Housing: before, during, and after the Great Recession
Demetrio M. Scopelliti
Homeownership symbolizes the American dream. The home we live in often represents how we choose to live our lives. As Winston Churchill once said, “We shape our dwellings, and afterwards our dwellings shape us.”
As the 2000s unfolded, economic growth and public policies designed to increase homeownership led to a housing boom. By 2006, the “housing bubble” began to burst. In late 2007, the economy fell into recession. The housing market continued to soften, people began to lose their jobs, and the banking industry was in crisis.
This Spotlight on Statistics looks at consumer expenditures on household items, employment in residential construction and housing-related industries, prices for household items and commodities, and injuries in occupations involved in building and maintaining our homes.
Expenditures on housing
In 2012, households spent the largest share of average annual expenditures (33 percent, or $16,887) on housing. As a percentage of total housing expenditures, households spent, on average, most on shelter (59 percent). Over 60 percent of expenditures on shelter were on owned dwellings—consisting of mortgage interest and charges ($3,067), property taxes ($1,836), and maintenance, repairs, insurance, and other expenses ($1153). On average, slightly over 20 percent of total housing expenditures were spent on utilities, fuels, and public services.
Housing expenditures from 2006 to 2012
Since households spend the largest share of their average annual expenditures on housing, increases or decreases in housing expenditures typically have a significant impact on whether households can spend more or less on non-household items such as food, apparel, and transportation. From 2009 to 2012, average annual expenditures on owned dwellings have decreased, driven largely by a decrease in expenditures on mortgage interest and charges. From 2006 to 2012, average annual expenditures on rented dwellings have increased. Since 2006, average annual expenditures on utilities, fuels, and public services have been on a downward trend—decreasing 2.1 percent from 2011 to 2012. The decrease was due in large part to a decline in average annual expenditures on natural gas (−14.5 percent) and fuel oil and other fuels (−12.7 percent).
Expenditures on housing, by area
Household expenditures on housing vary by metropolitan area. In 2012, households in areas such as Washington D.C., San Francisco, California, and New York, New York, spent, on average, more on housing than the U.S. average of $16, 887. Households in areas such as Cleveland, Ohio, Miami, Florida, and Detroit, Michigan, spent, on average, less on housing than the National average. Households in Washington D.C. ($17, 603) spent, on average, almost twice as much on shelter— a component of housing expenditures—than households in Cleveland, Ohio ($9,061).
Is it cheaper to rent or own your own home?
In 2012, on average, homeowners spent less on mortgage interest and charges than renters spent on rent. Renters, however, spent less on all other housing-related expenditures including maintenance, repairs, insurance, and other expenses, where homeowners spent $1,788, on average, while renters spent $13. Homeowners spent, on average, more than twice as much as renters on household furnishings and equipment.
Employment in construction and financial activities hit hard by latest recession
During the latest recession, construction industries such as residential building construction (-262,000 jobs) and specialty trade contractors (-945,000 jobs) experienced significant job losses. In contrast, during the 2001 recession, employment in residential building construction increased while specialty trade contractors lost 68,000 jobs. During the latest recession, the financial activities industry lost 461,000 jobs, compared with an increase of 55,000 jobs during the 2001 recession.
Residential construction employment, by state
From 2003 to 2013, the residential construction industry experienced a 26.8 percent decrease in employment—precipitated by the recent recession. While most states recorded a decrease in employment over that period, a total of 22 states experienced a decrease of 30 percent or greater. Nevada and Arizona had the largest decreases—52.0 percent and 48.3 percent, respectively. Those states with increases in employment included North Dakota (47.1 percent), followed by New York, Texas, and the District of Columbia.
Residential construction business establishments, by state
The residential construction industry comprises establishments primarily responsible for the construction or remodeling and renovation of single-family and multifamily residential buildings. From 2003 to 2013, the number of private business establishments in this industry decreased 10.8 percent and employment decreased 26.8 percent. While the majority of states experienced a decrease in the number of establishments over this period, a total of 5 states recorded a decrease of 30 percent or greater. Michigan and South Carolina had the largest decreases—41.4 percent and 36.6 percent, respectively. A total of 3 states experienced increases of 30 percent or greater, led by the District of Columbia and North Dakota with 45.5 percent and 44.7 percent, respectively.
Employment and wages in housing-related industries
Residential building construction, specialty trade contractors, and household and institutional furniture and kitchen cabinet manufacturing are among those industries that build, maintain and furnish our homes. In 2013, the residential building construction industry employed 29,010 construction managers—the industry's fourth largest occupation. Construction managers earned an annual mean wage of $84,650—over $38,000 more than the annual mean wage for all occupations ($46,440). Within the foundation, structure, and building exterior contractors, and household and institutional furniture and kitchen cabinet manufacturing industries, the 4 largest occupations earned an annual mean wage that was less than the average for all occupations. The majority of the 4 largest occupations within the building equipment contractors industry earned an annual mean wage that was greater than the average for all occupations, including the industry's largest occupation (electricians)—representing 380,900 workers earning an annual mean wage of $52,980.
Quits and layoffs and discharges in construction
Quits are generally voluntary separations initiated by employees. Quits are procyclical, rising with an improving economy and falling with a faltering economy. Layoffs and discharges are generally involuntary separations initiated by an employer and are countercyclical, moving in the opposite direction of quits. The ratio of the number of quits to the number of layoffs and discharges provides insight into churn in the labor market over the business cycle. From 2001 to 2013, the ratio for construction was below 1.0, indicating that layoffs and discharges are more common than quits in this industry. In construction, workers are routinely laid off as projects are completed and then rehired elsewhere for new projects.
Employment projections in housing-related industries
Over the 2012–2022 period, employment in housing-related industries such as masonry contractors (65.3 percent); residential building construction; poured concrete foundation and structure contractors; electrical contractors and other wiring installation contractors; and plumbing, heating, and air-conditioning contractors is projected to grow at least 28 percent. Employment in industries involved in wholesaling, such as furniture and home furnishing merchant wholesalers (−13.4 percent), household appliances and electrical and electronic goods merchant wholesalers, and lumber and other construction materials merchant wholesalers is projected to decrease.
How much time do we spend on household activities?While most of us enjoy relaxing at home, some of our time is spent on housework—such as cleaning or doing laundry—and maintaining and repairing our homes. In 2013, on average, women spent 6 hours per week on housework—over 3 times as much as men. Men on the other hand spent almost 2 hours per week on lawn and garden care—almost twice as much as women.
Consumer Price Indexes for housing
Consumer prices for household energy include fuel oils and electricity. Following a spike in the price of household energy from November 2007 to July 2008, prices have decreased and remained below their peak level. The price of water and sewer and trash collection services has increased steadily since January 2004, increasing 69 percent as of June 2014. The price of household furnishings and operations, which includes window and floor coverings, appliances, furniture and bedding, and housekeeping supplies, has been relatively flat since January 2004. Helping keep those costs down is an almost 30-percent drop in the price of window and floor coverings from January 2004 to June 2014.
Producer Price Index for residential construction and related commodities
Producer prices for inputs to residential construction increased 48 percent from January 2004 to June 2014, compared with a 39 percent increase in finished goods over that same period. During the latest recession, following a peak in prices of home heating oil and distillates in July 2008, prices dropped rapidly and fell well below pre-recession levels. Since a low point in March 2009, prices have increased and reached their pre-recession levels. While the price of residential natural gas also peaked during the latest recession, prices have yet to return to pre-recession levels.
Construction specialty trades are getting safer
Specialty trade contractors such as framing, roofing, masonry, and electrical contractors often work in residential construction. In 2012, workers in the framing contractors industry were safer, as the rate of nonfatal occupational injuries and illnesses for all recordable cases was 3.7 incidents per 100 full-time workers compared with a rate of 12.0 in 2003. The rate for private industry decreased from 5.0 in 2003 to 3.4 in 2012. While injuries and illness rates decreased from 2003 to 2012 for siding, and glass and glazing contractors, the decreases were smaller than those experienced for private industry as a whole.
Fatalities in residential construction industries
In 2012, a total of 205 fatal occupational injuries occurred in private residential construction industries, such as residential building construction and specialty trade contractors. The majority of those fatalities were wage and salary workers working in private residences. Over half of the fatalities were a result of falls, slips and trips (111). Within the specialty trade contractors industry, the roofing contractors industry had the highest number of fatal occupational injuries with 31.
Demetrio M. Scopelliti is an economist in the Office of Publications and Special Studies, U.S. Bureau of Labor Statistics. You can contact him at Scopelliti.Demetrio@bls.gov.
Additional data can be found at Industries at a Glance:
Note: Data in text, charts, and tables are the latest available at the time of publication. Internet links may lead to more recent data.
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