Report on the Economic Well-Being of U.S. Households in 2015
Print- Preface
- Executive Summary
- Introduction
- Overall Economic Well-Being
- Income and Savings
- Economic Preparedness and Emergency Savings
- Banking, Credit Access, and Credit Usage
- Housing and Household Living Arrangements
- Automobile Purchase Decisions and Auto Lending
- Higher Education and Human Capital
- Education Debt and Student Loans
- Retirement
Housing and Household Living Arrangements
Housing represents one of the largest expenses in most families' financial picture and, as such, one's housing situation is closely tied to their economic well-being. Partially reflecting the level of resources necessary to purchase and maintain a home, respondents who own their home are more likely to report that they are either "doing okay" or "living comfortably" (77 percent) than those who rent (54 percent).
Recognizing the importance of housing to one's overall well-being, the SHED poses a series of housing-related questions to survey participants. The survey finds that most respondents are satisfied with the quality of their home and neighborhood, although satisfaction rates differ based on the income level of the neighborhood. The results also illustrate that most homeowners believe that the value of their home has increased in recent years, although the extent to which respondents believe values are increasing is not uniform across the country.
Home Ownership and Living Arrangements
Approximately 16 percent of respondents report that they live alone and just under half live with only their spouse or partner and children under age 18. However, 15 percent of adults indicate that they live with their parents, 9 percent report living with an adult child who is not in school, 10 percent report living with extended family members, and 5 percent report living with one or more roommates (table 16). Of the 15 percent of respondents who are living with their parents, 47 percent are ages 18 to 24, but slightly over half (53 percent) are age 25 or older. Lower-income respondents are also more likely to live with someone other than their spouse or dependent children under age 18. Forty-seven percent of respondents whose family income is less than $40,000 live with at least one person outside of their immediate family, compared to 28 percent of middle-income respondents and 23 percent of higher-income respondents who live with someone other than a spouse or dependent child under age 18.
| Category | Percent |
|---|---|
| Living alone (unique) | 15.7 |
| Spouse/partner | 62.5 |
| Children under age 18 | 27.7 |
| Adult children (all in school full time) | 5.3 |
| Adult children (at least one not a full-time student or unknown) | 9.4 |
| Parents | 15.0 |
| Extended family (grandparents, siblings, aunts, uncles, etc.) | 10.2 |
| Roommate(s) | 5.1 |
| Other | 0.9 |
In addition to asking respondents who they live with, the survey asks respondents about the ownership status of their current residence. Sixty-one percent of SHED respondents report that they or their spouse or partner own their home, while 27 percent rent and 11 percent neither own their home nor pay rent.24 Housing tenure is closely tied to the age and income of respondents. Thirty-two percent of respondents ages 25 to 29 own their home and 39 percent of lower-income adults own their home, each of which is well below the homeownership rates for older and higher-income individuals (table 17). There also are differences in tenure rates, along with the rates of owning other assets, by the race and ethnicity of the respondent (see box 3).
| Characteristic | Own | Rent | Neither own nor rent |
|---|---|---|---|
| Age | |||
| 18-24 | 10.0 | 34.7 | 54.6 |
| 25-29 | 31.6 | 48.7 | 19.4 |
| 30-44 | 59.2 | 32.8 | 7.7 |
| 45-59 | 76.6 | 20.1 | 3.2 |
| 60+ | 80.6 | 16.3 | 2.6 |
| Family income | |||
| Less than $40,000 | 38.6 | 39.9 | 21.2 |
| $40,000-$100,000 | 72.8 | 22.1 | 4.8 |
| Greater than $100,000 | 85.8 | 10.1 | 3.9 |
| Overall | 61.4 | 26.8 | 11.4 |
Reflecting both the increased housing stability that often comes from owning as well as the older average age of homeowners, respondents who own their home report a substantially longer duration of living in their current residence than those who rent or who neither own nor rent. Among homeowners, the median duration in their current residence is 13 years and the average duration is 16 years. Among renters, the median duration is just three years and the average duration is five years.
Box 3. Asset Accumulation by Race and Ethnicity
When considering the well-being of individuals in different subsets of the population, one finding that is apparent in the SHED results is the stark difference in asset holdings across different races and ethnicities. This asset gap exceeds that which can be explained only by current income. It also is broadly consistent with findings from the Survey of Consumer Finances that there is a wealth gap between individuals of different races and ethnicities.1
Relative to that seen among white respondents, non-Hispanic black and Hispanic adults are less likely to own their home, less likely to own a car, less likely to have three months of emergency savings, less likely to cover a $400 emergency expense without borrowing, and less likely to have any retirement savings (table A). They also are less likely to have acquired human capital assets, as they report substantially lower rates of completing a bachelor's degree than is seen among non-Hispanic white respondents.
| Asset type | White, non-Hispanic | Black, non-Hispanic | Hispanic |
|---|---|---|---|
| Homeowner | 67.8 | 47.7 | 47.3 |
| Car or truck owner | 82.6 | 61.1 | 65.1 3 |
| Has 3 months of emergency savings | 52.1 | 33.6 | 35.3 |
| Would cover $400 expense without borrowing | 60.8 | 36.4 | 38.3 |
| Has any retirement savings | 73.7 | 60.3 | 57.1 |
| Has at least a bachelor's degree | 32.3 | 23.7 | 17.6 |
Additionally, to the extent that non-Hispanic black and Hispanic respondents have these assets, they are more likely to have loans that reduce their equity in the asset. While there are only minor differences across races and ethnicities in the propensity of homeowners to have a mortgage, differences in
borrowing rates emerge for other assets. Fifty-one percent of non-Hispanic black car owners and 43 percent of Hispanic car owners report that they have an auto loan. This compares to 38 percent of non-Hispanic white car owners who currently owe money on a car loan. The difference in the propensity to owe education debt is even more prevalent. Forty-nine percent of non-Hispanic black respondents with a bachelor's degree and 40 percent of Hispanic respondents with a bachelor's degree currently owe education debt from that education, compared to the 19 percent of non-Hispanic white respondents with a bachelor's degree who owe money on education debt.
These differences in asset accumulation are partially attributable to demographic and socioeconomic characteristics that are correlated with the race and ethnicity of the respondent. However, while adding controls for the gender, age, education, marital status, and parental education to regressions weakens the magnitude of these relationships between asset ownership and race/ethnicity, in almost all cases the relationships remain statistically significant. The only exception is that, with controls, non-Hispanic blacks are no longer significantly less likely to have obtained a bachelor's degree than non-Hispanic white respondents, although the sign of the point estimate remains negative.2 Additionally, even adding controls for current employment status and income only impacts the significance of the difference across races and ethnicities for retirement savings and emergency savings between non-Hispanic white and Hispanic respondents, while the gap in these retirement savings between non-Hispanic white and non-Hispanic black respondents remains significant. In the case of each of the other assets considered, the difference in asset ownership between non-Hispanic white and black respondents and between non-Hispanic white and Hispanic respondents remains significant even with all of these demographic and socioeconomic controls included.
1. See Jeffrey P. Thompson and Gustavo Suarez, "Exploring the Racial Wealth Gap Using the Survey of Consumer Finances," FEDS Working Paper Series 2015-076 (Washington: Board of Governors of the Federal Reserve System, 2015).Return to text
2. Own education and income are both excluded from the covariates in the regression considering the likelihood of having a bachelor's degree, since one's education is expected to influence his or her income level rather than the reverse.Return to text
Return to textNeighborhood Satisfaction and Reasons for Moving
Many factors contribute to an individual's choice of where to live and whether to buy a home, including the location, the quality of the home, and the attributes of the neighborhood. Overall, 70 percent of adults report that they are either mostly or completely satisfied with the overall quality of their neighborhood. Additionally, a majority of adults indicate that they are mostly or completely satisfied with their neighborhood safety, the quality of their schools, the quality of local amenities, the quality of their home, and the cost of their home. However, there are differences in satisfaction levels based on whether the individual owns their home (figure 21).
Figure 21. Respondents who are "mostly satisfied" or "completely satisfied" with each neighborhood characteristic (by housing tenure)
Note: Responses to the cost of the house/apartment are among respondents who either own or rent.
Across all measures of satisfaction, homeowners are more likely to report that they are satisfied with their house and neighborhood than are renters. Specifically, while 76 percent of homeowners are mostly or completely satisfied with their neighborhood quality overall, only 58 percent of renters report this level of satisfaction. This may reflect differences in the houses and neighborhoods where owners live relative to renters, as well as differences in the psychological commitment to a house and neighborhood required for someone to decide to purchase a given home.
While neighborhood satisfaction is generally high, there is also substantial variation in perceptions of the neighborhood quality based on the income level of the local area. Among respondents in neighborhoods with low to moderate rates of poverty, where fewer than 20 percent of residents have income below the poverty line, over three-quarters of respondents are satisfied with the overall quality of their neighborhood and majorities are satisfied with the other aspects of their housing and community conditions. However, among respondents living in census tracts with high or very high poverty levels, the neighborhood satisfaction rates are lower. Among those living in high-poverty census tracts, where between 20 percent and 40 percent of residents are poor, 54 percent of respondents are mostly or completely satisfied with their overall neighborhood quality. Among those living in very high-poverty census tracts, this overall satisfaction rate falls even further to 35 percent (table 18).25 A similar pattern is observed for each of the specific aspects of neighborhood and housing satisfaction, with lower satisfaction rates in communities with higher rates of poverty.
| Characteristic | Live in low- to mod- erate-poverty area (less than 20 percent) |
Live in high-poverty area (20-40 percent) |
Live in very high-poverty area (over 40 percent) |
|---|---|---|---|
| Neighborhood quality overall | 76.9 | 53.9 | 35.1 |
| Local schools | 64.6 | 45.7 | 31.0 |
| Neighborhood safety | 75.4 | 50.1 | 36.3 |
| Neighborhood amenities | 63.3 | 43.6 | 30.5 |
| House/apartment quality | 71.5 | 58.2 | 40.7 |
| Cost of house/apartment | 61.3 | 53.1 | 42.8 |
Note: Responses to the cost of the house/apartment are among respondents who either own or rent.
Reflecting that non-Hispanic black and Hispanic respondents are disproportionately likely to live in high-poverty and very high-poverty census tracts, neighborhood satisfaction is also lower among black and Hispanic respondents than among white respondents. While 76 percent of non-Hispanic white respondents are mostly or completely satisfied with their overall neighborhood quality, this percentage is 57 percent among non-Hispanic black respondents and 59 percent among Hispanic respondents.
In order to gain additional insight into the factors that contribute to housing choices, the survey also asks renters who moved in the past two years what factors contributed to their moving to their current home. The options presented can be grouped into moves resulting from a change in life circumstances (including a relocation or a change in family status), moves to find a better quality house or neighborhood, and moves to save money. Forty-seven percent of renters who moved recently indicate that they moved, at least in part, due to changes in life circumstances, with 35 percent reporting that they relocated to a new city and 18 percent reporting that they had a change in family status (responses to the separate responses exceed those moving for life circumstances combined because the answers are not mutually exclusive). Twenty-nine percent report that they moved in order to save money, and 24 percent report that they moved for either a better quality home or a better-quality neighborhood (table 19).
Table 19. Reasons reported by renters who moved recently for moving to their current home
| Reason | Percent |
|---|---|
| Relocated to a new city | 35.5 |
| Change in family status | 17.6 |
| Larger or better quality home | 18.9 |
| Better quality neighborhood or schools | 12.0 |
| To save money/cheaper place to live | 28.8 |
| Other | 17.1 |
Note: Among respondents who rent their home and have moved since 2014.
Home Value and Housing Expenses
Among homeowners, 67 percent currently have a mortgage, and among mortgage holders, the average monthly mortgage payment is $1,225, with a median payment of $1,100. Among renters, the average rent payment is $855 and the median payment is $760. Both the median reported mortgage and the median reported rent have increased relative to 2014, when they were $1,068 and $700 respectively--although the increase in median mortgage payments is not statistically significant.
Looking at the trend in home values, a majority of homeowners believe that the value of their home increased in the 12 months prior to the survey. When asked to compare the current value of their home to the value one year prior (in fall 2014), 17 percent of homeowners say that the value of their home is now lower, while 27 percent say that the value has stayed the same and 51 percent say that their home now has a higher value.26 Consistent with that seen in the SHED for the past two years, respondents in the Pacific division of the United States are the most likely to think that their home increased in value over this period, with over two-thirds of respondents believing that their home has risen in value.27 Those in the South Atlantic, Mid-Atlantic, East South Central, and East North Central divisions, however, each had fewer than half of homeowners report that they feel that the value has appreciated in the prior year (figure 22).
Figure 22. Homeowners who think that the value of their home is higher than it was 12 months ago (by census division)
Note: Among homeowners who have owned their home since at least 2014.
Perceptions of the recent trajectory of home values are also correlated with the local neighborhood conditions. Fifty-three percent of homeowners living in low- to moderate-poverty census tracts believe that their home increased in value over the prior year. In census tracts where over 20 percent of individuals are in poverty, 45 percent believe that their home value has recently increased.28 Recognizing that perceptions of home values trends are self-reported, particular caution is warranted in interpreting these results. Nevertheless, this difference in perceived home value trends illustrates a potential concern that rising home values may not benefit individuals living in all communities equally.
Most homeowners also express optimism about the trajectory of home prices going forward. Eight percent of homeowners believe that home prices in their neighborhood will decline in the year after the survey, compared to 43 percent who expect home prices to rise. Optimism about future home prices is also highest in the Pacific division of the United States, where 58 percent of respondents expect home prices in their neighborhood to rise, compared to 6 percent who expect home prices to fall (figure 23).
Figure 23. Homeowners who think that home prices in their neighborhood will increase in the next 12 months (by census division)
Home Purchase Decision
Among all respondents, 9 percent report that they probably or definitely will purchase a home in the 12 months following the survey. An additional 9 percent of respondents report that they do not know if they will buy a home in the next year. The likelihood of purchasing is higher among renters, with 16 percent of those who currently rent indicating that they probably or definitely expect to purchase a home.
In order to assess how seriously respondents are considering a purchase, as well as to better understand the path buyers take toward a home purchase, the survey asks respondents who expect to purchase a home in the next year, or who do not know if they will buy a home, about the steps that they have taken toward this endeavor.
A majority of prospective home buyers (60 percent) report that they have researched houses on their own, and nearly as many (54 percent) report that they have checked their credit. Thirty-six percent indicate that they have talked to a real estate agent in their home search, and just over a quarter indicate that they have talked to a bank or lender about obtaining a mortgage. Obtaining a preapproval for a mortgage is less frequent, with 17 percent indicating that they have taken that step toward buying a home.
Researching houses independently and checking credit are the most common home-buying tasks for respondents irrespective of their level of certainty in purchasing a home. Predictably, however, the more certain a respondent is that they will purchase a house in the next year, the more likely that they are to have taken each of the steps in the home buying process (table 20).
| Step | Definitely will buy | Probably will buy | Don't know | All |
|---|---|---|---|---|
| Researched houses on your own | 90.8 | 72.6 | 43.7 | 59.8 |
| Checked your credit | 83.7 | 71.3 | 34.7 | 53.9 |
| Talked to a real estate agent | 68.2 | 45.1 | 21.9 | 35.8 |
| Attended open houses | 53.1 | 32.9 | 16.7 | 26.9 |
| Talked to a bank or lender | 64.2 | 30.0 | 14.5 | 26.0 |
| Received a mortgage preapproval | 41.2 | 20.2 | 9.4 | 17.1 |
| Submitted an offer on a house | 27.6 | 9.3 | 3.9 | 8.7 |
Note: Among respondents who say that they will definitely, probably, or don't know if they will buy a house in the next year.
An important aspect of purchasing a home is acquiring sufficient resources to fund a down payment. To assess the usual sources of these funds for a down payment, the survey asks all respondents who purchased a home since 2001 what sources were used to fund their home purchase in addition to their mortgage. Among all buyers during this time, personal savings and proceeds from the sale of a previous home were used most frequently--by 56 percent and 35 percent of homebuyers, respectively. The other sources of funds were each used by 15 percent or fewer of homebuyers.
However, among young homeowners (under age 35), a higher 23 percent report that they used a loan or gift from family or friends to help fund the down payment on their current house (table 21).29 When further restricting the sample to young first-time homeowners--thereby excluding those who have already moved on to their second or third house--the fraction who relied on a loan or gift from family or friends increases to 28 percent. Approximately 10 percent of young first-time homeowners say that they relied exclusively on a loan or gift from family or friends for their down payment. Nevertheless, even among young first-time homebuyers, personal savings is the dominant source for funding a home purchase, with 65 percent reporting that personal savings were used to fund the purchase.
| Source of funds | Under age 35 | All ages |
|---|---|---|
| Personal savings | 63.0 | 55.6 |
| Proceeds from sale of previous home | 15.5 | 34.8 |
| Loan or gift from family/friends | 23.4 | 13.8 |
| Second mortgage | 3.3 | 5.2 |
| Assistance from government program or nonprofit |
5.6 | 4.8 |
| Other | 2.1 | 4.5 |
| None | 15.5 | 13.3 |
Note: Among respondents who purchased a home since 2001. Respondents who volunteered that the funds came from an inheritance are included with loans or gifts from friends or family.
References
24. Since the SHED asks respondents about whether they or their spouse or partner own their home, and not whether the house is owned by anyone living in the home, this number is not directly comparable to somewhat higher homeownership rates from the Census Bureau's American Community Survey. Return to text
25. Poverty-level census tract information is obtained from the Census Bureau's 2010-14 American Community Survey five-year sample. The choice of cutoffs at 20 percent and 40 percent of the population in poverty are based on the thresholds used by Alemayehu Bishaw, "Changes in Areas with Concentrated Poverty: 2000-2010," Census Bureau American Community Survey Reports ACS-27(June 2014), www.census.gov/content/dam/Census/library/publications/2014/acs/acs-27.pdf. Return to text
26. The 2015 survey changed from a three-point scale (with answer choices that the home value is higher, the same, or lower than a year earlier) to a five-point scale (with options that the value is much higher, somewhat higher, the same, somewhat lower, or much lower) when asking respondents about the recent trajectory in their home value. This change likely accounts for the lower number of respondents in 2015 who feel that their home value is unchanged over the past 12 months relative to that observed in the previous year's survey. Return to text
27. Census divisions are considered here, rather than states, in order to ensure sufficient sample sizes to make meaningful comparisons. Additional information on the nine census divisions is available at www.census.gov/geo/reference/gtc/gtc_census_divreg.html. Return to text
28. The poverty status of the respondent's census tract is based on the five-year American Community Survey results from 2010 through 2014. As such, the level of poverty considered in each tract predates the survey, which mitigates concerns about reverse causality. Return to text
29. The small number of respondents who volunteer that they used an inheritance to fund their down payment are included in this group. Return to text
