Analyzing Population Trends in Housing

Instructor: David Juliao

David has a bachelor's degree in architecture, has done research in architecture, arts and design and has worked in the field for several years.

Know the market when buying or selling a house. In this lesson, examine generational changes and other population trends that are affecting the housing market. Also, learn about important information that housing market analyses present.

The Housing Market

Say you want to move to a different house. Whether you are buying your first house, need a bigger spot, looking for a retirement place, or want to make an investment, buying or selling a home is not a decision to be taken lightly.

It is important to identify how the housing market is doing and try to understand some population trends that are affecting it. This allows you to make a better decision.

Population Trends in Housing

Population trends refer to changes in size, distribution, and behavior of a given group over a period of time. They are often related to major shifts in the housing market.

Generational Changes

The baby boomers (born between 1945 and 1964) have had an important impact on the housing market because they are the biggest generation in the US housing market. Estimated at around 80 million people, boomers surpass the following generation by about 20 million.

When they became young adults (1960s to 1980s), construction of entry-level housing in the suburbs grew enormously. As they reached their most productive years, they demanded better houses, thus pushing construction of move-up units (more expensive houses of bigger size and better quality).

Many suburban houses were bought by baby boomers
Suburban residential area

Now the boomers are entering retirement and are expected to have, once more, a big market impact. In the next decade, more than 30 million will enter retirement. Therefore, new construction is expected to respond to the demands of seniors.

The following generation is smaller in number and there are fewer married couples with children. It remains is unclear whether there will be enough demand to absorb all the properties that will become available once the boomers start to go out of the market.

Lifestyle Preferences

Some decades ago, many families moved to the suburbs to raise their families. It was a quieter and more spacious environment which was also affordable. Today, many suburbs consist of move-up houses and entry-level units are scarce.

Small units in central areas are providing an entry-level option for part of the younger generations. New young adults seem to favor urban living, and many prefer to occupy more compact spaces in favor of convenient locations. Move-up units are also developing in centralized urban areas.

Downtown condominiums are in high demand in many cities
Downtown condominium

Time and Energy Costs

Traffic has worsened over the years and commuting from the suburbs has become very time-consuming. It is also expensive because energy costs are higher, so driving long distances daily can impact the family budget. Similarly, utility costs of a suburban house are often higher than those of smaller urban condos.

Commuting consumes hundreds of hours a year
Traffic jam

The market analyses of the main cities show us that the demand for units in central areas is high and the prices are going up. The value of one- and two-bedroom condos in New York and Chicago have nearly doubled in the last 15 years. On the other hand, the demand for suburban houses is dropping gradually, so new developments are slowing down.

Understanding the Housing Market

Trying to understand the housing market can be challenging. The information is often overwhelming and can be confusing if you don't know what you are looking for.

Each region, county, even city is different and so are their markets. Economic, political, social, and even random events such as natural disasters can affect supply, demand, and prices.

In many analyses, you will find statistics, facts, and predictions of potential future behaviors. The first thing to understand is that no matter how solid an analysis is, predictions are still guesses. No one can tell for sure what will happen.

If we look at the information, we can get some insight on whether it might be a good time to buy your new house (or sell the old one). Just remember that real estate is an investment and as such, there is always a risk.

Some data to examine is:

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