the longest spending decline on record. No previous decline lasted more than two years. 
• The Great Recession spending decline includes the largest single-year decline ever recorded (a -3.5 percent drop between 2009 and 2010, after adjusting for inflation). Previously, the largest single-year decline occurred between 1989 and 1990 (-3.2 percent).  
• The Great Recession spending decline is getting increasingly worse, starting with a small 0.3 percent slip between 2006 and 2007, followed successively by declines of 2.1, then 2.5, then the record-setting 3.5 percent.  

The good news is that, statistically speaking, we are due for an uptick in household spending. The bad news is that, realistically speaking, we may not get one.

Our Declining Standard of Living

The average American is in the grip of mass amnesia, as urban activist and philosopher Jane Jacobs has called it (see her book Dark Age Ahead). Mass amnesia occurs when a population loses its cultural memory for one reason or another (such as war, natural disaster, technological change, or economic dislocation) and no longer remembers how life was lived by its parents or grandparents.

Case in point: When we claim our standard of living is better than our parents' was at the same age--as most of us invariably do on survey after survey--we don't know what we're talking about. There are few studies that compare standards of living then and now, so we are left guessing--and we guess wrong.

One way to compare standards of living is to look at expenditures. So let's take a look at the spending of two generations of peak spenders--45-to-54-year-olds in 1990 and the same age group twenty years later in 2010. In 1990, households headed by 45-to-54-year-olds spent $61,750, after adjusting for inflation. In 2010, households headed by 45-to-54-year-olds spent a smaller $57,788--nearly $4,000 less.

Today's 45-to-54-year-olds spend less than their counterparts in 1990 on most things, including restaurant meals, alcoholic beverages, other lodging (a category that includes hotels and motels), furniture, clothing, new cars and trucks, entertainment, and gifts. Today's 45-to-54-years-olds spend more than their counterparts in 1990 on mortgage interest, property tax, telephone service, daycare, gasoline, vehicle insurance, health insurance, drugs, and education.

Now comes the test: In which year was our standard of living better?

Housing Bust Equalizes Prices

Everyone knows housing is a bargain in Ohio, where real estate prices are often well below $100 per square foot. Thanks to the housing bust, prices in many other areas of the country are an even bigger bargain.

A new analysis by the Federal Reserve Bank of Cleveland shows that housing prices in Atlanta and Charlotte are now on a par with prices in Ohio's metropolitan areas. In Phoenix, Orlando, and Tampa, median sales price per square foot is even lower than in Cleveland or Akron.

Source: Federal Reserve Bank of Cleveland, Trends in Housing Prices per Square Foot

Your Taxes at Work: Prescription Drugs

Thanks to Medicare Part D, the prescription drug plan that took effect in 2006, the out-of-pocket spending of elderly Americans on prescription drugs has plummeted.

In 2009 (the latest data available and recently released), a nearly universal 91 percent of Americans aged 65 or older bought prescription drugs. Those drugs cost a median of $1,290, slightly less than their $1,336 cost in 2005 (not adjusted for inflation). But in 2009, older Americans had to pay only 23 percent of that cost out-of-pocket, just half of the 46 percent they had to pay out-of-pocket in 2005. They have you, the taxpayers, to thank.

Source: Medical Expenditure Panel Survey, Household Component Summary Data Tables, 2009 Expenditures Per Person by Health Care Service

Electronic Reading Devices Surge

The percentage of Americans who own an e-reader or tablet computer surged over the holidays, according to the Pew Internet & American Life Project. As the dust settled, e-readers and tablets appear to be equally popular, each owned by 19 percent of the public. Overall, the percentage of Americans who own at least one of the devices climbed from 18 percent in December to 29 percent in January. Here is the percentage who own each device by age as of January 2012...

	ereader	tablet
Total	19	19
18-29	18	24
30-49	24	27
50-64	19	15
65+	12	7

Source: Pew Internet & American Life Project, Tablet and E-book Reader Ownership Surge in the Holiday Gift-giving Period

Department of the Obvious

"Younger adults in the U.S. remain less likely than those aged 30 and older to report high blood pressure, high cholesterol, diabetes, heart attacks, and cancer," reports Gallup.

No kidding.

High Expectations, Low Pay

Median salary in 2009 of students who enrolled in a certificate or two-year post-secondary program in 2003-04, completed the program, and got a job: $26,000.

Dismal. All that effort for just $500 a week. Almost as dismal as the pay is the way these data are presented in the National Center for Education Statistics report, Beginning Subbaccalaureate Students' Labor Market Experiences: Six Years Later in 2009. Let's start with the title: Subbaccalaureate? Who came up with that gem? And as usual in its reports, the NCES likes to throw standard error tables in your face on every other page, rather than consigning them to an appendix. Presentation skills, people!

Why They Didn't Use Birth Control

Percent distribution of teenagers aged 15 to 19 who had an unintended pregnancy by reason for not using birth control...

31% thought they could not get pregnant at the time
24% had a partner who did not want to use birth control
22% did not mind getting pregnant
13% had trouble getting birth control
9% did not like the side effects of birth control
8% thought they or their partner was sterile

Note: Numbers add to more than 100% because more than one reason could be reported.
Source: CDC, Pre-pregnancy Contraceptive Use among Teens with Unintended Pregnancies Resulting in Live Births--Pregnancy Risk Assessment Monitoring System (PRAMS), 2004-2008

Facts about Food Stamps

You would think, after all these years, that the South would have gotten over its hang ups about race. The Jim Crow generations are almost gone, replaced by younger generations educated in integrated schools and living in mixed-race neighborhoods. But if you think the South is over it, you would be wrong. Racism lives on in too many of the smiling faces and beautiful places, crawling out from under its rock every four years when the politicians come to town.

There's always something that coaxes it out. This time, it's food stamps. White crowds cheer as politicians link blacks to food stamps, implying that blacks are wrongly getting something for nothing. (I'm no psychologist, but this is so a projection of whites' own feelings of guilt about getting something for nothing from blacks for hundreds of years.)

Facts don't matter to jeering crowds, but they do matter to the rest of us. So let's take a look at who gets food stamps. A lot of people, in fact, depend on them to feed their family. Thirteen percent of Americans (or 39 million people) live in households that receive food stamps, according to the Census Bureau. Because of the Great Recession, that number grew by 71 percent between 2007 and 2010.

Non-Hispanic whites, not blacks, account for the largest share of people receiving food stamps--42 percent in 2010. Blacks account for 28 percent of food stamp recipients. The number of non-Hispanic whites on food stamps grew by a faster-than-average 83 percent between 2007 and 2010. In contrast, the number of blacks on food stamps grew by a below-average 43 percent. The state with the largest percentage of households on food stamps--Oregon--is one of the whitest states in the country.

People of the South, it is time to move on. Talk about real issues like unemployment. In South Carolina, one in ten workers is looking for a job.

What Makes Schools Effective?

It's not class size, spending, testing or teacher certification, according to a National Bureau of Economic Research study of New York City charter schools (Getting Beneath the Veil of Effective Schools: Evidence from New York City, NBER Working Paper 17632, $5).

Five policies do work, however, explaining more than half the variation in school effectiveness, according to the researchers: frequent teacher feedback, using data to guide instruction, intensive tutoring, increased instructional time, and high expectations.

Why Are Economists in Charge?

Good question, and one that a lot of demographers are asking themselves these days. After watching budget surplus turn into deficit, the housing bubble inflate and explode, and the Great Recession unfold and persist, one has to wonder why anyone listens to economists anymore.

This was the last straw: the release of the 2006 transcript of a Federal Reserve Board meeting, where a roomful of clueless economists dismissed the looming housing crisis and chortled over the excesses in the mortgage market, all while fawning over former Fed chairman Alan Greenspan. It was just so high school. Yes, it really makes you wonder why demographers are relegated to the bowels of the Census Bureau while economists are high-fiving it with the rich and powerful. 

Here's the problem: Economists are not very good at assessing the present or predicting the future with any kind of accuracy. Their profession is flawed because it ignores the elephant in the room--us, society, a group of people with complex relationships and common interests. Society is the economy's engine. Like an auto mechanic mesmerized by the paint job on a car, economists never bother to pop the hood. Demographers, on the other hand, are elbow deep in engine grease. They are experts on society and how it works. Trouble is, most of them are mired in the minutia of academia or trapped in the bureaucratic basements of government, high school nerds all grown up and still ignored.

Demographers could have predicted that budget surplus would turn to deficit as the massive baby-boom generation retired. Demographers could have predicted that the housing bubble would burst because housing prices were out of whack with household incomes. Demographers could have predicted that the housing market--and thus the economy--would be slow to recover as high rates of unemployment, stagnant wages, and the burden of student loans prevented young adults from establishing independent households. But if any demographer poked his head out of his cubicle to make these predictions, no one paid any attention because demographers are not the cool kids. Economists are.