Friday, December 20, 2013

Census Bureau Takes a Small Step in Better Describing the Structure of the Modern Family -- but More Can Be Done

by George Masnick
On November 25 the Census Bureau released its latest package of tables describing American families and living arrangements. These tables highlight the growing complexity of living arrangements among children—and the challenges that demographers and housing analysts face in charting changing household composition.

Since 2007 these tables have included a breakdown of family groups that identify couples who were not legally married but were joint parents of at least one minor child in the household.  This change reflects the trend for families to increasingly be started by the birth of a child rather than by marriage. Over 85 percent of births to teens are out of wedlock, as are over 60 percent of births to 20-24 year olds and over 30 percent of births to 25-29 year olds. Among those in their 20s co-residence of the parents is usually the norm, but in many cases, marriage does not take place for several years, and may never take place, certainly if the couple splits up.  Prior to 2007, these particular family groups were lumped into the category of “other families” with either a male or female reference person as head.  It was impossible under this old definition to distinguish in the tabulated data when unmarried family groups contained joint parents.

Many who referred to the older data assumed (incorrectly) that if adults in such family groups were not “currently married,” then the child or children were living in a “single”-parent household.  The implication was that unmarried two-parent households would behave more like one-parent households than like married couples across a wide range of issues of importance for public policy, including housing consumption.

The magnitude of the numbers of two-parent families under the old and new definitions can be seen in Exhibit 1.  While only about 7 percent of two-parent families are not married, that number is up from 5 percent in 2007. (Click exhibits to enlarge.)

Source: Current Population Survey March and annual Social and Economic Supplement, 2012 and earlier, Table FM-2;

In 2013 about 76 percent of all parents of minor children were married. Among young adults with minor children, however, the share that is currently married is much lower than this average (Exhibit 2). Only 43 percent of such parents under the age of 25 are married, as are just 65 percent of parents age 25-29.  The higher shares of older parents of minor children that are married reflect both the lower share of births to unmarried women when these parents were younger as well as the tendency for people to marry later. Whether today’s younger cohorts of parents will carry forward higher percentages of unmarried two-parent and “single”-parent living arrangements when they reach middle age remains to be seen.  I have put the word “single” in parentheses because it refers to legal marital status only, and these parents may well be partnered. 

When the parents of minor children are broken down by race/ethnicity we can see quite a large amount of variability in marriage/living arrangements (Exhibit 3).  The largest discrepancy is between Blacks and Asians.  Only 51 percent of Black parents are currently married compared to 89 percent of Asian parents of minor children. The share of non-Hispanic White parents of minor children who are married is almost 82 percent. Fully 42 percent of Black parents are in “single” parent living arrangements compared to only 9 percent of Asians. We would like to be able to identify the degree to which these differences are accounted for by differences in age of parents and by nativity status, but the data in the Census Bureau’s releases do not allow us to fully do this.  The data are especially silent when attempting to determine the presence of non-parent adults in the “single” parent category.

While identifying joint-parent unmarried couples as a separate category is a step forward, especially among parents in their 20s, a further breakdown of the data is still needed to better describe the modern family.  Married couples consist of persons in their first marriage and those who have been remarried.  If we are now identifying unmarried parents that are both the biological parent of at least one minor child in the household, shouldn’t we also identify married couples where only one parent is the biological parent of any child?  Some “single” parents are living with a partner to whom they are not married, who for all intents and purposes are helping to support the family and acting like a parent.  Some “single” parents are living with non-partner adults who also might be playing parental roles.  Many children are in “joint custody” households.  These “blended” and “extended” living arrangements are all very much part of the modern family, but cannot be readily identified in the Census data, especially by age cohort.

The next steps that the Census Bureau can take to present a better picture of the modern family seem straightforward.  Marital status could include a category “remarried,” and married couples should be further broken down by marriages in which one or both partners are remarried. Unmarried parents of minor children could be broken down by those living with a partner and those not. Among those not living with a partner, the presence or absence of other adults could be identified.  Minor children in married couple living arrangements could be identified as the biological child of both parents or as a stepchild of one parent.  And minor children in the household could be identified as living exclusively in the household or regularly spending some of their time in another household.

Generational differences in living arrangements at the onset of family formation, and the extent to which these differences persist as cohorts age, are key descriptors of the modern family. Therefore, many of the CPS tables should provide the age of the reference parent as a variable that is cross tabulated against other variables.  It would also be helpful if these new tables are produced separately by race/Hispanic origin of the reference parent.  This detailed breakdown by age and race/Hispanic origin will stretch the CPS data quite thin, to be sure, but the user can always aggregate up to gain robustness.

Finally, a few comments about the sharp decline since 2007 in Exhibit 1 in the number of two-parent families with minor children. This decline is certainly related to the effects of the Great Recession.  One reason for the decline is that immigration fell sharply in 2006 and has just begun to recover. Immigrant women have higher fertility than native born and experienced the greatest fertility decline during the economic down turn. These are trends consistent with the poor economic conditions that have affected young adults most severely.  Immigrants also have a much higher share of births to married couples compared to native born (76.4 percent versus 61.2 percent), and the decline in immigration during the Great Recession thus contributed to the recent rise in the share of all births that are to unmarried women.

It is normal that during a recession, both marriages and births are postponed.  A recovery in marriages would be expected to lag the recovery in the economy to allow for some planning of the event.  Meanwhile, both the decline and the recovery in births should each lag the trend in the economy by a year or more.  Although year-to-year instability in the CPS series is often the result of simple random variability, perhaps the upturn in 2013 in the number of families with minor children is further evidence that the economic recovery has begun in earnest. 

Thursday, December 5, 2013

American Renters Face Severe Affordability Problems: Live Webcast Monday, December 9

by Kerry Donahue
Communications Manager
Affordability problems for American renters have skyrocketed over the past decade, both in number and the share of renters facing them.  The inability of so many to find housing they can afford dramatically impacts the health and well-being of renters, as lower-income households cut back on food, healthcare, and savings, just to keep up. Our new report, America’s Rental Housing: Evolving Markets and Needs, will be released next Monday December 9 in Washington, DC.  The daylong event will feature a keynote address from HUD Secretary Shaun Donovan as well as remarks by Colorado Governor John Hickenlooper, Senator Mark Warner of Virginia, and many others.  The event will be webcast live from 11:30 a.m. – 4:30 p.m. (Eastern) at   

This new report on America's rental housing finds that half of U.S. renters pay more than 30 percent or more of their income on rent, up an astonishing 12 percentage points from a decade earlier. Much of the increase was among renters facing severe burdens (paying more than half their income on rent), boosting their share to 27 percent. These levels were unimaginable just a decade ago, when the share of Americans renters paying half their income on housing, at 19 percent, was already a cause for serious concern. Tune into the webcast on Monday for more findings from this new report.

Monday, December 9, 2013 
(Eastern time, subject to change)
11:00 a.m.
Eric S. Belsky, Managing Director, Harvard Joint Center for Housing Studies
Mijo Vodopic, Program Officer, John D. and Catherine T. MacArthur Foundation
11:10 a.m.
Keynote Address
The Honorable Shaun Donovan
Secretary, U.S. Department of Housing and Urban Development
11:35 a.m.
America’s Rental Housing 2013 Research Presentation
Chris Herbert
Research Director, Harvard Joint Center for Housing Studies
12:30 p.m.
Michael Stegman
Counselor to the Treasury Secretary for Housing Finance

U.S. Department of the Treasury
1:00 p.m.
CONVERSATION: Future Directions in Assisted Housing
Chris Arnold, Correspondent, National Public Radio (moderator)
Poethig, Fellow and Director of Urban Policy Initiatives, Urban Institute
Mark Calabria, Director of Financial Regulation Studies, CATO Institute
2:00 p.m.
Housing Finance Reform & Multifamily Lending  
The Honorable Mark Warner
U.S. Senator, Commonwealth of Virginia
2:30 p.m.
2:45 p.m.
CONVERSATION: The Evolution of the Rental Housing Market
Nick Timiraos, Reporter, Wall Street Journal (moderator)
Thomas Bozzuto, Chairman and CEO, The Bozzuto Group
Sean Dobson, Chairman and CEO, Amherst Securities Group
Shekar Narasimhan, Managing Partner, Beekman Advisors
4:00 p.m.
The Honorable John Hickenlooper 
Governor of Colorado

This event will be WEBCAST LIVE at www.jchs.harvard.eduand you can join the conversation on Twitter with #RentalHousing

Monday, December 2, 2013

Why We Should Care About the Great Recession’s Most Unfortunate Victim: Homeownership

by Rob Couch
Guest Blogger
From time to time, Housing Perspectives features posts by guest bloggers. This post was written by Rob Couch, a member of the Banking and Financial Services, Real Estate and Governmental Affairs practice groups at the law firm Bradley Arant Boult Cummings in Birmingham, Alabama.  Rob also serves on the Housing Commission of the Bipartisan Policy Center in Washington, DC..  Previously, he served as General Counsel of the U.S. Department of Housing and Urban Development and as President of the Government National Mortgage Association (Ginnie Mae). His post reflects thoughts he shared at a Brown Bag Lecture delivered at the Harvard Kennedy School on November 14, 2013.

In my lunchtime talk at the Harvard Kennedy School, sponsored by the Joint Center for Housing Studies, I discussed why recent government efforts enacted in the wake of the financial meltdown have caused increasingly stringent underwriting standards. These efforts have resulted in fewer homeowners, particularly first time purchasers, and the widening of the homeownership gap between certain minorities and white Americans. One of the questions from the audience during my talk came from a young man who challenged the continuing validity of the “Dream of Homeownership.”

After the bubble of 2007, some might think homeownership isn’t as worthy a goal as it used to be. In particular, younger Americans who have recently witnessed homeowners suffer financial loss or foreclosure due to declining home values or job loss may be especially wary.  A sizable percentage of young people are not yet in a stable career and want the flexibility that renting offers, and many young Americans who do want to own a home cannot meet underwriting criteria or afford a down payment given the combination of student loan debt and high unemployment.

Nonetheless, as Eric Belsky explains in his paper, The Dream Lives On: The Future of Homeownership in America, most young adults surveyed say they intend to buy a home in the future.   Furthermore, the results of several surveys cited in Belsky’s paper reveal that a majority of both owners and renters believe that owning makes more sense than renting. And for good reason; numerous studies have confirmed the economic and societal benefits of owning a home.

As a homeowner makes payments against his mortgage, and as the value of the property appreciates, the borrower’s equity in the home increases. If necessary, this equity can be accessed though the sale of the home or through a “cash out” refinance or a revolving line of credit. Homeowners also enjoy tax benefits as, in most cases, the annual interest paid on a mortgage and property taxes are fully deductible. Due to the long-term fixed-rate feature of most mortgages and the lifetime cap placed on adjustable-rate mortgages, homeowners are insulated from some of the inflationary pressures on the cost of housing faced by renters.

For the past thirty years, the wealth gap between the most affluent citizens and moderate wealth families in the United States has steadily widened. Households that are able to convert their greatest monthly living expense – rent—into a tax protected asset through amortizing long-term debt have a powerful tool for accumulating wealth. The family that owned its own home in 2010 had a median net worth of $174,500, compared to families who rented and had a net worth of $5,100. Belsky’s paper provides a more detailed analysis of the financial benefits of homeownership.

The benefits of homeownership extend beyond the financial ones, though. Children who grow up in owned homes have higher academic achievement scores in both reading and math and have a 25% higher high school graduation rate than children whose parents rent. Children of homeowners are twice as likely to acquire some post-secondary education, and they are 116% more likely to graduate college. As adults, they earn more and are 59% more likely to own their own home, extending the benefits of homeownership on to the next generation.

Society as a whole also benefits from homeownership. Research has shown that homeowners are more likely to be satisfied with their neighborhoods, and thus more likely to give back to their communities. People who own their homes more often participate in civic activities and work to improve the local community, and they are 15% more likely to vote. Lastly, they tend to have greater longevity in a residence, leading to a more stable neighborhood.

Considering the benefits homeownership offers to society as a whole, young Americans aren’t the only demographic group affected by recent policies. Recent reports estimate that the African-American community, with wealth more concentrated in homeownership than any other asset, lost more than 50% of its net worth during the housing crisis. The deterioration in homeownership has been disproportionately severe on African-Americans, Hispanics, and younger people, leading to a widening of the gap in minority/white homeownership rates.

Recent government efforts to protect borrowers who fail to pay their loans, particularly settlements that have been extracted from the industry and increased servicing standards, have had the effect of compounding the losses from bad loans, thereby encouraging even more conservative lending and hurting a much larger group of potential borrowers by depriving them of the opportunity to achieve homeownership. The overarching policy goal should be to facilitate homeownership, not to shift the burden of non-performance from defaulters to aspiring borrowers. Policies need to change if we wish to continue making homeownership a reality for the broadest group of eligible borrowers in the United States.  My recent paper, The Great Recession’s Most Unfortunate Victim: Homeownership, discusses how we can address this important issue.