Real estate agents can expect to be busier in the next decade, but they should also be prepared for some major demographic shifts in the housing market, said National Association of Realtors’ chief economist Lawrence Yun, in his latest column in Forbes. He explains that housing demand will be significantly higher in ten years time than it is now, due to a combination of rising populations and strong job growth.
As the population in the U.S. rises over the next ten years, more housing will be needed to meet demand, Yun wrote. About 325 million people currently live in the U.S., and population projections forecast a 27 million increase to 352 million in 10 years.
However, not every age group will see an increase. On the contrary, the number of young adults in their 20s is expected to drop, Yun says.
“This demographic are mostly renters, and hence, rental demand will flatline,” Yun says. “Real estate investors should be mindful that even though there is good rent growth today, that certainly will not be the case in a few years, especially given the ramp-up in apartment construction over the past few years.”
The ages you’ll need to watch for some of the most activity in the housing market over the next decade: those in their 30s and 40s. The population of people in their 30s is expected to grow by 5 million over the next decade, reaching 48 million. Yun says that 12 percent increase likely will lead to more first-time home buyers. Plus, the number of Americans in their 40s will increase by 3 million, and he predicts they’ll be looking to trade up in real estate as their finances improve.
On the other hand, the number of Americans in their 50s is forecast to drop by nearly 4 million, which could signal a lower demand for second homes, Yun notes.
Meanwhile, “those in their early 60s, before the commonly recognized retirement age of 65, are a stable bunch with no change in their number of the next decade,” Yun writes. “The population of those aged 65 and over is rising big time: Expect an increase from the current 51 million to 69 million, a growth of 35 percent.”
Housing demand in warm weather areas, and income tax–free states like Florida, Tennessee, and Texas are set to boom over the next decade, Yun says.
Overall, Yun notes, “Within reasonable parameters of economic growth and interest rate movements, home sales should do well over the next decade, clocking in at around 6 million a year.” The national median home price likely will go from $234,000 in 2016 to $330,000 by 2027.