Demographic and population trends influence almost every decision in modern life, from business planning to healthcare, from educational needs to fashion and style. Age, ethnicity, gender, income, mobility, occupation, geography and other demographic factors determine the shape of our society.
The real estate sector is no less affected by the ups and downs of demographic trends, in particular income, aging, family status and employment. Think of a real estate agent, whose livelihood depends on people moving houses. Economic mobility is a determining factor for the future of your business, as is the economic health of the region.
“I try to see how fast the economy is growing and how many jobs could be created as a result, to determine the resources my company will need over the next five years,” says Terry Denoux of Bend, Oregon, a real broker. of goods.
Development planning relies even more on demographics to prioritize. The average age of the population is an important factor in the type of housing that will be required over the next two decades.
“A young population in an area will require more single-family homes with multiple bedrooms and plenty of space for the kids to run around,” explains Wendy Cobrda of Catosphere, a demographics reporting company. “On the other hand, an aging population will need more hospitals, more medical clinics, more homes that require minimal maintenance.”
For investors, the stakes are just as high. Investing in commercial real estate, for example, requires the ability to predict where there will be a growing population and / or where the average income of the population will increase.
Indeed, investing in commercial properties requires a deeper understanding of demographics; It’s not just population trends that need to be taken into account, but competitor demographics as well. And even those cannot follow an established formula.
For example, an entrepreneur looking to establish a new car dealership should consider where the established dealerships are located and set up a shop nearby. Car buyers who want to compare similar models have to visit different dealers, so they need to be close to each other.
On the other hand, an entrepreneur looking to open a new hardware store should look for an area that is poorly served by competitors or where new residential developments will open. Hardware buyers can compare similar tool brands within the same store, making accessibility more important.
On the issue of ease of access, road traffic patterns can also make or break an investment, especially near busy intersections in competitive markets. Traffic demographics can add to the complexity of a commercial real estate investment.
Understanding where to invest in retail properties is one of the main reasons demographic mapping is such a popular service, explains Wendy Cobrda. “Visually seeing the movement of people and their investment helps companies to ‘see’ where they should open their next store.”
Demographics also play a role in vacation rental properties. “Do you buy vacation rental properties or sell the ones you have now?” asks Steve Curtis, owner of FabVillas, a website that lists Florida vacation rental properties. “Well, that depends on how much disposable income people have for the holidays and, more importantly, on the age of the population. A younger person is more likely to backpack across Europe and stay in a hostel. An older person more interested in comfort and privacy, which is what vacation rental properties offer ”.