Will a decreasing US birth rate hurt multifamily?

Question

The US birth rate has dropped for a 4th year in a row. Will this hurt multifamily real estate over the long term?

If yes, where, when, why?

If no, why not?

"The United States’ birthrate fell for a fourth consecutive year in 2018, bringing the number of people born in the country to its lowest level in 32 years, according to provisional figures published on Wednesday by the federal government. It said the fertility rate in the United States also fell to a record low."

https://www.nytimes.com/2019/0...

Sam Grooms · Answer

I'd argue that it helps multifamily. Marriage rates and birth rates going down, means less people are settling down. We're likely looking at more lifelong renters.

Bill B. · Answer

I was going to say what Sam said. People without kids don’t mind/do want apartments way more than people with kids.

A lower birthrate would be more likely to hurt larger home sales. But, that said, until population starts decline it doesn’t matter where the people come from, women or borders.

Todd Dexheimer · Answer

It's market dependent. Many midwest markets are seeing solid population growth and are still attractive. Minneapolis, Des Moines, Indianapolis, Cincinnati, Columbus, Milwaukee, etc still all saw healthy gain in population. Markets that cannot/will not shift with the economy and demands are markets that will be left behind. A few things that a lot of Midwest states have going for them is a well educated workforce and a population base that is not nearly as transient.

Taylor L. · Answer

Maybe. Net population change is the more important metric, in my opinion. Birth rate is a factor in that, but not the only factor. If we're making up the difference with immigration, then we won't see much impact of this. If we do see an impact, it'll be quite a few years because that generation will not be forming households for about two decades.

David Almeida · Answer

Immigration is still a net positive for the country, and we expect population growth to continue. Birth rates are down but we can fill the gap and more overnight. It's not like there's a dearth of immigrants looking to become US citizens.

Here's an article from Harvard's Joint Center for Housing Studies discussing the trends: https://www.jchs.harvard.edu/blog/number-of-u-s-households-projected-to-increase-by-12-2-million-in-the-next-decade/And the trends seem to support multifamily ownership over the next decade even though they revised down the long-term population growth numbers. Realistically, it's going to be public policy dependent and how competent you feel our government will be over the long run.

Nancy P. · Answer

As a Midwestern investor we're sort of assuming climate change/water issues are going to make the coasts and the southern states far less attractive in our lifetime.  Who knows.  That's why there is some risk in  REI.

Marcus Auerbach · Answer

I would think that birth rate is a factor, but only one and maybe not the biggest amongst all the other demographic factors, like immigration from other countries, migration inside the US, the general housing shortage and the complete absence of new construction of starter homes, economic changes and clutural and lifte style changes. I do however think that luxury multi family is on think ice for the next 3 to 7 years.

Todd Dexheimer · Answer

Sure, it will effect the MF market if immigration doesn't cover the gap. The effect will happen 14+ years from now when these babies become renters. This timeline would also fall in line with a lot of deaths of baby boomers, which could also put a stress on MF. There are still a lot of unknowns being this far out, but it's worth paying attention to what is happening a decade or more down the line.

Bjorn Ahlblad · Answer

@Tyler Kastelberg the movement is away from rural single family to cities and larger towns, and to inlying suburbs. Small towns and communities will disappear so MF should do well. This is a trend that has been happening in Europe for decades.

Frank Wong · Answer

There is sure a ton of new apartments being built for this declining birth rate if that article is true. Follow the money it's never wrong. Bullish on multi-family.

Will a decreasing US birth rate hurt multifamily?

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