Counties with Fastest Population Growth 2000-2006
by Petros S. Sivitanides, Ph.D.
Strong population growth in a real estate market with low housing and commercial vacancy rates can trigger strong property value increases and capital gains for real estate investors. Strong population growth translates to strong household growth, which in turn triggers increases in demand not only for housing, but also for consumer goods and services. These developments ultimate translate to increases in demand for housing units (rental or owner occupied), as well as retail and office space by retailers and service providers in order to satisfy the increased demand for goods and services by the area’s population. If the area’s housing and commercial real estate market is characterized by low vacancy rates, which signal a non-oversupplied market, these strong increases in demand should trigger strong increases in property values and capital gains for real estate investors that bought property before these population increases took place. Increases in an area's population can result from two causes: natural growth and net migration. Natural growth refers to population increases due to new births outpacing deaths. If deaths outnumber new births an area’s population will be declining (excluding any immigration of people from other areas). According to 2007 estimates reported in the CIA fact book the birth rate in the US is 14.16 births/1,000 population while the death rate is 8.26 deaths/1,000 population. This numbers suggests a natural population growth rate of (14.16-8.26)/1000=0.0059 or 0.6%. The second source of population and household growth in an area is net migration. Net migration is actually the difference between immigration and outmigration. If immigration is greater than outmigration, then the area’s population and number of households should increase. Net migration flows (domestic or international) play an increasing role in triggering population growth since natural population growth is slow. According to the Census Bureau (2003) during 1995-2000, over 22 million Americans changed their state of residence, with approximately half relocating to a state in a different region. Saiz (2001) reports results that link migration flows to housing demand and prices. In particular, this analyst found a strong relationship between immigration in 1990 and increases in moderate-quality housing rents during 1990-1992. Such a finding provides evidence of increases in housing demand due to immigration, which in turn triggered increases in housing rents. Saiz also found that immigration in the Miami area expanded the renter population by 9% in 1980, and that housing rent increases in low-income, Spanish-speaking areas of the city exceeded rent increases in other low-income units by 6 percentage points. The main reason migrants move from one place to another is to improve their status either in terms of employment and earning opportunities or in terms of overall living conditions, including amenities and climate. Empirical work on migration has shown that movements across labor markets are motivated mostly by job-related factors, such as expectations for better job opportunities and higher wages. The US population growth rate is estimated in 2007 at 0.9%. Since the natural growth rate is estimated at 0.6% this suggests that net migration flows are responsible for a population growth rate of 0.3%. Given the importance of strong population growth in triggering strong property value and sale price increases in supply-constrained markets, the Bureau of the Census population forecasts by state can provide very valuable strategic insights to national real estate investors. The forecasts published in July of 2005 by the US Bureau of the Census, feature Nevada, Arizona, and Florida as the three top states in terms of population growth by 2010 and 2015 (see table below). More specifically, the US Bureau of the Census predicts that the population of Nevada will grow by 14% over the period 2005-2010 and by 30% over the period 2005-2015. Population in Arizona and Florida is expected to grow by 13% and 10%, respectively, over the period 2005-2010 and by 27% and 21%, respectively, over the period 2005-2015. It is interesting to note that the nation’s most populated state, California, ranks eleventh, as it is expected to register population increases of 6% and 11% during the two periods. The strong growth rates in the three top states (Nevada, Arizona, and Florida)for the overall forecast period translate to average annual growth rates, ranging between 2% and 3%. If these population growth rates materialize, they should contribute to considerable increases in the demand for housing in these states, assuming no adverse economic, demographic, or interest rate conditions will counterbalance their effect on the housing market. The extent to which such demand increases will translate to increases in housing and commercial property prices will depend on the real estate supply conditions in the cities that will be the beneficiaries of this population growth.
US Census Bureau Population Projections: 20 Top States in Terms of Population Growth
State population growth projections are useful in selecting states to invest in. However, growth rates may vary vastly across municipalities, cities and counties within the same state. For this reason, real estate investors need to target specific localities/metropolitan areas within these states before starting their search for investment properties. So, ideally, prudent metropolitan area/community selection requires population (as well as employment and income) growth forecasts for these geographical units. Such forecasts are available for a fee from various vendors that will be listed in our website soon. Local population growth forecasts may be available for free from metropolitan and regional planning authorities or local economic development agencies of each area. Independently of any forecasts, real estate investors should be very well aware of recent population trends in the localities they are targeting for investment purposes. Within this context is especially interesting to see which counties have been growing faster in terms or population growth in the last 6 years (from April 2000 to July 2006) according to Census Bureau’s latest population estimates by county. The five fastest growing counties were Flagler County, FL, Kendall County, IL, Rockwall County, TX, Loudoun County, VA, Forsyth County, GA, which registered annual population growth rates between 7.4% and 8.9%. These rates are extraordinary if we take into account that the current population growth rate nationally is estimated at 0.9%. See in the table below the top 20 fastest growing counties over the period 2000-2006. Click here to see the 100 fastest growing counties and click here on your state's table to see what happened in your county.
Twenty Fastest Growing Counties during Period 2000-2006
 
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