Effect of Population Drop Predicted by Elon Musk on Real Estate

7 Replies

Out of curiosity, have any investors thought seriously about how the population drop predicted by people like Elon Musk will affect the real estate market? Clearly, if it is as serious as he proclaims, there will be a substantial decrease in demand, contributing to lower prices nation-wide. 

Hey Kyler, you sound like those doomsday people. Elon might have been right on a lot of things but he has also been wrong on a lot too. The only way demand will slow down is if the interest rate goes up, has nothing to do with population. 

Elon Musk is saying population will start to decline in 2050.  Even if he is right, that is 30 more years of growth.   Even if he is right, he didn't say there would be a sudden die-off, just a downward trend.  Even if he is right, unless new homes are built, housing stock also declines over time (fire, flood, wind, or due to just lack of maintenance) which could easily offset any population decline.

Seems to me the next 100 years or so looks pretty good for investing (from a  population perspective.)

@ Arsen Atanasovski: So, the laws of supply and demand do not apply to real estate? I am not asserting that things will play out as Elon suggests, but am trying to consider what it would mean if they did. This does not place me among the "doomsday people". 

But, the comments do emphasize something I wonder -- most investors make choices and recommendations based upon what they can expect in their own lifetime, and most of the models which they use to support their predictions take for granted that population growth will remain positive, while none of them serve to explain what causes the growth which they observe (i.e. "correlation does not imply causation"). They simply extrapolate positive trends from the past into the future. I would be interested to study any resources which serve as an exception to this. 

@ Gregg Scott: The decline in stock is a good point;  I am sure there are many factors at play as well. 

Real estate is more of popularity then supply and demand, let’s  take Canada for example they have 10x less population does that mean their property is 10x less? Go to popular Toronto and you’ll be paying an arm and a leg. So what your saying or should I say what Elon is saying there would be such a decline in human population that will run the RE sector to unpredictable lows, which is impossible and if RE was ran by that the government would just ease immigration and add more to the number. I live near by a city that has been in decline of population for the past half century, Detroit but it doesn’t mean the property was ran down because of population it was ran down because of popularity and crime. If there was no crime in Detroit it would be the 3 or 4th largest city in the US. 

Here are the current projections for US population, showing 80+ years of expected growth.  I'm not worried in the slightest.

Below that is the World population, expected to peak in about 80 years (driven a lot by China).  Again, I'm not worried in the slightest.