Urban Institute (www.urban.org) has put together an interactive map using trending data from the last 15 years to make population predictions on all of the 740 regions across the US. They used factors of immigration, migration, birth and death rates. It also makes an adjustment based on demographics such as race. For instance, Hispanic populations have a higher birth rate than other cohorts. Urban Institute further factors in the ages of existing populations within a region and applies traditional birth and death rates. As one might guess the 65+ population isn’t having very many children.
Map of America's Future
Obviously there are many things that can happen in the next 15 years that would cause this data to be off. These would be, higher rates of migration, increase or decrease in immigration or possibly a decline in birth rates. One other key factor could be the advancements in healthcare that are helping to continue pushing life expectancy upward.
The reason we look at this data, is because many of our analytic forecast on regions factor in population growth. This subsequently leads to an increase in demand for housing. Although currently we aren't specifically investing in long term multi-year positions, it does help to be in an upward trending market. As occasionally, we can catch a spike in values associated with an increase in demand.
Additionally, the study of this and other data helps us to look beyond our current areas of operations. We always plan to be forward looking in identifying areas where capital expenditures might improve our velocity, and furthermore increase our annualized returns. This of course is a math problem of understanding operating cost for a particular market, and determining if there are enough distressed assets to justify expanding our current operations.
As we study demographics, it allows for the understanding of population cohorts and helps us to make further predictions. For instance, regions like Raleigh, NC and Sacramento, CA are going to be experiencing a much larger percentage increase in the 65+ population over the next 15 years. Our assumptions would then make the conclusion that certain assets within those regions, like independent living and care facilities, will experience a higher demand then an alternatively young market like Austin, TX or Provo, UT. This again helps us to identify the best use for the capital placement, and also target hold times. This allows us to get in front of the wave rather than reacting to it.
As a note, Urban Institute is predicting the Austin, TX region will see the largest population increase in Texas at 55.34%. With the 2030 predicted population of 2.7 million, 41% will be 20-49 years old and 28% will be 0-19 years old. This equates to a total of 69% of the 2.7 million projected population to be between 0-49. The underlying factors of this data would be that people in the 20-49 age bracket are traditionally the largest group of home buyers, especially as they start having children. For us, this then further validates that there will be a big demand for SFR (single family residential) in the Austin region for the next 15 years.
Other major markets to note, with above average projected population increases are: Atlanta, GA +59.02%, Las Vegas, NV/Northern AZ +56.72%, Raleigh, NC +50.42%, Orlando, FL 48.96%, and Charlotte, NC 46.69%. Additionally, some markets in Utah and Idaho will see huge percentage increases. However, based on their smaller market size might not be worth chasing.
Here's to healthy living, more babies and catching the waves,