The Number One Issue Affecting U.S. Real Estate – Aging Population



The Counselors Of Real Estate, a professional group of select real estate professionals, has released their analysis of the U.S. real estate market, and named the top ten issues affecting the real estate industry. Heading that list at number one is the aging of the U.S. population, and the associated impact this will have on the real estate industry in general.

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Because of the very large number of baby boomers who are already retired and approaching retirement, we are already seeing tremendous growth in the construction of housing specifically limited to active “seniors” over the age of 55, and housing targeted to seniors with health or physical issues that require some assistance on a day to day basis. Beyond that, there is already a waiting list for many nursing homes. Developing adequate housing for this diverse group is going to be one challenge to the industry, among many.

As millions of Americans reach retirement age and stop working full time, there will be a major impact across the entire real estate industry in ways that have never been witnessed before. From large scale changes in demand for residential property to changes in retail sales patterns, this factor promises to impact a wide variety of industries.

One example of this may be the apparent reduction in new household formation since 2007. Aging populations buy fewer homes and spend more of their available funds on health care. This could result in widespread allocation of capital away from the housing industry and into the healthcare industry. Reducing demand by millions of units over 10 years would of course mean softer prices for housing well into the future. Less demand for housing would ripple across other sectors of the economy that manufacture things for new homes. This would especially impact businesses like furniture stores, home fix it stores, appliance manufacturers and others too numerous to list here.

There may also be a growing demand for housing that can accommodate a variety of disabilities such as wheelchair ramps or handrails in bath tubs. And once boomers quit working full time, the vast majority will see a drastic decrease in their spendable income, thus reducing demand across a wide variety of sectors such as auto sales or vacation homes.

No one knows exactly how this will unfold over the next couple of decades, but there is no doubt that this event will fundamentally alter the real estate landscape. Anticipating these changes and structuring business models to accommodate them will be the challenge for real estate industry professionals such as brokers, developers, builders and lenders.

The “Counselors Of Real Estate” is made up of an elite group of real estate industry professionals who provide counseling services “with the highest integrity” to employers and clients. The CRE is made up of select individuals from all types of real estate industry related businesses.

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