Gearing Up for the 2020 Census: Lack of Funding and Leadership Vacancies Imperil Crucial Update

It’s hard to over-state the importance of the decennial census, which has been undertaken every decade since 1790.

Indeed, this key accounting of the American population was deemed important enough to be listed in Article 1 of the U.S. Constitution.

Today, however, with the departure of the Census Bureau’s director in June and a refusal by Congress to adequately fund important tests of the first Internet-based count in advance of 2020, alarm bells are going off at The Census Project, which counts among its 200 members the NAHB, the NAR and the U.S. Chamber of Commerce.

They certainly have reason to be worried. Several months before the departure of former director John Thompson, the Government Accountability Office had added the Census Bureau to its ‘high-risk list’ of imperiled agencies and programs.  If there is any economic sector which would be negatively impacted by the Bureau being under-funded and rudderless, it would be the building industry.

That’s because, besides the decennial census, the Bureau also collects monthly data critical for homebuilders such as building permits, starts, completions and new single-family home sales at various geographical levels.

Each quarter, the Bureau releases data on homeownership and residential vacancy rates by state and many MSAs.  The Bureau’s data can even move the stock market in either direction because it’s regularly tracking the health of retail stores, wholesale trade, manufacturing, domestic and international trade and even construction spending by sector.

Because a country as large and vibrant as the U.S. can change a lot between decades, the Bureau also conducts the American Community Survey (ACS), which provides annual information to better determine how over $400 billion in federal and state funds are spent based on local jobs, education levels and homeownership levels.

For demographers and market researchers looking at development opportunities, the Bureau’s data allows them to cobble together datasets to compare the risk profile of one city or town versus another.  If a small city is seeing a boom in new jobs that isn’t being met with new population or housing growth, that’s an opportunity the Bureau can help unearth. The Census Bureau may be one of the most important federal government agencies we have.

Although various state agencies also gather their own data on population, employment and housing trends – and have served as official State Census Data Centers since 1978 – they still must ‘benchmark’ their estimates against the latest decennial census data when it is released.  Sometimes this process can unveil a large discrepancy, which can deprive a large state of its share of numerous federal programs and even cost it a Congressional seat.  In some cases, the loss of a seat could potentially swing an election.

The private sector is also impacted, because when you order a demographic report from a company such as ESRI or Claritas, their analysts are basing their current-year estimates and projections on the most recent decennial census.  Consequently, if the 2020 update is under-funded, that could lead to another decade of bad guesses based on incomplete data.  Given the impact that under-building housing is having on home prices in many areas of the country, ensuring an accurate update in 2020 should be a rallying cry for our industry.

There are two reasons for this Census Bureau under-funding: (1) Because the budget is set at the same level as the 2010 Census, it is not accounting for either a decades’ worth of inflation or another estimated 25 million people to count by 2020; and (2) Because the Bureau is attempting to harness the Internet and new technology for the first time to reduce the need for door-to-door counting, it needs additional funds for tests originally scheduled to start in 2018.

According to The Census Project, the Bureau needs an additional $300 million in 2018 to extensively test this new technology for an accurate count, but the White House and Congress have approved just over 10 percent of that amount.  This puts the 2020 Census in danger of a botched count, which could lead to undercounts of rural and minority populations while over-counting whites, especially those with multiple homes.

There are fears that the 2020 Census could be the victim of politics, and be used as a means to shift federal spending from blue to red states – or vice versa if such a myopic precedent is set.  At a time when just agreeing on facts is a challenge, there’s a reason the Founding Fathers inscribed the decennial census into the Constitution.

Let’s at least honor their wishes by fully funding it.

November column for Builder & Developer magazine now online

My column for the November 2014 issue of Builder and Developer magazine is now posted online.

For this issue, entitled "Where are the First-Tme Homebuyers?" I was struck by the decline in first-time homebuyers in recent months and wanted to investigate further.  An excerpt:

During the month of September, while both new and existing home sales rose slightly, there was one group which continues to remain somewhat on the sidelines: the first-time buyer. According to the National Association of Realtors®, in September the share of first-time buyers was 29 percent for the third straight month.

Since historically the share of first-time buyers has been closer to 40 percent, given that these buyers have represented less than 30 percent of the market in 17 of the last 18 months, it’s almost certain that this change will have an impact on the housing market in the future. So just where have these buyers gone, and what are their plans for their housing needs?

For now, most are choosing to rent: according to the Census Bureau, the share of households age 25 to 29 who owned their own homes fell from nearly 41 percent in 2007 to 34 percent by 2013, which is great for landlords but not for the neighborhood stability which accompanies higher percentages of homeownership...

To read the entire column, click here.

To read the entire November 2014 issue in digital format, click here.

November column for Builder & Developer magazine now online

My column for the November 2013 issue of Builder & Developer magazine is now posted online.

For this issue, entitled "GOP-Centered Building Industry Update," I wanted to tackle the question of why the building industry is so wedded financially to the Republican Party when (a) the favor is not necessarily returned; and (b) an increasingly diverse pool of new home buyers doesn't support the party's policies. It's a huge disconnect and a potential PR issue in the future.  An excerpt:

In the 2012 campaigns, just over three quarters of the NAHB’s BuildPac funds went to the GOP – far higher than the 55 percent from the National Association of Realtors or the 57 percent from the Mortgage Bankers Association. Looking ahead to the 2014 elections, while the GOP money lead from BuildPac has shrunk to 67 percent, it’s still far higher than the 48 percent planned by the NAR...

By 2043, the Census Bureau estimates that the country will no longer be a white-majority country, fueled today by significantly higher birth rates among multi-racial couples, Asians and Hispanic immigrants...

So why is this important? Because the GOP has a substantial image problem among minority voters, with just 11 percent of non-white voters declaring allegiance to the Republican party as of mid-2012. And when the NAHB’s primary PAC is still targeting two-thirds of its funds towards Republican candidates, it’s hard to ignore this huge political disconnect between supplier and buyer.

To read the entire column, click here.

To read the entire November 2013 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 11/30/12

Please click here to see the edition of BuilderBytes for 11/30/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• New home sales in October dip by 0.3% from September but 17.2% above October 2011
• Pending home sales rose by 5.2% in October to 104.8, the highest level since March 2007
• S&P Home Price Indices rise for sixth consecutive month
• Conference Board Consumer Confidence Index rises to highest level since February 2008
• 3rd quarter 2012 GDP rises to 2.7% from 2.0% in second estimate

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BuilderBytes' MetroIntelligence Economic Update for 10/26/12

Please click here to see the edition of BuilderBytes for 10/26/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Sales pace of new homes highest since April 2010
• FHFA House Price Index rose by 0.7% from July to August and by 4.7% over the previous year
• September pending home sales show slight improvement
• Federal Reserve sticks to QE3 plan due to mixed signals on the economy
• Durable goods orders rose by 9.9% in September following 13.1% decline in August

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

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September column for Builder & Developer magazine now online

My column for the September issue of Builder & Developer magazine is now posted online.

For this issue, entitled "The Rise of the Single-Person Household," I had read an interesting article in Fortune magazine about the demographic changes in the U.S. and the generational rise of single-person households.  What does that mean for our industry? An excerpt:

According to the most recent Census Bureau statistics, just 51% of adults today are married, putting singles within shouting distance of becoming a majority cohort.  Moreover, 28% of the country’s households now include just one person, which has doubled since 1960 and is the highest in U.S. history.  And this trend isn’t just confined to the U.S. – single-person households account for 50% of the total in cities like London and Paris and even higher (60%) in Stockholm...

Of course singles also buy homes, and that is attracting the attention of both brokers and builders.  Today, single households buy one-third of homes and, according to the NAR, unmarried men and women account for 10% and 21% of all buyers.  Interestingly, despite their higher incomes, men in their thirties and early forties show little interest in buying a home, while women increasingly look to homeownership as a way to graduate to the next life stage of total independence. Then, and only then, will many of them even consider partnering up with a significant other...

To read the entire column, click here.

To read the entire September 2012 issue in digital format, click here.

The Rise of the Single-Person Household

As recently as the late 1950s, 80% of Americans taking part in a survey by the University of Michigan believed that people who preferred the single life were, among other things, “sick,” “immoral” or “neurotic.”  At the time, such pronouncements could be viewed as a product of their time, given that 70% of adults were married and divorce, when granted, was still viewed with eyes of suspicion.

Fast forward to today, however, and the rise of single living has become one of the most important generational changes of the last 50 years. According to the most recent Census Bureau statistics, just 51% of adults today are married, putting singles within shouting distance of becoming a majority cohort.  Moreover, 28% of the country’s households now include just one person, which has doubled since 1960 and is the highest in U.S. history.  And this trend isn’t just confined to the U.S. – single-person households account for 50% of the total in cities like London and Paris and even higher (60%) in Stockholm.

Although semi-hysterical books such as “Bowling Alone” and “The Lonely American” have portrayed single Americans as threats to wealth, well-being and longevity, New York University Professor Eric Klinenberg begs to differ.  In his new book, “Going Solo:  The Extraordinary Rise and Surprising Appeal of Living Alone,” Klinenberg, writing in Fortune magazine, argues that most people who live alone do so by choice, and this freedom is driven in large part by their higher discretionary incomes.

According to federal consumer expenditure surveys from 2010, singles spent an average of $34,471 per person, or 23% higher than married folks without kids ($28,017) and 49% higher than highest-spending families with children ($23,179).  In other words, take increasing numbers of singles, multiply that by their higher incomes, and what you get is rising economic clout that the Bureau of Labor Statistics estimates to be as high as $1.9 trillion.

While most corporations have been slow to take notice of this gradual demographic shift, there are certainly exceptions to the rule including Coldwell Banker, Lowe’s, Chevrolet and even the diamond merchant DeBeers.  Apparently they already know that singles are more likely to eat out, join a health club, take classes in art and writing, attend public events and volunteer in the community. Perhaps most important of all, single households also play a crucial role in revitalizing cities and giving life to public spaces, often as part of social networks called “urban tribes,” which often substitute for traditional families.

One major builder investing heavily in this demographic is The Related Companies. Last year, the company opened MiMA (“Middle of Manhattan”), a 63-story high-rise including luxury (and ultra-luxury) apartments, a 633-unit “Yotel” with its own bar scene and offering micro ‘cabins’ to rest and relax, an Equinox health club, outdoor screening space and three party rooms.  To make the project a cultural destination, Related brought in architect Frank Gehry to design a new multi-purpose space for The Signature Theater Company along with a café and a bookstore.  The idea is that residents here not need to venture off-site for a training session, a movie screening, a drink with friends or even an off-Broadway play.

Of the total 814 apartments available at MiMA, most are studios or one-bedroom floor plans, and nearly two-thirds of its occupants live alone.  Even with rents starting at over $3,500 per month, 90% of inventory was leased within six months.  It, too, will target not just another tenant but households with more than $100,000 in income who are seeking the lifestyle which revolves around one of their apartments.

Of course singles also buy homes, and that is attracting the attention of both brokers and builders.  Today, single households buy one-third of homes and, according to the NAR, unmarried men and women account for 10% and 21% of all buyers.  Interestingly, despite their higher incomes, men in their thirties and early forties show little interest in buying a home, while women increasingly look to homeownership as a way to graduate to the next life stage of total independence. Then, and only then, will many of them even consider partnering up with a significant other.

Given that single women living alone and age 18 to 34 years make up the fastest-growing demographic group – rising from 500,000 in 1950 to 5 million today – housing providers which target them with the right mix of floor plans, amenities and similar neighbors will likely be at the forefront of a trend that will be with us for some time.  For many, being single is a distinct advantage.

BuilderBytes' MetroIntelligence Economic Update for 7/27/12

Please click here to see the edition of BuilderBytes for 7/27/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Initial unemployment claims fall by 35,000 in latest report
• New home sales in June dip by 8.4% from May as inventory declines
• Pending home sales in June fall by 1.4% from May due to inventory shortages at lower end

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 6/4/12

Please click here to see the edition of BuilderBytes for 6/4/12 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Construction spending in April rose by 0.3% from previous month and by 6.8% from April of 2011
• Non-farm employment rose by just 69,000 jobs in May
• Personal income rose by 0.2% in April as consumer spending rose by 0.3%
• Manufacturing sector activity expanded in May

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Want to make sure your company or event is included in the events calendar? Contact editor Dani Smith at dsmith@penpubinc.com.

Has mobility really declined due to the recession?

For a couple of years we've been hearing that one reason unemployment is elevated is because people can't move because they're stuck in their homes.

The thinking was that without the historical social mobility that has allowed the U.S. economy to constantly re-invent itself that the right people couldn't move to the right jobs.

Or so it seemed.

However, according to a recent paper by Greg Kaplan and Sam Schulhofer-Wohl and available online at the National Bureau of Economic Research, the decline in interstate social mobility has been steadily occurring since the mid 90s and is not specifically related at all to the Great Recession. From their summary:

We show that the significant drop in the annual interstate migration rate between the 2005 and 2006 Current Population Surveys is a statistical artifact. The Census Bureau’s imputation procedure for dealing with missing data before the 2006 survey year inflated the estimated interstate migration rate. An undocumented change in the procedure corrected the problem for the 2006 and later surveys, thus reducing the estimated migration rate.

The change in imputation procedures explains 90 percent of the reported decrease in interstate migration between 2005 and 2006, and 42 percent of the decrease between 2000 (the recent high-water mark) and 2010. After we remove the effect of the change in procedures, we find that the annual interstate migration rate follows a smooth downward trend from 1996 to 2010. The 2007–2009 recession is not associated with any additional decrease in interstate migration relative to trend.

A related story in Newsweek posits that the decline is likely due to changes resulting from the information age and a service-based economy than anything else:

The decline, which is often attributed to early recession troubles with selling homes or paying for moves, is a “statistical artifact,” according to a report published by the National Bureau of Economic Research. It’s 90 percent attributable, the study claims, to a 2006 change in the way the bureau estimates missing data. Once the change is corrected for, the steep drop in moving rates disappears. Interstate migration is indeed falling, says University of Pennsylvania professor Greg Kaplan, who coauthored the study. But the trend is decades old and, says Kaplan, may be “an optimal response” to the information economy, where work is no longer as regionally diverse.

If you want to read the entire study, it is available for download for $5 at the NBER Web site.

Housing bust decreasing mobility in Sunbelt states

One of the more significant impacts of the distressed housing market is the lack of mobility for a country accustomed to moving every 7 years. The Census Bureau has recently released a report for the annual period ending July 1, 2007 that shows the impact of decreasing mobility, including net population losses in Los Angeles County as well as parts of Michigan, Ohio and Florida. From an article in the Wall Street Journal:

Population increases in many fast-growing counties, particularly in the South and West, started slowing last year, suggesting that the housing crunch may be forcing many Americans to stay put.

People "are paralyzed in their quest for jobs in growing areas in many parts of the country because the housing market has shut down across the board," said William Frey, a demographer at the Brookings Institution, a Washington think tank.

The Census Bureau's annual estimate of county-population changes covers the 12 months that ended July 1, 2007. It shows that many Americans continued moving to sunny counties in Florida, Georgia and Arizona, but that the rates were slowing.

The data show a marked deceleration in population growth in several suburban counties that are farthest from urban centers -- the kind of counties to which some city residents had flocked in prior years for bigger houses and a different lifestyle. At the same time, urban areas and close-in suburbs were seeing population decreases slow, and in some cases reverse...

The slowdown of county-to-county movement pulled down expansion in other fast-growing counties. Population in California's Riverside County, which is east of Los Angeles, increased by 66,000 -- down from 80,000 between July 2005 and July 2006. In Texas's Harris County, where Houston is, the population increased by 60,000, less than half the gain between July 2005 and July 2006.

Some formerly highflying counties actually saw population fall. Broward County, Fla., part of the Miami-Fort Lauderdale metropolitan area, added an average of 28,000 residents a year between 2000 and 2005. But the county lost 13,000 residents between July 2006 and July 2007. That was the county's first population decline recorded by the Census Bureau.

Some cities and suburbs that had been losing people to outer areas saw the exodus slow. Cook County, Ill., which includes Chicago, had lost an average of 16,000 a year between 2000 and 2006. Last year it gained about 4,800. In San Diego, the population rose by 27,000 in the latest period, compared with an average gain of 5,000 a year between 2003 and 2006...

Movement from one part of the country to another often slows during economic weakness and sometimes spurs shifts. In the early 1980s, many people fled the industrial Midwest for Texas oil towns, then moved again when the boom ended. Earlier this decade, workers from tech firms in Northern California headed south after the late 1990s tech boom collapsed.

The housing market's woes, though, are working the other way. Demographers and headhunters suggest people may be staying put because they can't sell their homes or can't get financing for new ones...

Dru George, a partner at Austin McGregor, an executive search firm based in Dallas, said that in the past nine months he has had several executives turn down jobs in other places because of the financial hits they would take if they sold their homes. Some are "under water" -- that is, they paid more on their houses than they would get selling them -- he said.

"I'm doing a search in Austin, and I was speaking with candidates, East Coast, West Coast, in the South," he said. "A lot of these executives are $300,000 to $400,000 under water on their house. Do they sell it at a loss or stay put? That's something we see on a daily basis."