Ernest Hemingway said there were two ways to go broke. Gradually, and then suddenly.
It’s somewhat similar to how demographics–particularly the patterns of people shifts from one geographic area to another–constantly reshape business opportunity for residential development and home building.
This morning, a release from the Census unveils 2017 population estimates and components of change for the nation’s 382 metropolitan statistical areas, 551 micropolitan statistical areas and 3,142 counties.
Among the top line data points in today’s Census analysis:
“The Dallas-Fort Worth-Arlington metropolitan area’s 146,000-population increase last year was the most of any metro area and Maricopa County, Ariz., saw a population increase of nearly 74,000 — the most of any county last year.”
The data reflect two things: the very gradual stream of exits from and inflow into communities, based on economic opportunity, natural appeal, or familial attraction is one.
The other is the sudden evidence of a narrative, and it’s the story that’s of interest to home builders and developers, because it contains critical information for them about what to design, what to build, and how to try to price that in the communities they develop.
The story is about two separate but equal mega forces in the dynamic trajectory of geography. One force roughly matches up to where most of America’s wealth and optionality resides–the aging, 55+ household. The other, of course, is the group that, writ large, has neither wealth nor optionality but is energetically bound and determined to get both–the coming-of-age Millennial adult, the oldest of whom is 36.
The first group is of disproportionate interest to those whose land, product, and community development investments focus on the 55+ customer segment, where the lion’s share of America’s wealth resides. Wall Street Journal staffers Janet Adamy and Paul Overberg mine the new Census analysis for insight such as the fact that the population of “federally designated retirement destination counties rose 2%,” a magnitude of order three times the national population growth during the time peiod.
Baby Boom generation adults, Adamy and Overberg write:
have fueled double-digit population growth in some old staples for retirees, such as Naples, Fla., and other places far from the Sunbelt, including Jackson, Wyo., and Coeur d’Alene, Idaho.
Coeur d’Alene shot up to become the country’s fifth fastest-growing metropolitan area. Picturesque lakeside views and walking trails are drawing older transplants from higher-cost states like California and Arizona, said Hilary Anderson, the city’s community planning director. New developments are geared toward those age 55 and older with single-story home layouts, low-maintenance yards and snow-removal service.
In Weld County, Co., which runs northeast from the Denver suburbs, local officials are touting low property taxes and proximity to Rocky Mountain National Park. Also outside the Sunbelt, the Adams County, Pa., area that contains Gettysburg is pulling in retirees from Baltimore.
Meanwhile, as New Geography demographer Joel Kotkin has observed, small cities whose economies science, tech, engineering, and math-based business, education, and cultural organizations have bubbled up now represent real opportunity as Millennial magnets. Kotkin writes here about what’s at stake:
Resuscitating small town economies is critical for all Americans. As migration rates have dropped and high housing costs make a shift to big cities increasingly difficult, we can no longer expect residents of small towns to move en masse to San Francisco, New York, Los Angeles or Chicago. Rather than write off the roughly one-fifth of Americans who live in such places, we should look to expand the map of economic opportunity, taking advantage of our continental scale and economic diversity.
Core Logic follows the STEM money and the real estate and housing implications as well, and here economist Molly Boesel looks at how technology, “eds and meds”, and capital all align to reshape the post-Great Recession geography of young adult workers. Boesel writes:
With high levels of venture capital funding, access to top university graduates and an ample supply of technology workers, the San Jose metro area – the epicenter of Silicon Valley – ranks based on both its five-year appreciation rate of 77 percent and its average year-over-year equity gain of $102,828 in the third quarter of 2017. With a strong job market and high-paid workers commuting to Silicon Valley, the
 San Francisco metro area also experienced high growth rates, with a five-year appreciation rate topping 65 percent and an average annual equity gain of $73,217. West Coast hub Seattle also experienced strong growth rates with a 68 percent five-year appreciation rate and an average equity gain of $63,641.
Conversely, the average annual equity gains for homes in the Austin, Washington D.C. and Madison metro areas – $10,180, $12,539 and $9,787 – fell short of the national average of $14,888. Interestingly, only four of the 10 largest metros in the study – Washington D.C., Seattle, Austin and Denver – are considered overvalued. This indicates that despite the growth in home prices in metros like San Diego and Boston, other economic factors such as low unemployment, people choosing to rent, and access to high-paying jobs, have kept these regions within the normal range.
Something else to think about this morning, perhaps, other than rising interest rates after yesterday’s Fed announcement.
