Counties with Fastest Population Growth 2000-2008
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 occur.
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 annual US population growth rate over the period April 2000-July 2009 is estimated at 0.97%. During this period US population grew by 25.6 million people,with 15.9 mllion (62%)representing natural increase and the remaining representing international migration, according the latest data released by the bureau of the Census.
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 latest forecasts published by the US Bureau of the Census were produced in July 2005, and feature Nevada, Arizona, and Florida as the three top states in terms of population growth over the period 2010-2015 (see table below). More specifically, the US Bureau of the Census predicts that the populations of Nevada, Arizona and Florida will register cumulative increases of 13.7%,12.9% and 10.1%, respectively, over the period 2005-2015. It is interesting to note that the nation’s most populated state, California, ranks thirteenth, as its population is predicted to grow by 5.4% over the period 2010-2015.
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.
20 Top States in Terms of Population Growth 2010-2015
Sources: US Census Bureau,www.Property-Investing.Org
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.
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 8 years (from April 2000 to July 2008) according to Census Bureau’s latest population estimates by county. The five fastest growing counties were Kendall County, IL, Flagler County, FL, Pinal County, AZ, Rockwall County, TX, and Loudoun County, VA, which registered annual population growth rates between 6.9%% and 8.3%. These rates are extraordinary if we take into account that the national population growth rate over the same period was 0.98%. See in the table below the top 20 fastest growing counties over the period 2000-2008. Click here to go to the Census Bureau page with table of all 100 fastest growing counties.
Twenty Fastest Growing Counties during Period 2000-2008
Sources: US Census Bureau,www.Property-Investing.Org
|
Search Our Over 400-Page Website!
|
Search Our Over 400-Page Website!
Related Posts
City Megatrends that will Dominate Future Urban Development
Predicting the Path of Urban Growth
Predicting the Path of Suburban Growth
Return from Population Growth to Real Estate Articles
Copyright 2006,2007 All Rights Reserved.
Published with Permission of Author.
No part of this publication may be copied or reprinted
without the express written permission of the Author and Property-Investing.org
|
|
