From Home Furnishing Business
Housing on the Move
People are again jumping into the housing market and that could spark furniture sales.
Nothing spurs a furniture purchase like a move to another home.
It can be young people renting a first apartment, first-time homebuyers, or individuals and families making life changes to new abodes. Now that housing mobility has begun to pick up after being stagnant for more than five years, people planning to move are faced with decisions whether to rent or buy an existing or new home or apartment. Included in these choices are decisions on the age and size of the structure and of course the cost.
Mobility Picks Up
During the Recession, people tabled moving plans. As the economy improved, mobility has slowly increased and more people are opting to move. As shown in Table A, 60.6 percent of total U.S. housing units were moved into since the year 2000 and 38.4 percent in the last five years.
Apartments are particularly transient with 70 percent of apartment units moved into within that same five-year period. As expected, owner-occupied housing units are more stable with 20 percent of these units moved into in the last five years, and 56.7 percent since 2000.
Now that people are moving, what are the housing options? Consumers initially face the choice of purchasing or moving into a new or old property. With housing starts slow to recover from the Recession, people are increasingly faced with an aging housing industry. Table B illustrates the year current housing was built for all occupied housing units. (Note: Rental versus owner-occupied units is not shown separately as data showed no significant difference between the two.)
Particularly startling is that 28.7 percent of all housing is more than 55 years old and 55.4 percent is more than 35 years old. The majority of the housing inventory in 2014 (54.5 percent) was built between 1960 and 1999. Only 2.2 percent of housing units were built in the last four years and a total of 16.8 percent since 2000. Many current and potential homeowners are living in or considering older homes and face ongoing costs of renovations and repairs, which could potentially dip into new furniture expenditures.
One thing is clear, single-family houses keep getting bigger. As shown in Table C, the average size of a new single-family home has grown 17.2 percent since 2000 to 2,657 square feet.
Meanwhile new apartment construction, which peaked in 2008 at an average 1,300 square feet, is holding now at 1,151 square feet.
The monthly mortgage paid by homeowners has actually fallen somewhat since 2009; however, rents have increased significantly (Table D).
Low interest rates over the last few years have made refinancing existing mortgages and new purchases attractive. In 2014, 18 percent of all owner-occupied housing units were paying more than $2,000 in monthly mortgage payments down from 21 percent in 2009. In contrast, renter-occupied housing units costing more than $1,000 a month grew from 33.4 percent of all units in 2009 to 41.7 percent in 2014.
What percent of household income is being spent on housing? And, what is the acceptable level? According to the Census Bureau, “The conventional public policy indicator of housing affordability in the United States is the percent of income spent on housing. Housing expenditures that exceed 30 percent of household income have historically been viewed as an indicator of a housing affordability problem.”
In all occupied housing units owned or rented (Table E), the percent of residents spending 30 percent or more of household income has fallen from 36.4 percent of all units 2009 to 33.4 percent in 2014, a healthy sign. In addition, monthly expenditures of 20 to 29 percent of household income have as also fallen from 23 percent of units in 2009 to 21.7 percent in 2014.
As shown in Table F,
homeowners spent a significantly less percentage of household income on housing over the last five years. Since 2009, the percent of owner-occupied units with owner’s spending more than 30 percent of their income has fallen significantly from 30.4 percent of houses to 24.8 percent.
Traditionally, renters spend significantly more of their income on housing than owners and the percentages have held steady between 2009 and 2014. In 2014, 47.9 percent of renters spent 30 percent or more of household income on rent, almost double the percent of owners.