Real estate demand over the long term is shaped by one factor more than any other: demographics. One demographic trend, US population growth by age, will impact US real estate demand over the next several years. (For a deep dive on other US demographic trends, such as population growth, income, affordability, and migration that may create opportunities, read US demographics and real estate demand.)
Growing age groups
Aging trends provide the clearest insights into potential shifts in demand for different types of US real estate. The robust growth of the age 75 and older population is expected to expand the need for senior housing, medical offices, and life science buildings, making them the real estate demand winners, in our view. The aging population trend will likely spur the greatest transference of wealth in US history over the next two decades. The transfer of money, assets, and personal goods could lead to at least three real estate trends. We expect more:
- Home sales as heirs sell homes they inherit
- Retail spending as they inherit cash assets that can be liquidated
- Demand for self-storage as they look for places to store inherited items.
The next big demand winner, in our view, is single-family rentals due to the projected growth of the sector's primary tenant age range, upper 30s and early 40s.