7.14.2016 | U.S. is the Developed World’s Growth Market – Rusty Tweed Team
Expected U.S. Growth vs. Other World Powers
The U.S. is expected to add more people than all other developed economies across the next 35 years, seeing a growth of 50 million people by 2050. According to a 2014 Pew Research Center Report, the U.S. will likely increase its population more quickly than European and East Asian countries, but more slowly than Nigeria, which is expected to replace the U.S. as the third most populous country in the world. India is expected to surpass China’s growth and top the list by 2050, seeing its population grow to 400 million by 2050 – almost equal to the combined populations of the U.S. and China.
What will the U.S. look like by Mid-century?
In June’s edition of the AEW Real Estate Market Outlook, the data suggests that over half of the growth in the U.S. over the next 35 years will be derived from immigration. By mid-century, the U.S. will have no majority ethnicity. The first millennials will hit mid-life within the next ten years; meanwhile, the first boomers will reach 80 within the next decade. Pew Research Center predicts that most countries worldwide, including North America, will see the share of its population that is over 65 overtake the share that is younger than 15 by mid-century.
What will the Impact Be on Real Estate?
In its June U.S. Real Estate Market Outlook report, AEW estimated that the U.S. will be in need of over 30 million new housing units by 2050. 1-2 billion square feet of new office space and a similar proportion of new distribution space will also be required by mid-century.
AEW’s Present Day Economic Outlook
The economic outlook for real estate and construction is looking healthy. The U.S. is now heading into its seventh year of continuous growth. New jobs are still being created at around 200,000 per month. Labor shortages in certain industries are likely across the next several years. Construction is set to accelerate.
The AEW also reported that rents have reached a new peak in most markets across the country. The tightening circle has already started, but it looks to be the slowest in Fed history to date. So far, long rates and property yields have been held down by robust capital flows. It looks likely that there will be outsized property gains in 2015, but moderation will follow.
References for U.S. is the Developed World’s Growth Market – Rusty Tweed Team:
AEW Real Estate Market Outlook, June 2016