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Predicting the Future of Real Estate

Demographics serve as a useful and reliable research tool for many fields and industries, including marketing, entertainment, and even politics. David Lereah, the Chief Economist for the National Association of REALTORS® (NAR), says demographics can also reveal a lot about different real estate markets. In fact, David believes that demographics can help predict future activity in certain real estate markets, including, in some cases, home value and appreciation. The following are some examples of key demographic indicators.

"Baby Boomers" – The largest generation to date, members of this demographic have now reached their peak earning years. In areas with a greater number of Baby Boomers, expect significant purchases of larger primary residences. In addition, Baby Boomers are likely to buy investment properties and vacation homes, leading to a substantial increase in property values for certain regions of the country.

Children of "Baby Boomers" – Born after 1980, this is the second largest generation to date. This age group has entered the workforce and is becoming established. In areas with large numbers of this demographic, look for sales of starter homes and condos to rise.

Immigrants – Different areas experience large influxes of immigrants at different times. It typically takes a full generation, however, for this demographic to begin buying homes and having an impact on local real estate markets.

Retirees – With advances in medicine and technology, we are living longer than ever before. In areas with large numbers of this demographic, or areas where retirees tend to move, expect inventories to drop and prices to rise.