MONEY energy

The High Cost of That Draft Under Your Door

Snow covers a street at daybreak Wednesday, Nov. 19, 2014, in south Buffalo, N.Y.
Carolyn Thompson—AP

As it gets colder outside it's time to break down heating costs by the numbers.

It may not be winter yet—the season doesn’t officially start until December 21, of course—but the weather doesn’t care. Temperatures across the country are plummeting, and a new “polar vortex,” otherwise known as a cold front, is already upon us. And the “lake effect” has hit Buffalo with a vengeance.

That frigid weather is bad news, and not just because many will soon be forced into a coat and hat. The change in season also means more heating expenses, and it can put a chill on your finances if you’re not careful about managing the thermostat. Here’s the costs of winter, by the numbers.

45% — The portion of your energy bill that goes to heating. According to the Department of Energy, heating is the largest expense in the average American home.

$649 — The average cost of heating a home with natural gas from October through March. Roughly half of Americans use natural gas to heat their homes.

$938 — The average cost of heating a home this winter with electricity. About one-third of American homes have electric heating.

$1,992 — The average cost of heating a home with heating oil. According to the Energy Information Administration, heating oil is used by about 6% of households, mostly in homes with older (and less efficient) heating systems.

$362 — How much heating oil households will save compared to last year because of lower prices. Natural-gas users will save just $11.

6 feet — The amount of snow that has fallen in Buffalo since Tuesday. Another 20 to 30 inches of snow is expected.

220,000 tons — The estimated weight of the snow that has fallen in Ralph Wilson Stadium, home of the NFL’s Buffalo Bills. The team is offering fans $10 an hour and free game tickets to help clear the field.

1% — The amount of money you can shave off your heating bill for every degree you turn your thermostat down during the winter, according to the Department of Energy. The DOE estimates turning your thermostat back 10 to 15 degrees for 8 hours can save you 5% to 15% on heating costs.

1/8-inch — Size of a gap under a 36-inch-wide door that will let in as much cold air as a 2.4-inch-diameter hole punched in the wall.

$1,000 — The amount one Utah home saves on winter energy costs by using a wood burning stove. Authorities are cracking down on this practice because of its negative impact on air quality.

Read Next:
Beat the Winter Chill Without Breaking the Bank
7 Easy Ways to Lower Winter Energy Costs

 

MONEY buying a home

Homebuyers ‘Addicted’ to Online Listings—But Accuracy Is Still an Issue

141117_EM_homebuyers_1
Getty Images

Almost two-thirds of recent home buyers surveyed said they were "addicted" to online listings, but only 22% said they were always accurate.

A new study from Discover Home Loans confirms the extent to which technology has transformed the way people buy and sell houses. But it also shows the limits of using online real estate sites when shopping for a home.

According to the survey, which polled 1,003 recent homebuyers on how technology affected their experience, 83% used listings sites like Zillow and Trulia, more than any other online resource. But the majority of respondents weren’t always satisfied with what they found. Only 22% said online listings were always accurate. The results reinforce previous studies, which found a disparity between the accuracy of listings on third-party websites and those found on local Multiple Listing Services, the primary tool of real estate brokers. Those listings tend to be updated more quickly than consumer-facing sites.

Zillow and Trulia have previously responded to such studies, noting that their sites also offer special tools to educate buyers on neighborhoods and housing conditions, and include listings of for-sale-by-owner, premarket and new-construction homes that don’t show up in MLSs.

Alison Paoli, public relations manager with Zillow, noted that while she hadn’t seen the full research, “what’s more important to understand about a study like this is that there is no gold standard for [accuracy in] real estate listings.” She added that Zillow gives brokers, agents, and MLSs the option of sending their listings directly at no cost. “Accuracy is top priority for us,” Paoli.

Accuracy aside, the survey showed that buyers still love trolling listing websites. The vast majority of respondents said technology made them feel “smarter” and “more confident,” and almost half said it helped them save money. In fact, two thirds said looking at online property listings “reached the point of becoming addictive.”

T.J. Freeborn, senior manager of customer experience at Discover Home Loans, said the results show that buyers still need a combination of online information and local expertise. “I think technology is an incredibly useful tool in this marketplace, but Realtors have a very deep knowledge of neighborhoods and particular homes,” Freeborn said.

Discover’s data shows buyers tended to shun social media when looking for houses—a surprising result in a world where virtually all other activities are in some way connected to Facebook and Twitter. Only 25% of homebuyers collected ideas on social media, and just 29% used social media to consult friends. (Given how hot some real estate markets have become, perhaps their reluctance can be chalked up to justifiable paranoia about oversharing.)

That data could have implications for home sellers. At least for now, a social media presence is far less important than making sure your home is listed online.

Get answers to your home buying questions from MONEY101:
How Do I Shop for a House?
How Do I Choose the Right Real Estate Agent?
How Do I Negotiate the Best Price on a New Home?

 

MONEY Marijuana

Official Bob Marley Marijuana Is Coming

Bob Marley & The Wailers in concert in the 1970s
Tracksimages.com—Alamy

It was just a matter of time.

Bob Marley, the late reggae superstar whose name is virtually synonymous with pot, will soon have his own marijuana label.

Marley’s family has joined with Privateer Holdings, a private equity firm focused on marijuana products, to develop Marley Natural brand weed. Marley Natural will offer “heirloom Jamaican cannabis strains,” the very same pot Marley himself is said to have enjoyed. The company will also sell creams, lotions, and Marley-branded accessories.

“My dad would be so happy to see people understanding the healing power of the herb,” said Cedella Marley, the musician’s daughter, in a statement announcing the launch. “He viewed the herb as something spiritual that could awaken our well-being, deepen our reflection, connect us to nature and liberate our creativity.”

Marley Natural website
Marley Natural’s branding. Marley Naturals Website

Cedella also said an official Marley marijuana brand would be an “authentic way to honor his legacy by adding his voice to the conversation about cannabis and helping end the social harms caused by prohibition.”

Brendan Kennedy, CEO of Privateer Holdings, told the Guardian that Marley is probably the celebrity most associated with marijuana. Pot products named after the reggae star, including strains of cannabis, are already being sold without the family’s approval. The executive believes the Marley Brand has the potential to the be the Starbucks of weed and reel in a sizable percentage of what is now a $1.53 billion domestic market for legal pot. AdWeek speculates that if legalization trends continue, that market could grow to $10.2 billion by 2019, and Greenwave Advisors, a marijuana-focused analysis firm, estimates lecit American marijuana sales could total as much as $35 billion by 2020.

But Marley Natural isn’t the only brand trying to become the “next Starbucks” of pot. AdWeek‘s Robert Clara notes a variety of brands are working to claim that same moniker, with companies like DixieElixirs, “the 800-lb. gorilla of the space,” producing slickly branded edible products that “would not look out of place on the shelves of Whole Foods.”

Dixie Elixir is Colorado’s leading marijuana-infused edible product and drink maker.
Dixie Elixir’s edibles are packaged to look at home at an upscale supermarket. Andrew Hetherington—Redux

If it seems surprising that more celebrities haven’t leapt into the pot branding space, it’s because there are still plenty of hurdles to launching a marijuana business. While an increasing number of states have legalized marijuana for some sector of the populace—Kennedy noted that 70% of Americans now live in a state where cannabis in some form is legal—regulation still severely limits opportunities for business.

“You have 20 states with some form of legalization, a number of them very restrictive, and a small customer base. So there’s not a national opportunity,” Taylor West, deputy director of the National Cannabis Industry Association, told AdWeek.

Another issue is that marijuana cannot be transported across state lines, making centralized distribution out of the question. Clara writes that DixieElixirs has resorted to licensing the brand to local growers in various states, a strategy Marley Natural could potentially replicate.

MONEY Jobs

Why The Lowest Paid Workers Are Getting a Raise—And The Middle Class Isn’t

"Save the Middle Class" on a sign
Jen Grantham—iStock

Low-wage workers are making more money, but wages continue to stagnate for the middle-class. Here's why.

If you’re a working adult, you probably haven’t received much of a raise in recent years. Earnings growth has declined dramatically since 2007, and wages bounced back only 2% this year, barely keeping pace with inflation. In October, wage growth was essentially static.

But we may be seeing light at the end of the tunnel, at least for some employees. Over the weekend, payroll processing firm ADP released data showing that the average hourly pay for low-wage workers — that is, those making less than $20,000 a year — increased by 5.4% in the last year, and that workers earning between $20,000 and $50,000 saw pay jump 4.9% on average.

As USA Today noted on Sunday, ADP’s methodology tends to overestimate earnings growth because it tracks only employees of businesses that can afford to contract with the company. The firm also reported that earnings for all Americans were up 4.5% in the third-quarter year-to-date; more than double the increase was reported by the Bureau of Labor Statistics in October for 2014.

But while ADP may have overestimated earnings growth among low-wage Americans, that doesn’t mean that group isn’t getting better raises than the rest of the population. The paper also observed that data from the BLS showed the bottom 10% of earners received a 3% hike in wages for the year ending on September 30, compared to a 0.5% raise for the 90th percentile.

Why do low-wage workers seem to be getting raises when the middle-class is not? According to Eugenio Alemánm, a senior economist at Wells Fargo, the answer is employment polarization. As the St. Louis Federal Reserve explains, this phenomenon describes how the automation of many routine tasks has decreased demand for middle-skill, middle-income labor, while increasing demand for both low-skill, low-wage workers and high-skill, high-wage workers. This trend was exacerbated by the great recession, and resulted in a hollowing out of the American labor force.

Higher wages for low-skill workers simply reflects higher demand for that particular class of laborer. High-wage employees have also seen a disproportionate increase in earnings during the recession compared to the middle-class.

“One of the characteristics of the current economic recovery is that we are seeing a lot of jobs in the very, very low levels of income, very low paying jobs, and very strong movement in the high paying jobs,” said Alemánm. “Those are the two sectors that seeing some upwards pressure on wages and this data is a confirmation of that.”

“Middle income jobs are not being offered in this economic recovery, so there is no pressure on those salaries,” added Alemánm. “The type of jobs that are being offered today”—which he says mainly exist in the leisure, hospitality, and retail industries—”are not conducive to having middle-income earners.”

Will the middle-class ever see some relief? Alemánm says yes, recent job growth is likely to exert upward pressure on wages across the board — but it’s hard to tell when that will happen for the majority for workers. “At some point, it has to change,” he predicts. “You’ll see some spillovoer into middle-income wage earners. That is the third leg we are waiting for.”

MONEY DIY

Build Your Own Standing Desk for $22

Most standing desks cost hundreds of dollars. This one costs about $20 and will (mostly) get the job done.

You may have heard that sitting down is bad for you. In fact, an overwhelming amount of research shows that sitting, like everything else we enjoy, will eventually kill us.

I’ll let the no-fun patrol at the New York Times explain:

It doesn’t matter if you go running every morning, or you’re a regular at the gym. If you spend most of the rest of the day sitting — in your car, your office chair, on your sofa at home — you are putting yourself at increased risk of obesity, diabetes, heart disease, a variety of cancers and an early death.

So we all need standing desks, that’s clear. But here’s another problem: Standing desks are really expensive. A mid-range standing desk will run you at least $300; Ikea’s new model is $275; and the best-in-class stand-up desks will run you nearly $1,500. Thanks again, science.

Luckily, there is an alternative to raiding your savings account. Smart people Colin Nederkoorn and Ryan Witt have hacked a standing desk made out of Ikea furniture that costs only $22. For that price, even I can afford to improve my health. After procrastinating for a few months, I finally broke down and tried to put my own standing desk together using their instructions. You can follow along in the video above.

Putting It Together

As it turns out, building the desk—affectionately called the Standesk 2200—wasn’t that difficult, even for someone who hasn’t actually built anything out of wood since summer camp. The entire Standesk consists of three different Ikea parts: A Lack side table to go on top of your existing desk; a Viktor shelf to hold your keyboard; and two Ekby Valter brackets to attack the shelf to the table. (You’ll need four extra 1.5 inch-long flathead screws for that last part.)

The construction takes about 45 minutes at most, and other than looking like an idiot in front of your entire office as you laboriously screw together furniture instead of, like, working, it’s a pretty painless process. In the end, you’re left with a jank-looking-but-effective standing desk that will be the envy of everyone else in the office too cheap frugal to buy a real one.

Potential Pitfalls

While the finished project works a lot better than you might imagine a patched-together collection of Ikea parts would, there are still some issues.

For one, the desk isn’t adjustable, meaning that unlike with some more expensive models, you won’t be able to sit down at your Standesk 2200 when your legs get tired. That’s bad, because even standing desk advocates recommend you sit for at least some of the work day.

If your desk is big enough (and you have a second computer or monitor), you can just sit down next to your standing desk and do work there when your feet start feeling weary. If it’s not, your best bet is to get a higher chair (preferably a foldable one that you can stash out of the way when it’s not in use) and keep that in reserve for when you want to sit.

Another issue is that if you’re not careful in constructing the Lack side table, your monitor will shake when you start typing. That’s because—shocker—Ikea furniture isn’t always super stable. Make sure you screw the table’s legs in as tightly as possible and put a few shims under any uneven legs to make them level. That solved most of my issues, but if the wobbling persists, consider putting furniture pads under the table legs for a bit of shock absorption.

Finally, make sure to consult this ergonomics diagram when deciding your keyboard height. You don’t want to build the whole thing and then find out your desk is too uncomfortable to use.

Did you hack together your own standing desk? We want to know! Send photos (and any information you’d like along side them) to HelpDesk@moneymail.com.

MONEY home prices

The World’s 10 Most Expensive Houses—and Who Owns Them

Feast your eyes on some of the priciest homes on the planet.

The owners of the world’s most luxurious houses can be a mysterious bunch. We all know who owns Buckingham Palace, but does anyone recognize the name Tim Blixseth? Or know the Indian billionaire who built a 27-story apartment building just for himself? We’re guessing not.

Well, the mystery ends here. Using information provided by CompareCamp.com, we’ve got a rundown of the world’s 10 most expensive houses—modern castles, really—and the people lucky enough, and rich enough, to own them.

 

  • 7 Upper Phillimore Gardens

    Location: London
    Value: $128 million
    Details: This 10-bedroom prep school turned mansion has an underground swimming pool, a sauna, gym, cinema, and even a panic room. That’s all in addition to an interior covered in marble, gold, and priceless artworks.
    Owner: Olena Pinchuk—daughter of Leonid Kuchma, Ukraine’s second president. She is known for being the founder of the ANTIAIDS Foundation and a friend of Elton John.

  • Kensington Palace Gardens

    Location: London
    Value: $140 million
    Details: Located on London’s Billionaires Row, the already tricked-out pad will soon add an underground extension with a tennis court, health center, and auto museum.
    Owner: Roman Abramovich—a Russian billionaire and owner of the private investment firm Millhouse LLC. He’s probably best known in the West as the owner of the English Premier League’s Chelsea Football Club.

  • Seven The Pinnacle

    Yellowstone Club near Big Sky, Montana.
    Erik Petersen—AP Photo/Bozeman Daily Chronicle

    Location: Big Sky, Montana
    Value: $155 million
    Details: The largest property in the Yellowstone Club, a private ski and golf community for the mega-rich, the house has heated floors, multiple pools, a gym, a wine cellar, and even its own ski lift.
    Owners: Edra and Tim Blixseth—Real estate developer and timber baron Tim Blixseth cofounded the Yellowstone Club, but the club’s bankruptcy, a divorce, and other troubles have seriously reduced his wealth in recent years.

  • Hearst Castle

    Indoor Pool at Hearst Castle, designed in style of Roman baths.
    Doug Steakley—Getty Images/Lonely Planet Images

    Location: San Simeon, California
    Value: $191 million
    Details: The 27-bedroom castle, used in the movie The Godfather, has hosted John and Jackie Kennedy, Clark Gable, Winston Churchill, and other famous figures.
    Owners: William Randolph Hearst’s trustees—The castle, built by the country’s first newspaper magnate, is now a heritage and tourist site and part of the California Park System.

  • Ellison Estate

    Location: Woodside, California
    Value: $200 million
    Details: Less a house than a compound, this 23-acre property is home to 10 buildings, a man-man lake, koi pond, tea house, and bath house.
    Owner: Larry Ellison—Co-founder of Oracle and the third-richest man in the world in 2013, according to Forbes.

  • 18-19 Kensington Palace Gardens

    Location: London
    Value: $222 million
    Details: Another property on Billionaires Row, 18-19 sits alongside the home of Prince William and Kate Middleton. This particular residence has 12 bedrooms, Turkish baths, an indoor pool, and parking for 20 cars.
    Owner: Lakshmi Mittal—The head of Arcelor Mittal, the world’s largest steel manufacturer, and, according to Forbes, one of the 100 richest men in India.

  • Four Fairfield Pond

    Location: Sagaponack, New York
    Value: $248.5 million
    Details: This 29-bedroom home sits on 63 acres and has its own power plant. Inside, there are 39 bathrooms, a basketball court, bowling alley, squash courts, tennis courts, three swimming pools, and a 91-foot long dining room.
    Owner: Ira Rennert—Owner the Renco Group, a holding company with investments in auto manufacturing and smelting. He also has holdings in metals and mining.

     

  • Villa Leopolda

    Villefranche-sur-Mer, south-eastern France, the villa of Leopolda, property of the widow of businessman Edmond Safra, Lilly Safra.
    Eric Estrade—AFP/Getty Images

    Location: Cote D’Azure, France
    Value: $750 million
    Details: This 50-acre estate includes “a commercial sized green house, a swimming pool and pool house, an outdoor kitchen, helipad, and a guest house larger than the mansions of most millionaires,” according to Variety. The house was famously used as a set in the 1955 Hitchcock classic To Catch a Thief.
    Owner: Lily Safra—A Brazilian philanthropist and widow of Lebanese banker William Safra. Her husband died when another one of the couple’s homes burned down, apparently due to arson.

  • Antilia

    India, Maharashtra, Mumbai, Kemp's Corner, Antilia aka the Ambani building on Altamont Road.
    Alex Robinson/AWL Images Ltd.—Getty Images

    Location: Mumbai, India
    Value: $1 billion
    Details: The Antilia isn’t even really a home in the traditional sense. This 27-story, 400,000-square-foot building has six underground parking floors, three helicopter pads, and requires a 600-person staff just to maintain it.
    Owner: Mukesh Ambani—India’s richest man, with a net worth of $23.6 billion, according to Forbes. Ambani made his money running Reliance Industries, an energy and materials company.

  • Buckingham Palace

    Buckingham Palace
    FCL Photography—Alamy

    Location: London
    Value: $1.55 billion
    Details: Technically still a house, but certainly not for sale, the Queen’s residence was valued at roughly $1.5 billion by the Nationwide Building Society in 2012. The property holds 775 rooms, including 19 state rooms, 52 bedrooms, 188 staff rooms, 92 offices, and 78 bathrooms.
    Owner: The British Sovereign—Currently Queen Elizabeth II, who has ruled since February 6, 1952.

    See CompareCamp.com’s full graphic, including more images of these home, here

    Read next: 4 Things Millionaires Have in Common, Backed by Research

MONEY Tech

Yes, AOL Still Exists—and It’s Got a Nifty Trick Up Its Sleeve

Man walking past AOL logo in NYC
Andrew Kelly—Reuters

Merger talks between AOL and Yahoo are heating up again, which raises the question: What does AOL actually do these days?

For the second time in two months, a Yahoo-Aol merger is in the headlines. According to a new report from Reuters, top shareholders are pressuring Yahoo to join with the company formerly known as America Online. If this were 1998, the news would shake the industry. In 2014, it’s got a lot of people scratching their heads. Aol? Forget the merger—how does that company still exist?

And yet, not only is Aol (the company lowercased its initials in 2009, when it was spun off from TimeWarner) still kicking around, it’s actually thriving. In 2013, CEO Tim Armstrong reported the first quarterly revenue growth in almost a decade, and the company recently posted an 18% year-over-year increase in revenue. The stock has soared, prompting the Atlantic‘s Derek Thompson to snark that the big A’s success is “a perfect lesson in why we shouldn’t confuse great stocks for great companies.”

It’s hard to blame someone for doubting a business that still makes most of its money from a dwindling pool of subscribers, but Thompson, like most tech observers, likely saw Aol for what it was, not what it is gradually becoming: namely, one of the most powerful players in the digital advertising world.

The Old Aol

Way back in the early days of the internet, Aol raked in boatloads of money from subscribers to its dial-up internet service. It was also a web “portal”—an internet directory of sorts—that pointed customers to its other online sites and services. The company’s model seemed flawless: Get paying subscribers in the digital door, then send them to your own media properties. For a time, the strategy worked. In 2000, Aol purchased TimeWarner (MONEY’s former parent company) in a $164 billion deal, becoming one of the largest corporations in the world.

But soon after the acquisition, Aol fell behind the times. Dial-up gave way to broadband, the company’s “walled garden” model was replaced by an open and vibrant web, and the merger is now widely seen as one of the worst business moves of all time. Nine years after their disastrous marriage, Aol was spun off from TimeWarner, and the newly independent company was essentially left for dead. How could such a tech dinosaur—an internet bubble cliché in so many ways—ever recover?

The New Aol

Two decades later, Aol technically still makes most of its money from subscribers to its various services, which these days include broadband. Total subscription revenue accounted for $650 million last year, and more than 100% of its operating income (that’s because the other sectors of the business are currently losing money).

But Aol’s true value isn’t in its shrinking subscriber base. The company has wisely taken the cash from its old business and poured it into a new one: digital video advertising. And in this sector, Aol has been dominating.

The company’s third-quarter earnings report shows Aol Platforms, its advertising arm, brought in a whopping $271 million in revenue. Even more impressive: the Platforms segment grew 44% year over year. That kind of growth is unheard of in most old-school tech companies, particularly one that predates the modern internet by more than a decade.

Why has Aol’s foray into digital advertising been such a hit? As Brian Pitz, an analyst at Jefferies covering Aol, explains, the company’s advantage comes from giving ad buyers and sellers a one-stop shop for all of their advertising needs. By combining analytics, tools for sellers, tools for buyers, and a number of other services, Aol promises to save marketers and publishers money by cutting out what it calls the “technology tax”—the extra money both sides pay for using various middlemen to accomplish the same tasks.

As the graphic below shows, advertisers and publishers need lots of different services to reach their desired audience. In the past, they would have gotten those services from multiple providers, each of whom took a cut. Aol is attractive, Pitz says, because it offers everything all in one place—”a fully integrated [advertising] platform. The only other company that has that is Google.”

Source: Aol

 

While Aol’s Platforms business seems to be doing just fine on its own, Pitz notes that the one thing the company lacks is bigger scale for its ad business to operate across. Merging with Yahoo, and gaining access to Yahoo’s millions of visitors, could help that problem; that’s one reason shareholders are pushing for a merger. (Another is a desire to unlock the value of Yahoo’s stake in Chinese e-commerce giant Alibaba.)

But Yahoo may decide it would rather beat Aol than join it. On Wednesday, the company purchased BrightRoll, which specializes in programmatic video ad sales, for $640 million.

MONEY Millennials

What Everyone Gets Wrong About Millennials and Home Buying

Millennials on porch in suburbia
Katherine Wolkoff—Trunk Archive

Conventional wisdom says that millennials are a new and different generation. But when it comes to housing, they're likely to be more conservative and traditional than their parents were.

If you’ve come across any stories mentioning millennials and home ownership, you’ve likely heard this refrain: Young people just aren’t very interested in buying a house. Instead, the story goes, they want to rent a cool apartment, live in a city, and walk to coffee shops. Forever.

This narrative was eloquently expressed in a recent New York Times article about a hip, 30-year-old, unmarried couple choosing to rent in a swanky Virginia high-rise. What made these millennials pick a rental apartment over a nest of their very own? The developer of the couple’s new home, Joshua Solomon, had his theories:

“That generation of folks has seen people really get hurt by homeownership,” said Mr. Solomon, president of the company, which is based in Waltham, Mass. “The petal has really fallen off the rose as it pertains to homeownership. People don’t want to be tied down to a mortgage they can’t get out of quickly.”

Sounds like a reasonable conclusion, right? Multi-unit construction is up, after all, and first-time home buyers are in historically short supply.

But if you dig a little deeper, both Solomon’s generalization and the “millennials don’t really want to own homes” trope turn out to be largely untrue. A number of surveys have shown that the vast majority of millennials would love to own a place of their own. Recent research from housing site Zillow, for example, found that adults age 22 to 34 are actually more eager to own a home than older Americans.

According to Zillow’s data, young married couples in which both partners work (represented by the orange line in the left graph below) currently own homes at a rate close to or above historical norms for their demographic. Even single employed millennials (the yellow line in the right graph) are slightly more likely to own a home than their counterparts in the ’70s, ’80s, and ’90s.

Zillow

So if young adults want homes more than previous generations, why is their homeownership rate at a historic low? The answer is that millennials are getting married later in life, and not having two income streams makes it much harder to scratch together a down payment.

From 1960 to 2011, Americans’ median age at the time of their first marriage increased by six years, to around 29 from 23 for men and 26 from 20 for women, according to Census data. Then came the financial crisis, which pushed marriage back even further by making financial stability—a marital prerequisite for many— a rarity among recent college graduates. According to one recent study from the University of Arizona, only about half of adults ages 23 to 26 and at least one year out of college have a full-time job.

As a result, the millennial generation’s overall home purchases are down—but they probably won’t be down forever. Zillow’s analysis shows that if millennials were marrying at the same pace as previous generations, their rate of homeownership would be 33%, four percentage points higher than now and roughly the same as in the 1990s. Once this generation begins to tie the knot, the evidence suggests, it’ll be buying homes at least as frequently as older Americans once did.

Old School Values

In fact, there’s some evidence that home ownership is more important to millennials than it is to Gen Xers or boomers. In a recent survey, forty-six percent of respondents ages 18 to 34 told Zillow they believe “owning a home is necessary to being a respected member of society,” and 65% said “owning a home is necessary to live The Good Life and The American Dream.” Both results were higher (in most cases, significantly higher) than older age groups.

America’s newest generation—post-millennials—are perhaps the most old-fashioned of all. A shocking 97% of teens age 13 to 17 believe they will one day own a home, and 82% say homeownership is the most important part of the American dream. If anything, buying a home seems to be getting more attractive, not less.

So millennials really want a home, but they still want a cool home, right? One that’s urban, and different, and close to a Blue Bottle Coffee? Maybe when they’re still young and single, but a large amount of evidence suggests that even today’s young adults look to the suburbs once children come along. Highly dense “core cities” like San Francisco and New York are attractive to millennials looking for fun and adventure, but they’re also extremely expensive to live in when dependents enter the picture.

Research suggests a negative correlation between big cities and child populations. City Journal found that between 2000 and 2010, the population of children 14 and younger fell by 500,000 in the country’s densest urban areas, including Los Angeles, Chicago, and New York. As children disappeared from cities, the nation’s 51 largest metro areas lost 15% of adults 25 to 34—the same age range when many begin to marry and start families. “While it’s not possible to determine where they went,” the Journal noted, “suburbs saw an average 14 percent gain in that population during the same period.”

Mollie Carmichael, principal at John Burns Real Estate Consulting, is already seeing millennials flee cities to more child-friendly environments. “We do find that the millennials want to be in urban areas, but usually when they’re not married and they’re renting” says Carmichael. “But the trigger is marriage, and then frankly they want more traditional areas and more traditional environments than even their parents. They want suburban; they want single-family detached; they want a yard.”

What about millennials’ much-reported fixation on urban-ness? There’s some truth to it, Carmichael acknowledges, but “urban to them means they want the ability to walk to the park and walk to the Starbucks. It’s more about accessibility, and that could be driving to those great places they want to go.”

In the end, America’s newest adult generation isn’t that different from the previous ones. Millennials may Instagram their new home instead of sending photos through the mail, but not much else has changed.

MONEY Jobs

The U.S. Added 214,000 Jobs In October, Unemployment Down Slightly to 5.8%

commuters at rush hour
iStock

The results beat expectations, but didn't quite match September's employment growth.

The economy added 214,000 jobs in October, according to the Bureau of Labor Statistics, meeting expectations of continued healthy job growth.

Today’s nonfarm payroll report also showed the unemployment rate declining slightly to 5.8%, down almost a full percentage point since the beginning of the year. That’s the lowest level since 2008, but is still well above its pre-crisis low of 4.4%.

The labor force participation rate — the percentage of the workforce that is either employed or actively looking for work — remained around 62.8%, reflecting older Americans dropping out of the workforce roughly as fast as new workers enter.

Once again, increased employment did not significantly raise average hourly earnings, which increased by three cents since last month’s report and by just 2% since the beginning of the year. Despite relatively stagnant wage growth, economists are optimistic the economic recovery will soon be felt in workers’ wallets. “If unemployment continues to fall, wage growth should pick up,” says Mark Hamrick, Washington bureau chief for Bankrate. “It’s like waiting for a bus that hasn’t arrived yet.”

While today’s news is good, it doesn’t quite match up with September’s employment growt, when the economy added almost 250,000 jobs.

This week’s midterm elections, in which Republicans took over both houses of Congress, could have an effect on future employment growth, but any impact won’t be immediate. The G.O.P. has been critical of the Federal Reserve’s low interest rates, and may now be more vocal its opposition to loose monetary policy. Fed chair Janet Yellen, however, a vocal supporter of using low interest rates to help promote job growth, acknowledged the improving labor market after the latest Fed meeting but indicated that she and her fellow Fed economists remained concerned about sluggish wage growth, low inflation, and the tenuous housing market recovery.

 

MONEY Taxes

Amazon, Pepsi, and Other Household Brands Accused of (Another) Huge Tax Dodge

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Hiroshi Higuchi—Getty Images

A new report accuses Luxembourg of making secret tax deals with hundreds of companies to help them avoid taxes.

Hundreds of international companies, including IKEA, Amazon, Pepsi, and FedEx have been receiving secret deals from Luxembourg, enabling the corporations to cut their tax bill by billions of dollars, according to a report from the International Consortium of Investigative Journalists.

The report, which stems from a review of almost 28,000 pages of confidential documents obtained by the ICIJ and journalists from 26 countries, found Luxemburg’s tax authorities granted hundreds of secret tax rulings—known unofficially as comfort letters—that allowed various corporations to reduce their tax rate, often to less 1%. In one instance, according to the report, New York-based Coach funnelled €36.7 million euros through Luxemburg and payed €250,000 in taxes—a rate of just below 0.7%. The ICIJ’s review showed that in 2012, American corporations paid 1.1% in taxes on the $95 billion in profits transferred through the European dutchy.

The documents appear to show how Luxembourg is using a particularly complex tax code to deprive foreign governments of massive amounts of revenue. “This is the first time really that we’ve seen inside the workings of Luxembourg as a tax haven,” Richard Brooks, the author of The Great Tax Robbery, told the ICIJ. “The countries . . . that are losing money, they don’t know about it, don’t know how it operates at all.”

The country’s tax authority is so friendly to international business that thousands of companies have rushed to establish “offices” inside the duchy, many of which contain no visible employees and amount to little more than a mailing address. The ICIJ found 1,600 companies were technically housed in a single Luxembourg City building, and that other properties were also home to a seemingly impossible number of businesses. One-hundred and seventy Fortune 500 companies have a branch in Luxembourg.

Despite hosting branches of so many U.S. corporations and having received $416 billion in U.S. direct investment last year, Luxembourg has only 500,000 citizens and represents about one-tenth of one-percent of all overseas jobs with American companies.

The way that Luxembourg helps companies slash tax expenses is highly technical: One deal involving the Illinois-based Abbott Laboratories is said to consist of 79 different steps and companies in Cyprus and Gibraltar. According to the report, it appears that companies use Luxembourg as a base to pit different nation’s tax rules against one another.

One example offered by the consortium is something called a “hybrid debt instrument.” This procedure apparently lets a company move profits from a European country with a higher tax rate to a Luxembourg subsidiary. These profits are then treated as tax-deductible interest payments in Luxembourg, and dividends, eligible for tax exemption, in the company’s home country. The two country’s tax laws essentially cancel each other out, resulting in a substantially reduced effective tax rate.

The European Union has banned this type of tax evasion, but EU members like Luxembourg don’t have to enforce the law until 2015. But the EU is nevertheless investigating whether Luxembourg’s secret tax rulings for Amazon and Fiat Finance are equivalent to illegal state aid. European Union law forbids any member from giving one company an agreement that isn’t available to all businesses.

Ironically, Luxembourg’s former prime minister, Jean-Claude Juncker, recently assumed the presidency of the European Commission, one of the EU’s most important posts. Junker has claimed his country’s tax system is in “full accordance” with the law, but has also vowed to fight tax evasion as the commission’s president.

 

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