As the Housing Industry collapsed after 2007, Apartment rentals shot up and continue to rise due to a low inventory of homes as well as the vast amount of Millennials currently in their late teens and early twenties. Apartment rents have increased 20 percent from 2007 to 2015 Q1 with an average yearly growth of 2.3 percent.
With the number of apartment rentals on the rise, the Vacancy Rate has plummeted. Dropping an average of 7% a year since 2009, the Vacancy Rate has decreased a total of 35.8 percent – down to 6.8 in 2015 Q2.
The jump in apartment rentals over the last eight years is in huge part due to the core of Millennials aging into Age Group 20 to 24 (prime renting years).
The amount of early twenty year olds increased from 21.1 million in 2007 to 22.9 million in 2014 – a growth of 9 percent.
This is the second in a series of six Factoids exploring the future of the Housing Industry. The housing market has picked up steam over the last two years in terms of both existing home sales and new housing starts and a shift in the demographics of available homebuyers should spur more growth in the next 10 to 20 years.
This Factoid shows both the age groups of the current Millennial population and what age groups the Millennials will be in 2025. In 2015 the highest population of Millennials falls into Age Group 20 to 24 with 22.7 million people, while Age Group 24 to 29 is only slightly smaller at 22.5 million. Millennials are just starting to age into their home buying years with 21.7 million in Age Group 30 to 34.
Over the next decade, the youngest of the Millennials will be leaving college and entering the rent/housing market and the oldest will be in their early 40s and often upgrading housing. Age Group 30 to 34 (mainly first time home buyers) is projected to increase 12.9 percent - from 21.6 million to 24.5 million, while the population of 25 to 29 year olds (prime renting age) shows a slight growth of 2.8 percent. Ages 35 to 39 and 40 to 44 are expected to increase 15.9 percent and 10.5 percent as the older Millennials age into a traditional period of housing upgrades.
This is the first in a series of six Factoids exploring the future of the Housing Industry. The housing market has picked up steam over the last two years in terms of both existing home sales and new housing starts and a shift in the demographics of available homebuyers should spur more growth in the next 10 to 20 years.
This year, the Millennials are expected to surpass the Baby Boomers and become the largest living generation. The Millennials are generally defined as children of the Baby Boomers born between the early 1980’s and the early 2000’s. The oldest Millennials are entering their 30s and the youngest still pre-teen. Over the next 10 to 20 years, Millennials will pour into the housing and apartment markets and many of the Baby Boomers (currently ages 51 to 69) will be downsizing to smaller homes, single-family retirement communities, or group housing.
The population will grow and change over the next ten years with the surge of Millennials and the skyrocketing of Baby Boomers in the over 65 age group. Boomer growth over 65 will total 37.8% - increasing at a rate of 3.3% a year from 2015 to 2025.
The next factoid of this series will show in further detail the projected pouring of Millennials into home buying age groups over the next decade.
Source: U.S. Census Bureau, Projections of the Population of the U.S
2015 Q2 year to date totaled $45.23 billion, an increase of 5.4 percent over the first two quarters of last year. Industry sales are on pace to finally reach or surpass peak pre-recession totals.
The chart above shows quarter-over-quarter industry performance from 2012 Q2 through the second quarter of 2015.
Second quarter combined Furniture and Bedding industry sales of $22.96 billion were a 5.2 percent improvement over $21.83 billion from the same quarter in 2014. Compared to last quarter (2015 Q1) sales improved 3.1 percent
Furniture (excluding Bedding) increased 5.2 percent in 2015 Q2 versus the same quarter last year with sales of $19.67 billion – up from $18.7 billion in 2014 Q2.
Bedding continued steady quarter-over-quarter growth with sales of $3.28 billion, up 4.9 percent over second quarter sales last year.
The Industry continued its steady growth in the second quarter of this year. A 5.2 percent increase over the same quarter last year resulted in Furniture and Bedding sales totaling $22.96 billion. Compared to the previous 1st quarter of this year, sales were 3.1 percent.
Furniture (excluding Bedding) increased 5.2 percent over 2014 Q2 and grew 4.3 percent over the previous Q1 of this year. Bedding sales were also up 4.9 percent over Q2 of last year but declined 3.4 percent compared to the previous quarter (2015 Q1).
This is the fifth in a series of five Factoids detailing Consumer Spending. Consumers are spending an increasing amount of money on Consumer Services and “Lifestyle Expenditures” – leaving fewer dollars for Furniture and other durable and non-durable goods.
Factoid #5 compares the dollar growth in personal consumption of three major home furnishings consumer products - Furniture, Major Household Appliances, and Televisions.
The innovation in Televisions has been the major home furnishings consumer expenditure story early on, growing from 13.1 percent of the home furnishings category to 21.5 percent over the 15-year period.
The Television industry has more than doubled since 2000, growing 141 percent. However, most of that growth occurred before and during the recession. Since the recession, the Furniture industry has outperformed both Televisions and Appliances, growing 20 percent since 2009 compared to 9 percent for Appliances and 4 percent for Televisions.
Source: U.S. Department of Commerce, Bureau of Economic Analysis “Personal Consumption Expenditures”
Factoid #4 details the Furniture industry’s growth in share of the three major home furnishings product categories – Furniture, Major Household Appliances, and Televisions. Furniture has lost share over the last 15 years, slightly to Major Appliances, but sharply to the rapid innovation in Televisions
Furniture and Bedding continues to claim the largest share of the three home furnishings product categories at 56.2 percent but has lost six market share points, primarily to televisions. Since 2000, total personal consumption of furniture products has grown 33 percent (2015 Q1 annual rate) to $99.5 billion, just above the growth rate of appliances.
Appliances have also lost market share slightly to Televisions, falling from 24.8 percent to 22.3 percent between 2000 and 2015 Q1. In terms of growth, the $39.4 billion Major Appliance industry has the lowest rate of the three home furnishings categories at 32 percent.
Source: U.S. Department of Commerce, Bureau of Economic Analysis, “ Personal Consumption Expenditures”
This is the third in a series of five Factoids detailing Consumer Spending. Consumers are spending an increasing amount of money on Consumer Services and “Lifestyle Expenditures” – leaving fewer dollars for Furniture and other durable and non-durable goods.
Consumers were faced with increasing costs of Housing and Healthcare on smaller budgets during the Great Recession. Factoid #3 shows the rise of Consumer Services expenditures from 2000 to 2015Q1. Like Housing, Healthcare expenditures have grown exponentially - increasing 126 percent in 15 years. Although dropping slightly in 2009, money spent on Food Services and Accommodations and Recreation increased by 93 percent and 77 percent. Consumers decreased spending on Transportation during the recession by 7 percent, but have grown 21 percent since 2009.
The final two factoids in this series will show how as the economy recovers and budgets increase, sales of home furnishing products are rising alongside Consumer Services expenditures.
This is the second in a series of five Factoids detailing Consumer Spending. Consumers are spending an increasing amount of money on Consumer Services and “Lifestyle Expenditures” – leaving fewer dollars for Furniture and other durable and non-durable goods.
Money spent on Housing, including rent, utilities and other vendor services related to housing costs, has risen at a rapid pace since 2000 – up 85.6 percent in 2015 Q1 while consumption of Furniture rose just 33.3 percent.
Unlike Furniture, which felt the impact of the Recession – dropping 11 percent in 2009, Housing services expenditures only slowed its upward momentum. On a positive note, Furniture has risen 20 percent since the peak of the recession, while Housing increased 18 percent.
Source: U.S. Department of Commerce, Bureau of Economic Analysis, “Personal Consumption Expenditures”