Paradigm Shift 1: Demographic Trends = The Tipping Point in Demand

Recently, we reviewed the demographics of the United States of America from 1900 to 2000 based upon the United States Census.  That analysis showed several fascinating facts:

1. In the early 1900's, the population in the United States was heavily skewed towards younger folks with almost no Americans above the age of 75;
2. That pattern continued up until 1960 when the Boomers became a very obvious influence on the USA demographics;
3. Over the 100 years, the population in the United States grew from approximately 80 Million to not quite 300 Million, or increasing almost 40%.

Today, the population of the United States is approximately 307 Million.  While the Census Bureau gives a low, a medium, and a high forecast of demographic trends in the United States, the median forecast for 2050 projects a population of 458 Million.

A population of 458 Million in 2050 represents an increase of 170 Million from 2003.  It is interesting to note that the population of the United States in 1950 was approximately 170 Million.

The significance of this increase in population is that during the 47 years between 2003 and 2050, the population in the United States will increase by an amount equal to the population of the United States in 1950.  Restated, this means that the population in the United States in those same 47 years will increase by the amount equal to the increase in population between 1607 (when Jamestown was founded in Virginia) and 1950.

Even more significantly, during those 47 years the United States will build all the homes, retail, office, industrial, roads, and water/sewer infrastructure that we built in the first 343 years of our existence.  But we build it in 47 years, not 343 years.

That population growth will not be uniformly spread across the different generations.  If you look at the three largest cohorts of the population of the United States, the trends for each are quite divergent.

Furthermore, the characteristics of each of the different major generations (Boomers, Gen-X, and Gen-Y) means each are looking for different types of housing and generating different real estate needs.

For a more complete discussion and our forecast of the real estate market in 2010 and 2011, please download the presentation we made to the Board of a large community bank entitled "RE/set, RE/position and RE/start".