How will global population decline affect real estate?

Question

Hi BPrs. I ready the article below and couldn't help but to think real estate!  Right now we have a sever housing shortage, but maybe population decline will help that (by the end of the century). The article also doesn't address longer life-expectancies and states that it might lead to a more equal society

So...for generations to come... How will populations decline affect real estate?  What do you smart people think? 🤓 Anything to plan around that jumps to mind?

Here's the article:

https://www.nytimes.com/2021/05/22/world/global-population-shrinking.html?utm_source=nextdraft&utm_medium=email

Jim K. · Answer

This is way too speculative, macro, and big-picture for me to make any money on.

Taylor L. · Answer

If ever there was a good reason not to bank on social security being around when I'm of age, this is it! The assumption of a growing workforce is baked into the design of the SS system.

Bill B. · Answer

For the last 40 years the planet’s added between 80 and 90 million people per year. It’s been incredibly stable. I bet you $100 you’ll find 97% of climate change scientist predict the world population will be double at the turn of the century.

Natural disaster deaths are down 90%? Weather related deaths same thing, infancy/child death, war deaths? Maybe more than 90%. What if Chinese adults take the government up on their “go ahead have 2 kids policy”? You just can’t kill enough babies with abortions ro counteract all these numbers.

This reminds me of the scientist explaining to his class that the sun will explode in 5.5 Billion years. A student jumps up and yells, “Did you say 5.5 Million years?” No. Billion. comes the response. The student sits back down saying thank goodness.

I do appreciate that these “experts” are all assuming there will be no WW 3, no planet killing asteroid, no alien invasion, no world ending global climate change. So we dodged all those bigger problems.

Tom Shallcross · Answer

@Joseph Schommer - it's a really interesting topic, and relevant to me as I just spoke with another investor how had a strong belief that Roe vs Wade had partial impact on the GFC.

2006 was 33yrs after the Roe vs Wade verdict and 33yrs is the average age of first home purchase. He's not naive to think there wasn't more wayyyyy more at play, but rather that this was a contributing factor that added fuel to the dumpster fire.

The US Population growth % has been declining since the 1990s so it's not totally new, but we've been able to shave off less births with immigration. If the US makes it harder for people to immigrate and/or less desirable, it's plausible that immigration will no longer be able to offset our smaller family formations (along with potential labor shortage on certain jobs/trades), and we will become much more dependent on older age citizens, similar to what's happening in Japan.

This then becomes a compounding effect as if the next generation is smaller, that means there will be even less folks to have kids and it becomes nearly impossible to reverse the trend.

It's a (boring) academic read, but take a look at the attached working research paper - "Demographics and the Housing Market: Japan’s Disappearing Cities."

https://www.imf.org › Files › wpiea2020200-print-pdf

It outlines how shrinking demographics have effected Japan - I have no affiliation to this paper, just found it very insightful as we can learn from what his already happening.

Stefan D. · Answer

I don't think it's something we've got to worry about for the next few decades.  Right now the US isn't shrinking, it's just growing at a slower rate than it has historically.  In the future if we don't have enough young people or laborers we'll let in more immigrants.  Plus, STR's are taking some housing off the market for residential use.  You asked about by the end of the century though? Man, I can't think that far into the future :)

How will global population decline affect real estate?

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