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Real Estate Investors: Follow Population Trends and Job Growth

Population trends, job growth, and the access to capital are three of the primary catalysts for any type of boom or bust housing cycle. Money and jobs attract people. People, in turn, need a place to live.

For both residential and commercial real estate, few mortgage loan options are more affordable (and with the lowest down payment requirements) for urban, suburban, or rural residents than government-backed or government-insured options, such as FHA, VA, or SBA.

Population Density & Value Trends

Lately, government-backed capital underwriters prefer more urban regions, so that’s where most of the new development and redevelopment is taking place.

Prior to boosting real estate values across the U.S., increasing access to public and private capital helped fuel population growth and job rates over the past 100+ years. Yet, money and real estate need people first prior to a community booming, busting, or stagnating.

Urbanization Trends in the 21st Century

urban life

People are moving from rural areas and suburbs towards urban conveniences.

Recently, trends have reversed somewhat in that more people are moving from suburban and rural regions towards the most crowded metropolitan regions in search of higher education, better paying jobs, shorter work commutes, etc.

Of America’s estimated 320 million residents, upwards of 81% of Americans currently live within areas classified as “urbanized” in cities, suburbs, or other places with populations above 50,000 people.

The worldwide urban rate is closer to 54%, so Americans seem to prefer larger crowds than others abroad.

Per the 2010 U.S. Census Bureau: “The nation’s urban population increased by 12.1% from 2000 to 2010, outpacing the nation’s overall growth rate of 9.7% for the same period.”

The U.S. Census Bureau breaks down “urban” sectors into two smaller categories:

  1. “Urbanized Areas” Population bases with more than 50,000 people
  2. “Urban Clusters” Population bases between 2,500 and 50,000 people

The 2010 U.S. Census Bureau reported that nationally there were 486 urbanized areas and 3,087 urban clusters.

America’s Most Densely Population Regions (per U.S. Census)

1. Los Angeles-Long Beach-Anaheim, California: This Southern California region has almost 7,000 residents per square mile. There are 640 acres within a square mile, so these numbers are equivalent to almost 11 people per acre (43,560 sq. ft.).

2. San Francisco-Oakland, California: There are an estimated 6,266 people per square mile in this Northern California “Bay Area” region.

3. San Jose, California: This high tech or “Silicon Valley” region has an estimated 5,820 people per square mile.

4. Delano, California (Bakersfield or Kern County Region): This Central California region has approximately 5,483 residents per square mile.

5. Newark, New Jersey-New York City:
This densely populated region of the “Tri-State” area has upwards of 5,319 people per square mile.

The U.S. Census reports that nine of the ten most densely urban regions are located in the West. Seven of these same nine regions in the West are located within the state of California alone.

The average population density for all U.S. urbanized areas was estimated at a much lower 2,534 people per square mile.

The Top 3 Metropolitan Regions by Population Numbers

  1. Newark New Jersey-New York City, NY: 18,351,295
  2. Los Angeles-Long Beach-Anaheim, California: 12,150,996
  3. Chicago, Illinois: 8,608,208

The 3 Fastest Growing Million+ Metropolitan Populations (2000 – 2010)

  1. Charlotte, North Carolina / South Carolina: + 64.6%
  2. Austin, Texas: +51.1%
  3. Las Vegas / Henderson, Nevada: +43.5%

Urbanized Areas by Regions

The U.S. Census Bureau reports that the West has approximately 89.8% of all residents living within urban areas. The Northeast was ranked second with 85%. The Midwest and South were a very close 3rd and 4th at 75.9% and 75.8%, respectively.

California was ranked as the most urban state with upwards of 95% of the state’s residents located within urban areas. New Jersey was ranked second at 94.7%. California was also ranked the number #1 most populous state with 35,373,606 residents, Texas was #2 (21,298,039), and Florida was #3 (17,139,844).

Real Estate Investors: Follow the Population Trends & Job Growth

Consider population trends and other demographics, such as unemployment rates, prior to deciding to buy or sell. If population growth rates are increasing at high annual rates, that’s a very good signal that future demand may one day exceed supply, driving prices skyward.

Conversely, falling population numbers and increasing unemployment rates in a community are potential “warning signs.”

Population trends are an easy indicator you can review online. So focus on the numbers, such as purchase prices, vacancy rates, and most importantly, the directions of the population!

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About the Author...

Check out Rick's new book The Credit Crisis: 10 Years and Counting (August 2017 publishing date) as well as The Credit Crisis Deals: Finding America's Best Real Estate Bargains.

Rick Tobin has a diversified background in both the Real Estate and Securities fields for the past 25+ years. He has held seven (7) different Real Estate and Securities brokerage licenses to date. He also writes college textbooks and real estate courses in several states for some of the largest educational firms nationwide.

Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), Equity Funds, and foreign money sources.

You can visit Rick Tobin at RealLoans.com.

Comments

  1. steven says:

    Credit crisis, we are going to have a major financial crisis thanks to the Fed, and property values will once again fall. Any real estate deals in this economy need to be short term measured in months. Las Vegas is a town that will blow away without water, and visitors that are willing to leave money on the gaming tables.

  2. Greg Schenk says:

    surprised miami not in list l our great city COLUMBUS really growing !

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