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Factoids

Factoids offer brief snapshots of current topics pertinent to the Furniture industry based on our on-going research. Increase your grasp of current trends, consumer attitudes, and shifts within the industry through solid statistics and concise insight.

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Factoids

Low Housing Inventories and Markets Most Affected: Metro Areas (MSAs) with Largest Unit Growth in Residential

In many metropolitan areas, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and impeding moves at a time when the economy is growing and employment is high. This is the fourth factoid in a series of five factoids that zeros in on markets hit the hardest with the housing shortage and those that are fairing better.

While many metro areas are suffering with tightening housing inventories, some areas are having better luck with building permits and new housing construction in an attempt to turn the tide.

Single Family Homes

For single family units only, Phoenix leads the way with 1,509 building permits added from 2017 Q2 to 2018 Q2, followed by Santa Rosa, CA with 1,007. Denver, Charlotte, and Atlanta all had above an 800 unit growth over the same time period.

Multi-Family Homes

From the 2nd quarter of 2017 to the 2nd quarter of 2018, Houston tops off the list for MSAs with the largest growth of multi-family units at 4,525, followed by Orlando with 3,767 and Charlotte with 2,892. Los Angeles, Atlanta, and San Diego all exceeded 1,500 units over the same year.

Source: Census Bureau Housing Units and Building Permits

Low Housing Inventories and Markets Most Affected-Part 4

In many metropolitan areas, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and impeding moves at a time when the economy is growing and employment is high. This is the fourth factoid in a series of five factoids that zeros in on markets hit the hardest with the housing shortage and those that are fairing better.

While many metro areas are suffering with tightening housing inventories, some areas are having better luck with building permits and new housing construction in an attempt to turn the tide.

Among the largest metro areas (over 1.5 million housing units), Houston leads the way with 21 percent growth last year. Boston and Atlanta both have over 15 percent growth, while Phoenix and Los Angeles have over 10 percent. By far, Chicago and Detroit are experiencing the worst negative growth in residential building – down 23.8 and 23.9 percent from 2017 Q2 to 2018 Q2.

 Some smaller MSAs made the list of metro areas with the largest unit growth in residential building permits with Houston, TX topping the list at 5,032, followed by Orlando, FL with 4,319. Certainly Hurricane Harvey last year is contributing to some of Houston’s housing permit growth. Charlotte, N.C. is third on the list with 3,788 permits. Phoenix, AZ, Austin, TX, and Salt Lake City, UT are also smaller cities that are showing growth in residential building.

Source: Census Bureau Housing Units and Building Permits

Low Housing Inventories and Markets Most Affected: Part 3

In many metropolitan areas, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and impeding moves at a time when the economy is growing and employment is high. This is the third factoid in a series of five factoids that zeros in on markets hit the hardest with the housing shortage and those that are fairing better.

While many metro areas are suffering with tightening housing inventories, some areas are having better luck with building permits and new housing construction in an attempt to turn the tide. Furniture retailers should pay close attention to the markets where building is picking up and where building is slowing. Overall building permits grew 6.6 percent in the U.S. 2017 Q2 to 2018 Q2 annualized. Interestingly, it is the smaller markets where building permits have increase, specifically for single-family units. The larger MSAs, 500,000 to 1.5 Million and Over 1.5 million housing units, had the smallest growth over last year, 4.8 percent and 5.8 percent respectively. Mid-size range 250,000 to 500,000 increased the most at 9.4 percent, while the smallest range available (50,000 to 100,000) had the second highest growth at 9.3 percent. of 4.6.

Looking at state increases in building permits in 2018, Hawaii had the highest growth in residential building permits since the second quarter of 2017 -- jumping 32.6 percent followed closely by New Hampshire at 30.9 percent. Idaho, Utah, and North Carolina all had over a 20 percent increase.

Building permits declined in many states. Montana had the lowest growth in residential building permits declining 23.7 percent this year compared to 2017, followed by Mississippi, down 20.5 percent, and Illinois falling 15.7 percent.

Source: U.S. Census Bureau Building Permits, unadjusted
Note: Data includes all states

Low Housing Inventories and Markets Most Affected: Series Factoid 2

In many metropolitan areas, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and impeding moves at a time when the economy is growing and employment is high. This is the second factoid in a series of five factoids that zeros in on markets hit the hardest with the housing shortage and those that are fairing better.

While housing inventory has fluctuated among the states with the highest ratio of homes for sale, no state has maintained above a ratio of 2.0 homes for sale per 100 households through June of this year. At the highest, Vermont has 1.6 homes for sale per 100 households – down from 2.4 in 2015.

Big cities have been hit hard by the housing shortage. The top three largest markets with the tightest homes for sale inventories are located in the West -- San Francisco, Seattle, and Los Angeles. And by far, the Seattle area has been hit the hardest – inventory plummeting 76.7 percent down to a ratio of 0.34 homes for sale per 100 households in the past seven years. Metro areas with high inventories in 2011 – Atlanta and Miami – have fallen 62.9 percent and 44.5 percent, but both markets are still in better shape than other major cities.

Source: Zillow Inventory Data; Census Bureau Housing Units
Note: 2018 housing unites have been estimated *Data is unavailable for Nevada and Indiana

The 10-Year Millennial Economic Slump Employment

This year the youngest Millennials have officially become adults with the largest generation since the Baby Boomers spanning ages 18 to 36. Most researchers and studies concur the last 10 years had dealt most Millennials an increasingly difficult economic hand.

This is the final factoid in a series of three factoids that breaks the Millennial generation into three distinct segments based on proximity to the Great Recession and date of college graduation or job market entry – prior to the recession, during the recession and post-recession high unemployment period, and post-recession recovery.

Being such a large generation Millennials are starting to make their imprint on the workforce. Employed Millennial workers ages 25 to 34 are growing in number and now surpass the number of employed 35 to 44 Gen Xers. At 34.4 million post-college employed workers in 2017, Millennials are now 7.8 percent higher than Generation X in the amount of people in the workforce.  Although Millennials now have the most employees in the workforce, they still lead the way with higher unemployment rates. 4.6 million 25 to 34 year-olds are unemployed compared to 3.5 million 35 to 44 year-olds and 3.2 million 45 to 54 year-olds.

While each category felt the effects of the Great Recession on the unemployment rate, those with a bachelor’s degree or higher spiked up to 4.9 percent in January of 2010 before leveling out to 2.5 percent in 2017 – just 0.4 percentage points shy of the rate in January 2007.

The percent of Millennials 25 to 34 who are “not in the labor force”, mostly students and others who are neither working nor seeking work past college age, is in line with Generation X . At 21.8 percent, the older Millennials not in the labor force are only slightly higher then the 20.9 percent designated to 35 to 44 year-olds (younger Gen Xers). However, keep in mind that many more Gen Xers are couples where one has chosen to stay at home to care for children while the other is employed.

Source: Bureau of Labor Statistics, U.S. Department of Labor, Current Population Survey

The 10-Year Millennial Economic Slump The Financial Picture

This year the youngest Millennials have officially become adults with the largest generation since the Baby Boomers spanning ages 18 to 36. Most researchers and studies concur the last 10 years had dealt most Millennials an increasingly difficult economic hand.

This is the second factoid in a series of three factoids that breaks the Millennial generation into three distinct segments based on proximity to the Great Recession and date of college graduation or job market entry – prior to the recession, during the recession and post-recession high unemployment period, and post-recession recovery.

The Financial Picture

Income in all generations was negatively impacted by the recession, especially among Millennials and Gen Xers. The overall population of 25 to 34 year-olds has not fared as well as the college graduates nor have they fared as well as the older Gen Xers aged 35 to 44 in terms of salary loss. At $34,067, median income for Millennials has yet to surpass 25 to 34 year-olds in 1974 ($34,601 in real adjusted 2016 dollars). Meanwhile 35 to 44 year-old’s median income was not hit quite as hard in the recession and at $42,012 in 2016 is nearly back to the median income in 2000.

Although incomes are rising, Millennials are overwhelmed by debt. According to the Federal Reserve, the average student loan debt for Class of 2017 graduates was $39,400, up six percent from the previous year.

Americans owe over $1.48 trillion in student loan debt spread out among about 44 million borrowers. That’s about $620 billion more than the total U.S. credit card debt, according to the Federal Reserve.

The real financial picture of Millennials and student debt lies in their net worth defined as assets minus liabilities. The average net worth for a Millennial just out of college at age 23 is negative $33,984. Even with an average starting salary of $52,569, it takes many millennials a long time to crawl out of student loan debt.

Source: U.S. Census Bureau, Current Population Survey; The College Investor report by NACE, National Association of Colleges and Employers “Salary Survey Report” and
Federal Reserve Student Loan Data, Net worth – assets minus liabilities; U.S. Bureau of Economic Analysis as published in the College Investor. Data through 2015.

The 10-Year Millennial Economic Slump : Education of Millennials

Numerous contradictory studies have attempted to profile the very diverse Millennial generation. Some data identifies them as big spenders adding to their debt with lifestyle products and so-called life experiences. Other studies suggest they are one of the best savers of any generation at this age. But like all generations, it’s inaccurate to place blanket labels on a generation that spans almost 20 years. Where most researchers and studies do concur is that many Millennials have been dealt an increasingly difficult economic hand.

Financial data has emerged which suggests there are three distinct segments to the Millennials based on their proximity to the Great Recession – (1) those that graduated college or entered the job market prior to the Great Recession, (2) those that entered the job market during the recession or during the post-recession high-unemployment recovery period, and (3) those entering after the economy was on its way to recovery. This is the first factoid in a series of three factoids that details these 3 different segments of Millennials in relation to education, finance and employment.

Education

Those that entered the job market early, prior to the Recession, have definitely fared better than their younger Millennials. The second group hit a job market wall during the Great Recession and many have yet to recover as they took jobs unrelated to their college education at lower salaries. With the tightening of the job market, Millennials turned to colleges becoming the most educated generation in history.

29 percent of Millennial men and 36 percent of Millennial women completed at least a bachelor’s degree compared to just 15 percent of men and 9 percent of women 50 years ago. While the percentage has increased with for both sexes with each generation, women now exceed men as college graduates by 7 percent.

Some Millennials aren’t sure how much that education has helped them.  The National Association of Colleges and Employers (NACE) tracks starting salaries by year of graduation and finds that 2004 through 2007, those early graduates averaged starting salaries of $42,619. Salaries in the second group graduating during the Great Recession and partial recovery, 2008 to 2011, averaged $41,607.  But as the recovery has moved forward, 2012 to 2016 (most current data), starting salaries jumped to an average of $48,169.

Source: Pew Research Center’s “How Millennials today compare with their grandparents 50 years ago,” March 16 2018; U.S. Census Bureau , Current Population Survey Annual Social and Economic Supplement (ASEC)

NACE, National Association of Colleges and Employees “Salary Survey Report”

Housing Industry Dilemma Number of Construction Workers Residential Construction

The furniture industry is driven by housing: new household formations, changes of residences of existing households, and replacement or upgraded furniture within existing residences.  Unfortunately, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and stymieing moves at a time when the economy is growing and employment is high. This is the final factoid in a series of four factoids detailing the crucial struggle facing the housing market and consequentially the furniture industry.

Numerous factors have converged to create the housing shortage, one of which is the lack of construction labor. Due to a combination of many workers leaving the industry during the recession, fewer people attending trade schools and a decline in immigrants and undocumented workers, builders struggle to find workers. The amount of construction workers in residential construction fell 44.8 percent from 2006 to 2011, losing almost half of the total workers. The industry has slowly gained employees back since 2011, increasing by 39.6 percent in seven years, but is still 23 percent shy of the one million construction workers in 2006. 

Source: U.S. Census Bureau

Housing Industry Dilemma Index Growth of Median Home Prices

The furniture industry is driven by housing: new household formations, changes of residences of existing households, and replacement or upgraded furniture within existing residences.  Unfortunately, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and stymieing moves at a time when the economy is growing and employment is high. This is the third factoid in a series of four factoids detailing the crucial struggle facing the housing market and consequentially the furniture industry.

Home prices have increased dramatically since the bottom of the recession in 2009 – jumping 46.1 percent from 2009 to 2018. With a current median home price of $328,000 (2018 April YTD), prices are 34.1 percent above the pre-recession peak of $244,950 in 2007. Since 2010, home price increases are averaging 5 percent a year (CAGR).  Paired with ballooning home prices, stricter lending polices are keeping many first-time buyers out of the market.

As inventory stays low, prices will continue to go up due to many builders turning away from starter and mid-priced home and choosing to build high-end homes with better profit margins. 

Source: U.S. Census Bureau

Housing Industry Dilemma Housing Inventories

The furniture industry is driven by housing: new household formations, changes of residences of existing households, and replacement or upgraded furniture within existing residences.  Unfortunately, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and stymieing moves at a time when the economy is growing and employment is high. This is the second factoid in a series of four factoids detailing the crucial struggle facing the housing market and consequentially the furniture industry.

The most critical result of the lack of new housing starts is falling housing inventories which in turn drive up prices.  The number of rentals and homes for sale has been falling consistently since coming out of the recession when inventories were high. During the four-year period 2010 to 2014, rental inventories fell at an annual rate (CAGR) of 7.5 percent and housing for-sale inventories declined 10.2 percent. During the following three years, 2014 to 2017, rentals and housing inventories fell again but at a smaller annual rate of 0.4 percent and 4.8 percent respectively.  This year, based on an annualized first quarter, rental inventories are down another 3.4 percent and houses for sale have declined 7.2 percent.

Source: U.S. Census Bureau, Current Population Survey/ Housing Vacancy Survey