Demography & Inequality

(1) Good and bad news for home builders. (2) Record number of households. (3) Renters’ uptrend may be flattening. (4) More middle-aged adults may be starting to buy homes. (5) Millennials are still more inclined to rent than own. (6) Big increase in labor force and household measure of employment bullish for housing. (7) Misleading Census data show stagnating real median household income for the past 20 years. (8) Lots of other measures of household income and spending show solid gains and record high in standard of living. (9) There aren’t enough rich people to skew real consumption per household. (10) The internal contradiction of Progressive programs to redistribute income. (11) More “selfie” households exacerbate apparent income inequality. (12) A short primer on EITC. US Demography I: More Homebuyers? The Bureau of Census released December data on the number of US households recently. There may be some good news for builders of both single-family and multi-family homes. Consider the following: (1) Record number of households. The number of households remained near October’s record high at 117.7 million (Fig. 1). That’s an increase of only 191,000 y/y, but that’s because there was a spike in the series during fall 2014 (Fig. 2). Over the past two years through December, household formation has totaled 2.4 million (Fig. 3). (2) Renters flattening. The Census Bureau also reports on the number of owner-occupiers vs. renters on a quarterly basis. At the end of last year, the former edged up to 75.2 million households, but has yet to exceed the record high of 76.5 million during Q4-2006 (Fig. 4). More noteworthy, the number of renters seems to have flattened out during the second half of last year around 42.6 million households. Nevertheless, renters increased 300,000 y/y, while owner-occupiers were little changed (Fig. 5). In fact, since the record high in owner-occupiers at the end of 2006, this series is down 1.4 million, while the number of renter households is up 8.0 million. (3) More 35- to 44-year-old homebuyers? The homeownership rate overall edged up to 63.8% of all households, still well below the peak of 69.2% during Q2-2004 (Fig. 6). The flip side of this series shows that renters as a percent of households edged down to 36.2% at the end of last year from its cyclical peak of 36.6% during Q2-2015 (Fig. 7). Still, that’s near the percentages prevalent during the 1980s before the homeownership boom depressed the renters’ percentage down to a record low of 30.7% during Q2-2004. By age group, the homeownership rate turned up slightly at the end of last year for 35- to 44-year-olds (Fig. 8).