WHY HOUSING…WHY APARTMENTS?
What will the population of the United States be in the year 2050? (Current 338 million) Under the assumption of a high level of net international migration, the population is expected to grow to 458 million by 2050. For the Low Net International Migration series, the population is projected to reach 423 million in 2050. For comparison in 1965, the U.S. population was 189 million, and the world population 3.3 billion… Now 8 billion.
GROWTH IN POPULATION
Housing demand is primarily driven by population growth. When more people move into an area, there is increased competition for housing, leading to higher prices and often a shortage of available units. This was evident during the housing boom of the early 2000s when rapid job growth led to large influxes of people into cities such as San Francisco, New York, and Seattle. The reverse is also true: when people lose their jobs or otherwise leave an area, the demand for housing decreases, leading to lower prices. This was seen in the aftermath of the 2008 financial crisis when many people lost their jobs and were forced to move out of high-priced cities. In general, then, it is population growth that is the primary driver of housing demand.
HOW DOES THIS AFFECT REAL ESTATE
The rental market is booming as more and more people are choosing to rent instead of buy. There are a number of reasons for this shift, but the two most significant are the aging population and international immigration. More than 75 million people between 18 and 34 years old are entering the housing market, primarily as renters. At the same time, Baby Boomers and other empty nesters are downsizing and moving into rental apartments. As a result, there is a pressing need for new apartments, to the tune of 4.6 million by 2030. Developers are scrambling to keep up with demand, but it is a daunting task. The good news is that the rental market is benefiting from this increased demand, with rents rising and vacancy rates falling. This is welcome news for landlords and tenants alike.
The U.S. population is growing. Since 2010, this has translated into at least 2.3 million additional people living in the U.S. each year. And according to Realtor.com’s housing demand forecast, that growth is expected to continue for the next decade.
These people all need somewhere to live. Moreover, many of these recent additions are immigrants from other countries and historically, immigrants will rent for extended periods of time while they establish themselves here in the U.S. In fact, a 2017 study by the National Multifamily Housing Council found that nearly two-thirds of recent immigrants were living in rental properties just five years after their arrival in the U.S. With a growing population and a growing need for rental properties, what could be a better investment than housing and specifically multi-family and apartments?
Given the continued population growth, it is likely that demand for multifamily housing will continue to increase in the coming years. So, whether you’re a first-time renter or a seasoned investor, it’s worth keeping an eye on population trends when making your next real estate decision.
FUNDAMENTALS OF HOUSING
In the next 28 years, (your working career), the U.S. will add 130 million people. Where will they live? Where will the work? How will we house another 100 to 130 million people? Will they live in North Dakota? No..they will live near cities of opportunity. While there are headwinds, the fundamentals of housing 350 to 450 million people will always remain. People will always need a place to live and people will always want to live near major cities and jobs. The demand for housing and specifically multifamily housing is guaranteed to continue to rise in the coming decades, making now the time to start your journey into Real Estate.
About Jim Thorpe & Summit Capital Partners
Jim Thorpe is a Seattle-based entrepreneur, , and real estate expert with over 30 years of experience in real estate development. He works to find high-demand properties in low inventory areas for both developers and homeowners alike. One of his specialties is locating single-family homes in property parcels zoned for multi-family development. His rental portfolio now includes houses, apartments, and commercial properties. Thorpe’s dedication to his business has led to city-wide growth and development in the real estate sector.
Summit Capital Partners is a real estate development and management firm that operates out of Puget Sound and is owned by Seattle real estate expert, Jim Thorpe. They work to acquire off-market real estate and specialize in developing risk-adjusted solutions, allowing an assets’ value to increase over 6-12 months. Summit Capital aims to make a difference in the community where they do business.