Three years ago on this forum there was an informal poll taken about when members built their first kit, and how old they currently were. Just about everyone here has told the story of their time in the hobby, and the majority follow a strikingly close path: first model at 7 or 8, building declines or stops in the mid-to-late teen years, and resumes roughly around 30 after college, marriage, and family started. Thus the community is renewed with those who choose to return to the hobby.
Of course, the days of boys going to the local drugstore to buy a $1 or $2 kit are gone, as are the days when those same boys played a pickup game of ball in the sandlot, or traded baseball cards and put them in the spokes of their bicycles. But, there are young folks exploring the hobby, and my club- the Southern Maine Scale Modelers- is very active in promoting the make-n-take program, doing several events each year. The families and scout troops (boys and girls) love this, and we have seen a few inquire more about the club and hobby.
The numbers and demographic may not be what they once were, but it's far from dead and the industry is certainly alive and well. And yes, for those who don't want to pay $50-$60+ for a new kit, the vendor tables at contests are where deals are had.