The Housing Chronicles Blog: The American Household, circa 2007

Tuesday, September 23, 2008

The American Household, circa 2007

The U.S. Census Bureau has released their findings from a 2007 survey of American households, with various stories across the media landscape posted today.

First, from

For homeowners with a mortgage, house prices were still on the upswing, with a median value of $216,400, up a respectable four percent from 2006 for owner-occupied housing units with a mortgage.

There were 51.6 million of such owner-occupied homes with a mortgage in 2007, according to the Census bureau, accounting for 46 percent of the country’s 112 million occupied homes. Each month, these households spent a median of $1,464 to live in those homes, a 4.4 percent uptick in housing costs from 2006. But the real jump came in real estate taxes, which jumped more than 6 percent to $2,099 for owner-occupied homes with a mortgage.

The good news is that at least in 2007, these homeowners could afford such increases … sort of. With a median household income of $73,408 last year, this group only spent 23.9 percent of its income on housing costs, a surprisingly affordable percentage given the soaring home prices of the now-past housing boom. In contrast, the median household income for all Americans last year was $50,740.

The most surprising findings came from data detailing the financial characteristics of American households. Despite the extensive coverage on the indebtedness of American homeowners, the American Community Survey showed that only 1.1 percent of those with mortgages had both a second mortgage (the now-uncommon “piggyback” loan) and a home equity line of credit.

Nearly three-quarters (73.3 percent) neither carried a second mortgage nor maintained a home equity line of credit.

Next, from, the rise of the non-traditional household:

Known as the American Community Survey (ACS), this set of Census data covers the social, economic and housing characteristics of the nation’s population. The 2007 information shows that the number of married-couple family households rose 345,223 to 55.9 million, but the average household size remained largely unchanged at 3.25 family members for this often-pursued group of home buyers.

At the same time, the data showed that the total number of households edged up to 112,377,977 in 2007 with an average household size of 2.61 people.

It also illustrated the rise of non-traditional households. The number of female-headed households with no husband present rose slightly to 14 million. So did the number of male householders with no wife present, although this represents a smaller group at just 5.2 million. Finally, non-family households totaled 37 million...

The Joint Center for Housing Studies at Harvard University agrees, says Rachel Drew, a research analyst at the center. Though Drew had not seen the Census data at press time and could not comment on the specifics of today’s release, she co-authored the Joint Center’s "State of the Nation’s Housing" report and says many of its findings are similar to today’s information from the Census.

“Married couples are a shrinking share of American households,” the center concluded in its report. “Several trends have contributed to this shift, including higher labor force participation rates for women, delayed marriage, high divorce rates, low remarriage rates, and greater acceptance of unmarried partners living together. The resulting growth in unmarried-partner, single-parent, and single-person households has increased the share of adults in all age groups heading independent households.”

Researchers at the Joint Center believe that many of these household trends will continue. It expects that unmarried partners will head 5.6 million households in 2020, up from 5.2 million in 2005. It also projects that between 2010 and 2020, the number of unmarried householders with children is projected to increase from 11.0 million to 11.8 million.

What does this all mean for home building? Myers says the market for families with kids appears to be stagnant, but there are other target markets to pursue, as builders have done for years. “First they were building for young families, and then they were building for move-ups buyer,” he says. “I think they will now build for the empty-nesters with no kids and couples with no kids.”...

According to a story in USAToday, however, housing costs are eating up a significant share of incomes in many areas:

Last year, 38% of homeowners with mortgages spent 30% or more of their before-tax income on housing — the threshold the government defines as unaffordable, according to an analysis of Census data done for USA TODAY by the Joint Center for Housing Studies at Harvard University.

And 15% of homeowners without mortgages and half of all renters had trouble meeting housing costs, the analysis found...

The median home price slumped 7.1% to $212,400 from July 2007 to July 2008, according to the National Association of Realtors.

Among the largest 100 metro areas, Miami- Fort Lauderdale had the highest percentage of cash-strapped homeowners with mortgages. Nearly six out of 10 homeowners with mortgages there are spending 30% or more of their income on housing. Stockton, Calif.; Riverside-San Bernardino, Calif.; Cape Coral-Fort Myers, Fla.; and Los Angeles-Long Beach round out the top five.

In 13 of the largest metro areas, at least half of homeowners with mortgages spent 30% or more of their income on housing.

Most of those markets are also in areas of the country hardest hit by the recent wave of home foreclosures as the value of real estate — which soared during the housing bubble — collapsed in the past year.

McCue says the growth of homeownership was halved from 2006 to 2007, while renting reversed itself and gained in popularity. "From 2005 to 2006, renting went down by almost a quarter of a million households. It went up by almost as many from 2006 to 2007."

Nearly 75% of homeowners with household incomes under $50,000 struggled to pay their mortgages, versus 23% of those who made more than $50,000.

Homeowners with mortgages and whose incomes were lower than $20,000 continued to struggle most. Nearly all spent at least 30% of their income on housing.

Among the largest 100 metropolitan areas, half or more of homeowners with mortgages in these metros were in the "cost burdened" category of spending at least 30% of their gross income on housing in 2007.

Metro area Share of mortgaged owners "cost burdened"
Miami-Fort Lauderdale-Miami Beach 58%
Stockton, Calif. 57%
Riverside-San Bernardino-Ontario, Calif. 55%
Cape Coral-Fort Myers, Fla. 55%
Los Angeles-Long Beach-Santa Ana, Calif. 54%
Modesto, Calif. 54%
San Diego-Carlsbad-San Marcos, Calif. 53%
San Francisco-Oakland-Fremont, Calif. 53%
Sarasota-Bradenton-Venice, Fla. 52%
Oxnard-Thousand Oaks-Ventura, Calif. 52%
San Jose-Sunnyvale-Santa Clara, Calif. 51%
Las Vegas-Paradise, Nev. 51%
Sacramento-Arden-Arcade-Roseville, Calif. 50%

Note: Because the percentages are estimates, precise ranking is not possible.

Source: Analysis of Census data by Harvard's Joint Center for Housing Studies

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