Monthly Issue
From Home Furnishing Business
October 26,
2017 by Jane Chero in Economic News, Industry 
Table A shows the steady increase of both existing and new homes sales since the Great Recession. At a 98.5 index growth (2007 = 100), existing home sales continue to edge closer to pre-recession levels. Although still 21.8 percent shy of 2007 sales levels, new home sales have increased an average of 13 percent each year since 2011.
The National Association of Realtors projects the number of existing home sales will increase 2.6 percent this year and inventory tighten further in 2018 at 1.8 percent growth. (Figure 1)
Median Home Prices
The rapid rise of home prices shows no sign of slowing down (Table B). For existing home sales, prices have increased an annual average of 6.7 percent since 2011. The median price of existing homes at press time totaled $242,150 – up 11.8 percent from pre-recession prices. At year end, the National Association of Realtors (NAR) projected existing home prices will grow 5.2 percent this year compared to last then moderate slightly into the 3 to 4 percent growth range over the next two years (Figure 2).
New home prices have jumped by 28.7 percent since 2007 and have maintained an upward track post-recession (2011) – growing a yearly average of 5.8 percent and finishing the second quarter of 2017 with a median home price of $313,767 (Table B). Growth in the median price of new homes is expected to moderate in the last half of this year and the National Association of Realtors forecasts new home costs increasing over 3 percent next year (Figure 2).
As would be expected, regional variation in home prices are significant. As shown in Table C, at a median home price of $357,443 the West has the highest existing home sale prices. A lack of existing home inventory in the West is most likely causing prices to increase at such a high rate – up 22.5 percent from 2014 to 2017 Q2. The Northeast increased by 7.4 percent during the same time period, while existing home prices in the Midwest and South also showed great gains – growing 17.2 and 20.8 percent.
For new homes, the median price in the Northeast has skyrocketed up to $497,350 – a jump of 23.5 percent in 3.5 years. New home prices in the West actually declined by (-2.6) percent since 2014, while the Midwest increased 5.5 percent and the South by 8.6 percent.
Metropolitan cities, especially in California, are showing jaw-dropping price increases. Table D shows the top 10 most expensive cities to buy a home in 2017 Q2. The top 3 are California cities with San Jose-Sunnyvale-Santa Clara, CA topping out at $1,183,400.
The 10 metro cities increased an average of 7.7 percent in existing home sale prices over last year. Seattle-Tacoma-Bellevue, WA led the way in price hikes – jumping 13 percent from 2016 Q2.
On the flip side are the 10 metropolitan cities with the lowest median prices of existing homes this year (Table E). Youngstown-Warren-Boardman, OH-PA tops the list at a median price $87,000. A couple of these least expensive cities actually made big increases over last year – Decatur, IL is up 12.3 percent while Rockford, IL is up 12.4 percent.
When the home building industry picked up after the Great Recession, so did the price of new homes. Before the recession in 2007, 64 percent of new homes sold for under $300,000. In 2009 at the bottom of the Recession, that number grew as high as 74 percent. Today only 45.7 percent of homes sell $300,000 and under. Since 2011, houses selling above $300,000 have steadily become the majority – up to 54.3 percent in 2017 YTD.
Median Income
Since the recession, median income has been unable to keep up with the escalation of home prices. Overall, median home prices have risen 28.1 percent from 2007 to 2016 – up to $313,700 (Table G). The growth of median income stalled with the recession and has slowly improved to $59,900 in 2016. According to ONS affordability data, median price paid for a home leapt 259 percent between 1997 and 2016, while earnings rose only 68 percent.
Housing Inventory
Along with rising home prices, low inventory has posed a problem for many home buyers wanting to upgrade housing or buy for the first time. Forecasters see little change on the horizon for existing home sales. Although in a much higher price bracket, new home inventory has steadily increased over the last year – rising 16.5 percent from July 2016 to 276,000 homes in July 2017. In comparison, at a year-to-date inventory of 1.9 million homes, existing home inventory had a typical dip in the fall and winter but is still 9 percent lower from July 2016 to July 2017 (Table H).
Rental Prices and Vacancy Rates
For many, home buying continues to be out of reach and with slower to grow rent prices, it is often the best option.
At a median monthly rental price of $1,414 in July 2017, rent has only increased by 2.1% since 2011 (Table J).
As shown in Table I, rental vacancy rates have dipped dramatically by 35 percent from 2009 to 2016. With an increase of 4.3 percent over the past year, the vacancy rate is at 7.2 year-to-date.
Housing Starts – Single and Family Units
The growth in new Single-Family unit housing starts will not let up anytime soon. Starts are projected to have double digit growth over the next two years. However, Multi-Family unit housing starts (apartments) has fallen dramatically since the boom of 2014-2015 brought on by pent up demand and also the Millennials pouring into the rental market. Developers complain of long permitting and construction time spans also a lack of skilled workers. However, even though Multi-Family starts are projected to fall slightly next year, this reflects the apartment industry returning to a more realistic growth cycle (Figure 3). The challenge to growth in new home starts will be the affordability for first-time Millennial buyers, and current homeowners seeking to upgrade.
September 4,
2017 by Jane Chero in Business Strategy, Economic News, Industry
Despite the dramatic decline in the percent of Americans moving and changing residences over the last 60+ years, the patterns of mobility have shifted much less than might be expected. Once a country on the move, mobility reached a historical low from 2015 to 2016 with only 11.2 percent of the population moving to a different home or apartment. This compares to a 1948 peak of 20.3 percent.
After detailing the “who” and “why” in two previous articles on Mobility in America, the current issue explores “where” people are moving. Are more movers simply relocating to a nearby apartment or home? Is there migration into the cities from the suburbs? Are some more people moving to sunshine states? (Sources: U.S. Census Bureau, Current Population Survey: (1) 2016 Annual Social and Economic Supplement and (2) Annual Geographical Mobility Rates 1948 to 2016)
Mobility by Year
While the percent of Americans moving has changed overtime, how far away they tend to move has not. Looking at the last 28 years, in 1987, 17.8 percent of the population moved compared the 11.2 percent from 2015 to 2016. Since that time, a slightly higher percentage of movers are moving to a different county within the same state – an increase from 18.3 percent (1987) to 21.3 percent (2016). Meanwhile, while fewer movers are relocating to a different state – down from 16.7 percent to 13.6 percent. (Table A)
Both long distance and shorter nearby moves have fallen by similar rates over the past 60+ years. Between 2015 and 2016, 61.6 percent of all movers relocated within the same county compared to 67 percent in 1948. As shown in Table B, as a percent of the total population, just 6.9 percent of Americans made shorter moves last year within the same county, down from 13.6 percent in 1948. Different county and out of state moves dropped to just 3.9 percent of the total population in 2016.
As expected, metro areas have the most movers by far, with 64 percent of movers electing to stay within the same metropolitan area (Table D). At 16.7 percent, the next highest group of movers traded one metro area for another metro area between 2015 and 2016, while 9.3 percent of movers continued to reside in a nonmetro location.
Despite the perception that inner cities are increasing in desirability the data reflects differently (Table E). Actually a yearly average of 1.5 million movers have left Principal Metropolitan cities (urban areas) since 1985 while Metropolitan suburbs keep growing – increasing by an average of 2.9 million movers a year.
When it comes to the distance a homeowner moves versus a renter, what might be surprising to some is that the geographical mobility patterns among both renters and owners are very similar as depicted in Table F. At 60.7 percent owner-occupied units and 61.7 percent renter-occupied, the vast majority of movers in both housing types moved within the same county from 2015 to 2016. A higher percentage of homeowners moved to a different county within the same state (25.2 percent) versus 19.7 percent of movers that rented in the same year. Not surprisingly, movers from abroad account for a higher percentage of renter-occupied units (4.9 percent) rather than owner-occupied units (1.9 percent).
Regional Movers
Overall the sunshine states in the South and West had the most movers from 2015 to 2016. The South had the highest flow of people in and out of the region with Inmigrants and Outmigrants both over 900,000 people. (See definitions below.) At 247,000 persons, the West had the most Net Internal Migration, with the South leading the way in total Net Migration (including movers from abroad) (Table G).
Table H shows the Net Internal Migration of movers (current residents moving within the country) over the last five years. Between 2012 and 2015, the South had on average the greatest net increase in population from movers each year. However in 2015-2016, the West took over adding 247,000 additional people compared to 39,000 for the South. The Net Internal Migration in the Northeast and Midwest has been either null or negative for many years with more people leaving than moving in.
Movers from abroad relocate into all regions of the country (Table I). However, the South has been the greatest beneficiary over the last five years but with 497,000 movers from 2015 to 2016.
Although Net Internal Migration in the Northeast and Midwest has been null or negative over the last few years, the influx of movers from abroad over the last three years has increased their populations. Meanwhile, the South and West are still holding the most appeal for mobility.
July 19,
2017 by HFBusiness Staff in Economic News, Industry
Although Healthcare spending still leads the way, durable goods, including Furniture and Home Furnishings products, have steadily increased their share of post-recession consumer dollars since 2009. This is despite the fact that last year for the first time Americans spent more money on health care than the total amount spent on living in and taking care of their homes -- $2.95 trillion versus $2.91 trillion. Housing expenditures grew 4 percent last year and include rents, mortgage payments, utilities, housing maintenance, all household and outdoor furnishings, tools and equipment but excludes cell phone, internet, cable, and telephone services. Meanwhile, spending for heathcare grew 5.6 percent and includes all out-of-pocket costs for health insurance, physicians, hospitals, outpatient facilities, nursing homes, etc. as well as prescription and non prescription drugs and medical equipment.
After a gradual post-recession recovery, consumer spending continues to grow an average of 3.8 percent a year since 2009. According to the Bureau of Labor Statistics’ Personal Expenditures Survey, Consumer Spending by U.S. Households totaled $12.76 trillion last year – increasing 3.9 percent from 2015. At a seasonally adjusted annual rate, the first quarter of this year slowed 2.7 percent to $13.11 trillion. This article picks up from Statistically Speaking’s August 2015 article Where are Consumer’s Spending Their Money.
Growth of Durable Goods
Between 2000 and 2009, consumer expenditures for services surged as durable goods lost ground during the Great Recession. However, since the recession’s end in 2009, spending for durable goods has seen the largest increase with nondurables declining as a percent of total consumption. Durable goods now comprise 67.8 percent of consumer expenditures (2017 Q1 Annualized) compared to 63.9 percent in 2009 (Table A).
As shown in Table B, both durable goods and nondurable goods lost tremendous ground from 2000 to 2009 as spending on services skyrocketed by 53.2 percent while consumer spending on housing and healthcare services steadily increased. On a positive note, in the years following the recession (2009 to 2017Q1), durable goods have surged growing 40.6 percent compared to 27.8 percent for nondurables and 33.7 percent for services.
Top Consumer Spending
With healthcare last year finally exceeding total housing expenditures, including furnishings and maintenance, the trend is on track to continue this year. Total combined housing and home furnishings expenditures lost 1 point share of all spending since 2009, mainly through declining utility expenses and slow to recover rents early in the recovery. Home furnishings products have generally held consumer spending share with the exception appliances and televisions. Meanwhile healthcare has increased its share 1.5 points in the same time period – up to 22.5 percent of total spending the first quarter of this year. Total consumer dollars spent on housing and furnishings trailed closely at 21.6 percent in 2017 Q1. Meanwhile Americans are eating out more, with corresponding spending on food consumed at home declining. Table C compares the share of consumer spending 2009 to 2017 Q1 by various goods and services. Itemized categories exceed three percent of spending.
Rents and mortgage payments make up 73 percent of consumer spending on housing, while the biggest chunk of healthcare was paid to hospitals (7.9%) and outpatient services (7.8%). Actual medical health insurance totaled 1.3 percent of consumer spending.
Housing and Household Expenditures
Since the end of the 2009 Recession, household insurance has surged as the fasted growing housing expense – up 67.8 percent but tapering off over last year (Table D). Both furniture and home Furnishings have maintained a steady upward trajectory – averaging 3.5 percent and 3.7 growth each year, but still lag slightly behind overall consumer spending growth of 3.8 percent. Televisions and appliances have been outpaced by other household spending. Household utilities have stabilized with little increase.
As Americans are staying put longer, household maintenance spending has grown 29.2 percent over the last five years. Last year, rents and mortgages saw a high growth of 4.7 percent as supply tightened in many areas. Consumer spending slowed during the first quarter of this year in all household spending categories, except televisions/video and audio. Figure 1 itemizes the growth of the housing and home furnishings expenditures five years, one year and 2017 Q1.
Furniture and Home Furnishings Products
In this first quarter of this year at a seasonally adjusted annual rate, Consumer spending on furniture alone totaled $109.7 billion dollars. Major appliances is the second largest home furnishings spending category at $41.4 billion. (Table E).
Although window coverings is the smallest of the home furnishings categories, it has experienced the largest post-recession surge in consumer spending increasing 42.1 percent. Table F visually depicts the indexed growth of spending on the major home furnishings categories post-recession. Carpets and other floor coverings have surged since 2015 with a total 32.2 percent growth since 2009. Both furniture and home furnishings accessories also experienced over 30 percent growth post-recession at 31.8 and 31.7 percent growth respectively.
Looking at the five year, one year and 2017 Q1 growth (Figure 2), all home furnishings categories except televisions and major appliances, exceeded 20 percent five-year growth. Spending on televisions has been depressed with only 2.4 percent five-year growth, although sales picked up the first quarter of this year. Major appliances has also underperformed growing 11.3 percent in five years. Growth last year was under 1 percent last year and continues to decline in the first quarter.
If curious about the spending categories with the largest increases, Table G shows the biggest winners and losers 2015 to 2016. Spectator sports are at the top of the winner’s list at 10.9 percent growth, followed closely by hairdressing salons and personal grooming Establishments at 9.4 percent. Gasoline and other energy goods are the biggest losers in consumer spending posting a 10.3 percent decline with second place going to securities commissions falling 5.2 percent.
June 19,
2017 by HFBusiness Staff in Economic News, Industry
With Mobility in America at an all-time historical low and only 11.2 percent of people moving from 2015 to 2016, what drives the current movers and leads them to change residence? Picking up from the “who” of last month’s article, we now dive into “why” people have moved since 2000 and take note of both the growing and declining trends. Two major reasons to move, jobs and a desire or need for new or different housing, took hits during the recession. Since the end of the recession, jobs and housing have gained traction again as reasons for mobility. However, as shown in the previous month’s article, Americans need more than a healthy economy and a recovering housing industry to propel them to move.
Table A shows that for 42.2 percent of the 35.1 million movers from 2015 to 2016, the biggest reason to move continues to be a desire for new or different housing. Recovering from the recession, job related moves are back up to just over 20 percent of movers since 2006-2007. Meanwhile, over a quarter of American movers (27.4 percent) changed residence last year due to a change in family status.
Moving Reasons Vary by Age
The propensity to move varies by age group as does the reason (Table B). But one thing is certain, the older one gets the less likely he or she is to change residence for any reason. (See Statistically Speaking, April 2017 issue for additional age related moving data.)
Young adults ages 20 to 29 dominated all categories for reasons to move in terms of numbers of adult movers -- the principle reason for moving being housing-related (3.7 million movers). These young movers are starting new households, moving into their own apartments or homes or changing residences for various reasons. Job-related moves also dominated this age group more than any other with 3.0 million moving for employment reasons.
For adults 30 to 44 (a 15-year age span), housing-related moves were by far more important than any other category (3.6 million movers) and almost double employment reasons.
Adults 45 to 64 (20 year span) are a large part of the U.S. population and contain a chunk of baby boomers on the back end. However these older adults were most likely to stay put with 2.4 million movers citing housing-related reasons for moves and only 1.1 million moving because of jobs.
The broad category reasons for moving – Family, Job, and Housing can be further segmented into more specific moving motivators.
Family
Both Divorce and Marriage rates have been on a steady decline since 2000 – lowering a “change in marital status” as a key reason for moving (Table C). Down from a divorce rate of 4.0 in 2000 (rate per 1,000 total population) to 3.2 in 2014, more people are staying married. On the flip side, less people are getting married – decreasing from a marriage rate of 8.2 in 2000 to 6.9 in 2014.
Luckily more people moved to establish their own households from 2015 to 2016 – up to 12.2 percent of all movers from 10.4 percent in 2016 (Table D). Although slow to leave Mom and Dad’s home, more Millennials are venturing out on their own and forming households. This increase should continue steadily over next five years as Millennials age.
According to the National Association of Realtors, between 2008 and 2016 America added an average of 835,000 new households per year. For 50 years prior, it was 1.3 million per year.
Job Employment
Slow job growth this decade coupled with more conservative corporate transfer policies during recessionary times have kept people from moving for a new job or job transfer. However that trend is improving as only 7.8 percent of movers from 2009 to 2010 cited new jobs or transfers as reasons for moves, now up to 10.8 percent in 2016. Also on the rise is a desire to be closer to work and have an easier commute – up to 6.0 percent of movers from 2015 to 2016, almost double that of 2001. Other job related reasons for moves impacting less than 2 percent of movers included moving to look for work or after a lost job or retirement (Table E).
A person was more likely to make an employment-related move based on the type of job (Table F). Professional and Service jobs are geared toward mobility more than any other type of employment, representing 23.3 percent and 21 percent of job-related movers respectively.
Housing
Continuing the historical trend, the strongest reason for a household move for any reason is simply the desire to upgrade to a nicer apartment or home (Table G). These movers represented 17.4 percent of the total in 2015/2016, up from 14.8 percent of movers between 2009 and 2010.
After a slowdown during the Great Recession, the desire for renters to own their own homes is trending up. Bottoming out at 4.6 percent of movers from 2009 to 2010, changing residence in order to stop renting and purchase a home grew to 5.9 percent of movers from 2015 to 2016. Other housing-related reasons for moves 2015 to 2016 included wanting cheaper housing (8.2 percent of movers) and a desire for a less crime ridden neighborhood (3.1 percent).
Other Reasons to Move
Although minor, from 2015 to 2016, both health reasons and a desire for a better climate were listed as reasons for a move, slightly more than previous years, reflecting most likely our aging population (Table H). Attending or leaving college also increased as a reason as Millennials filled universities – jumping from 1.9 percent of movers in 2006/2007 to 3.2 percent in 2015/2016.
While the percentage of Americans moving has been on a steady decline since the mid – 20th century, both the job market and housing industry are on the upswing and Millennials are entering full adulthood. More opportunity and more young adults could give way to higher mobility in years to come.
May 17,
2017 by Jane Chero in Economic News, Industry
This is the first in a two-part series on Mobility in America. Part 1 featured on the following pages, focuses on the profile of “who” is moving. Part 2 in the upcoming June issue will detail where people and moving and what motivates them to move.
Once a nation of movers, Americans are increasingly less likely to sell their homes or leave their apartments and move across the country or even down the street. With only 11.2 percent of people moving from 2015 to 2016, American mobility is at an all-time record low. Since the 1950’s, mobility has plummeted almost 50 percent – from 21.2 percent of the population changing residence – down to 11.2 percent in 2015 to 2016 (Table A). While the previous decade’s stagnant change in residence can be owed partly to the economy, this downturn has been steady for over forty years.
Because a move often spurs a furniture or home furnishings purchase, the question for the industry then becomes, who is moving? According to the Census Bureau, many of the movers are non-married, under 35 renters, many with children. The closer to the poverty level, the more likely a person changes residence. This article is a snapshot of current movers and what factors might determine mobility at this time in America – age, marital status, owning versus renting, and poverty status.
Age of Movers
By far, younger adults moved the most from 2015 to 2016. Twenty-three percent of 20 to 24 year olds and 20.1 percent of 25 to 34 year olds moved last year – double that of 35 to 44 year olds (11.1 percent) (Table B). With increasing age, the percentage of an age group’s mobility declined significantly.
For example, less than 4 percent of adults over age 55 moved between 2015 and 2016.
Fifty percent of all persons changing residence 2015 to 2016 were split evenly between children (24.9 percent) and young adults 25 to 34 (25 percent) (Table C). Of the 35.1 million movers, 23.7 million (67.3 percent of all movers) were under the age of 35.
Marital Status
Marital Status plays a major role in a person’s desire, ability and necessity to move (Table D). Not surprisingly, 17.2 percent of separated people moved in 2016 with never-married people following close behind at 15.8 percent. Eleven percent of divorced individuals moved last year, while only 7.4 percent of married individuals changed residence. Widowed individuals tend to stay put with only 5.1 percent in the category moving.
Table E shows that at 37.4 percent, single, never married people were the highest category of movers from 2015 to 2016. In the same time span, married individuals were the greatest portion of nonmovers at 41.5 percent.
Owners vs. Renters
Just over one-third of the population lives in renter-occupied units. As expected, renters of housing units change residence much more often than owners of housing units (Table F).
Of the 108.2 million renters from 2015 to 2016, 24.8 million were movers (22.9 percent), compared to just 5 percent of owners. Only 10.3 million people in owner-occupied units moved last year, while 196.4 million homeowners remained in the same residence.
Renters accounted for more than two thirds (70.6 percent) of movers from 2015 to 2016 (Table G).
Poverty Status
Although 13.5 percent of the population is below 100% of poverty (Figure 1 and Table H), 22.6 percent of movers were these lowest income households.
Americans at 150% of poverty (incomes over $36,450 for a family of four) accounted for 66.4 percent of movers from 2015 and 2016 and 79 percent of nonmovers.
Americans with higher household incomes (above $36,450 for a family of four) are choosing to stay in place – only 9.6% moving in 2016. As Table I shows, the poverty category with the lowest income had the highest percentage of Americans move over 2015 to 2016, 18.6 percent of those below 100% of poverty moved over last year.
The series continues in the next issue.