Real estate investors who take the long view might want to pay attention to a few reports just out that could shed some light on where the residential market might be going -- and where it hasn't really been.
One is from the U.S. Census Bureau, which says its latest data shows that only 27.1 million people -- about 8.4% of all of us -- changed addresses in the past year. That's the lowest rate of movement recorded since at least 1948 and by some measures, ever in the centuries that have passed 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 stay childless, for a variety of reasons that range from climate change to, frankly, just not wanting kids.
Image source: Getty Images.
The "Great Migration" happened, but maybe not as "great" as supposed
The census data seems to contradict the conventional wisdom that says the coronavirus pandemic induced a "great migration" that has seen people flee the latest plague in that time-tested way: by heading for the hills, or in this case suburbs, exurbs, and beyond, in search of separation and space.
Indeed, there certainly was some of that. There's no question some areas that lend themselves to working at home in attractive settings have seen some of the strongest price growth in a housing market that's already at record heat.
That's backed up by research by Stephan Whitaker, the Cleveland Fed policy economist who has been closely tracking U.S. migration patterns during the pandemic. He reported several weeks ago that in 2Q21, net out-migration from urban neighborhoods continued to be more than 54,000 migrants per month, twice what it was before the pandemic.
Whitaker said he also found that movement into urban neighborhoods did, in fact, increase. Here's the crux from his report: "The flow of middle-aged people moving out to purchase homes in the suburbs is balancing a swelling return of young renters to urban neighborhoods."
"Balancing" is a key word here. As the census report notes, the number of people who have been moving overall has been falling for decades -- a steadily aging population is a major factor cited here.
Now, add in the Pew Research Center findings about reproduction choices. The organization said that a recent survey finds that 44% of nonparents aged 18 to 49 say it's not too or not at all likely they'll have children someday. That's up 7 percentage points from 2018. Furthermore, 74% of parents under 50 said they're unlikely to have more kids, although that number's unchanged since the 2018 survey.
Divining strategies from demographics begins and ends with individual choices
There's far more to be found in all these reports, and how to use this info for your own real estate investing strategies begins and ends with you. Here's one signpost to consider: Who's moving into the urban centers? Young professionals. Who's becoming less likely to have kids? Young professionals.
So, in this case, those markets may reach a peak soon and then a long decline once their populations begin to retire and then age out, which would have a big effect on residential and commercial real estate alike.
Of course that's lumping millions of individual decisions into one big generalization, but that's what trends are -- the sum total of all those individual decisions. Nonetheless, staying attuned to the big picture can help you better focus your tactics when you make a move in your own realm.
