At the Visions, Insights & Perspectives conference in Southern California last week, we covered a number of important topics and heard from a number of thought-provoking keynote speakers, among them Jonathan Last, an American journalist, author and senior writer at The Weekly Standard.
Last recently wrote a book, What to Expect When No One’s Expecting. He shared some keen demographic insights from his book at our event.
We’ve often heard that shrinking birth rates is a Western problem. It’s really a global issue. Last noted that 97 percent of the world faces falling fertility rates. In countries such as Mexico and Brazil, it is becoming a concern.
There is a correlation between birth rates and economic growth. When fertility rates fall below replacement rates, everything else being equal, you end up with falling GDP.
The current fertility rate in the United States is at 1.93, which is below the 2.1 replacement rate. That is currently being offset with immigration.
One memorable quote from Last: “We are 20 years away from becoming a Florida nation.”
What does all this mean for real estate? One could build the case that the aging of America and bulge of Millennials (born between 1980 and 2000) could provide a strong base for the continued trend for mixed-use urban centers that are designed around walkability.
Based on current trends, global population is expected to peak in 2050 and thereafter is expected to fall going forward, which will create a number of new opportunities and challenges for investors in the future.
These current trends are just trends. They aren’t destiny. They could change for the better or worse, as we all know the future is uncertain. However, given our current environment, it seems most likely they will continue for a number of years into the future. Demographic trends do provide us with one valuable piece of the investment puzzle for long-term planning.
John Hunt is conference program manager at Institutional Real Estate, Inc.
