Demographic trends in the United States are reshaping the real estate market
The real estate market relies on people, and demographics help identify the best investment opportunities. Understanding US demographic trends can benefit investors.last updated Sunday, January 7, 2024
#demographic trends in the united states real estate #demographic trends in real estate
| John Burson | Subscribe |
CONTENTS
The real estate business is about people, considering they are the primary driver of demand in this market. Many drivers have a relevant impact on prices, availability, and investment potential. Among them, demographics deserve special attention.
Demographics describe the composition of a population and provide valuable information for looking for housing opportunities. Understanding the impact of trends in the US may help investors capitalize on them.
Thus, people will be looking for residential assets in various forms if a population is aging. Learning about how millennials transform the real estate market might also be relevant. Are they getting married? Are they renting or becoming owners? Where are they living?
Demographic factors often overlooked when evaluating the demand and pricing for properties include age, race, gender, and income. They can shape the regional preferences of actual or potential buyers.
Major demographic shifts can affect real estate trends for decades, and investors need to weigh their impact on any property they consider. Thus, they can narrow down the type and location of potentially desirable investments long before the trends have started.
Source: Urban Institute (Millennial Homeownership Report)
The continued growth of multifamily assets
Real estate investment experts have identified three demographic trends shaping the US housing market's future. They all converge on the growth of multifamily assets, which seem best positioned to benefit from these shifts.
Trends include aging baby boomers who increasingly prefer to live in urban, millennials who decide to form their own families later and later and the difficulty that many Americans have to afford their property.
The increasing population of 65+
The longer life expectancy combined with a surge of baby boomers entering their retirement years will lead to 1 out of 3 households in the US being headed by people over 65 years old. About 79 million people will be looking for different housing options.
Despite most of this group being expected to own their places, the last national census showed an increasing preference toward renting, particularly from 2007 to 2017. For individuals +55, the growth was 38%, while the +65 group grew at 65%.
Source: Curbed (Why boomers, not millennials, are fueling the urban apartment surge)
This can be explained by different reasons like the empty-nesters seeking to downsize, active adults looking for urban environments, and both trying to avoid the annoyance of home repairs. For one reason or the other, it can be foreseen as an opportunity for assets:
- Located in urban zones or close-in.
- Two/three-bedroom floor plans.
- With active amenities.
- In walkable neighborhoods.
Source: Harvard (2016 JCHS Household Projections)
Millennial preferences
Individuals born between 1981 and 1996 -the so-called millennials- are less likely to become owners of their homes than previous generations. This response to their delayed marriage and childbirth plans is often a life event associated with homeownership.
Source: Urban Institute (Millennial Homeownership Report)
But they also have particular preferences, like living in high-cost cities and having high debt levels, mostly from student loans. Both have made homeownership less affordable for millennials, and the alternative is renting.
Millennials tend to choose properties and locations quite similar to what the baby boomers look for and that are located in millennial-friendly markets:
- Denver
- Nashville
- Phoenix
- Seattle
- Orlando, Florida
- Raleigh, North Carolina
- Austin, Texas
Affordability
Many Americans find it increasingly difficult to afford to buy their place. This is unsurprising, considering that median home sales prices have risen faster than median income since 2008.
According to the United States Census Bureau, the median home sales price increased by 31.6% between 2008 and 2018. The speed growth rate is even higher in markets like Denver or Orlando. At the same time, median income barely rose 5.7% within the same timeframe.
In this context, the alternative is renting, and this trend benefits, again, multifamily asset owners.
Subscribe to Paperfree Magazine
EB5 Visa Consultants by Paperfree EB5 Program
Get dedicated service, from finding the right information to complex investment challenges.
Real estate investment strategies
Multifamily investment strategy to boost investment portfolio returns.
Diversify in multifamily investment strategy to lower volatility and boost portfolio returns.
Value add real estate strategy helps investors drive capital growth.
The value add real estate strategy's first goal is capital growth, the second goal is some income. The strategy works with all property types
Investing in senior housing. Invest in senior housing real estate to drive stable returns.
Senior living investments will create social impact on the market with strong fundamentals: growing demand, resilience to economic cycles.
Invest in build to rent investment funds
Build to rent investment funds for passive real estate investing.
Invest In Real Estate Private Equity
Discover diverse private equity real estate investment opportunities.
Core real estate investment strategy to drive income vs capital growth
Core Real Estate Strategy is one of the most conservative modern real estate investment strategies focusing primarily on income.
Passive real estate investing, best investment strategies, opportunities and more.
Passive real estate investing allow you to be a silent partner in large-scale real estate investments that can produce earnings and return on investment.
Invest in Syndication Real Estate
Investing in real estate syndicates as a part of alternative investments strategy
Investing in apartment buildings
Apartment investments are a sound investment option for numerous investment strategies.
Multifamily fund
Multifamily funds have one of the highest average annual returns of all real estate investments. Find private and public multifamily investment funds below.
Multifamily value add strategy
The main attribute of the multifamily value add strategy is the focus on capital growth. The investment strategy has a median risk profile.
Core plus investment strategy real estate to generate income
Core Plus Strategy focus to generate income based on mid-low risk profile. Learn more.
Opportunistic real estate investment to maximize return on investment
Opportunistic real estate investment strategy drives capital growth with heights risk of default.
EB 5 investment projects list
Find the best fit for your immigration strategy and investment goals for EB5 projects in USA local markets.
Value add real estate funds
Value add real estate funds aim to increase cash flow and value by buying and improving underutilized assets, potentially yielding higher returns than traditional real estate investments.