Population Bust, Property Value Decline?

[Mat Garcia]

Obviously, the global human population is still growing. But with people having fewer children these days, especially in developed countries, sometimes below the replacement rate and increasing issues in fertility, etc. possibly due to environmental contamination, etc... Doesn't this mean that eventually there will be fewer people, thus less demand, resulting in less property appreciation, or worse, a decline in property value?

I believe there was a podcast episode about the baby boomers aging and dying that touched on this and of course, we've all seen areas that have had local population shrinkage and real estate values have plummeted. But could this become a much more widespread phenomena in the next decades? And what could one do to mitigate any such effects?

I realize this is a very "big picture" question, but I do wonder if it could have a significant effect on one's portfolio (meriting a change in investment strategy) and real estate in general in the coming decades.

[Eric Fernwood]

Hello @Mat Garcia,

While there may be population declines at national levels, local factors have a much bigger impact on RE. For example, from 1970 to 2020, Cleveland lost 50% of its population (from 750,903 to 372,624). This dramatic decline had nothing to do with birth rates. Meanwhile, Las Vegas's population increased by 410% during the same period (from 125,787 to 641,903), also not due to birth rates. So, while national and international population trends exist, they may not apply to individual cities within a country.

For the U.S., immigration will play a significant role in population growth for the next decades.

Population changes significantly impact real estate investors. In cities with declining populations, properties are typically much cheaper, but rents and prices rarely outpace inflation. Conversely, in cities experiencing significant and sustained population growth, while initial prices are higher, both property values and rents are more likely to outpace inflation.