Real estate investors with a long-term view may want to pay attention to a few reports that have just been released that may shed light on where the housing market might be heading – and where it hasn’t really been.
One is from the US Census Bureau, which says its latest data shows that only 27.1 million people – about 8.4% of us – have changed addresses in the past year. This is the lowest rate of movement recorded since at least 1948, and by some measures, never in the centuries since the first U.S. census was taken in 1790.
Then there’s one from the Pew Research Center that says a growing share of American adults are choosing to remain childless, for a variety of reasons ranging from climate change to, frankly, not wanting children.
The “Great Migration” has taken place, but perhaps not as “great” as one suspects
Census data seems to contradict conventional wisdom that the coronavirus pandemic has induced a ‘great migration’ that has seen people flee the latest plague in this proven way: by heading for the hills, or in this case the suburbs. , exurbs and beyond, in search of separation and space.
Indeed, there was certainly a part of it. There is no doubt that some areas that lend themselves to working from home in attractive environments have experienced some of the strongest price increases in an already hot housing market.
This is supported by research by Stephan Whitaker, the Cleveland Fed political economist who closely followed U.S. migration patterns during the pandemic. He reported several weeks ago that in 2Q21, net emigration from urban neighborhoods continued to exceed 54,000 migrants per month, double what it was before the pandemic.
Whitaker said he also found that travel in urban neighborhoods has actually increased. Here is the gist of his report: “The flow of middle-aged people moving to buy homes in the suburbs is balancing a growing return of younger tenants to urban neighborhoods.”
âBalancingâ is a key word here. As the census report notes, the number of people who have moved overall has been declining for decades – a steadily aging population is a major factor cited here.
Now add the results from the Pew Research Center on breeding choices. The organization said a recent poll found 44% of non-parents aged 18 to 49 say it’s not too or not at all likely that they will ever have children. This is an increase of 7 percentage points from 2018. Additionally, 74% of parents under 50 said they were unlikely to have more children, although this number was unchanged since the 2018 survey.
Divination strategies from demographics begin and end with individual choices
There is much more to all of these reports, and how to use this information for your own real estate investing strategies begins and ends with you. Here’s a sign to consider: Who is moving to urban centers? Young professionals. Who is less and less likely to have children? Young professionals.
So, in this case, these markets could soon peak and then a long decline once their populations begin to retire and then age, which would have a significant effect on residential and commercial real estate.
Of course, this bundles millions of individual decisions into one grand generalization, but that’s what trends are – the sum total of all those individual decisions. Nonetheless, staying tuned to the bigger picture can help you better target your tactics as you step into your own realm.