Sunday, March 23, 2014

The Favorable Demographics for Apartments

by Bill McBride on 3/23/2014 02:57:00 PM

For several years I've been pointing out that demographics are favorable for apartments. This is because a large cohort has been moving into the 20 to 34 year old age group (a key age group for renters).

Also ... in 2015, based on Census Bureau projections, the two largest 5 year cohorts will be 20 to 24 years old, and 25 to 29 years old (the largest cohorts will no longer be the "boomers").

Here are two graphs showing the population in the 25 to 34 year age group, and the 20 to 34 year old age group from 1985 to 2035 (1990 was the previous peak for 25 to 34, 1985 was the previous peak for 20 to 34).

This is actual data from the Census Bureau for 1985 through 2010, and current projections from the Census Bureau from 2015 through 2035.

Population 25 to 34 years old Click on graph for larger image.

For the 25 to 34 year old age group, the population is just getting back to the previous peak, and will continue to increase significantly over the next 5 years.

After 2020, the increase in population for this key age group will slow.

Population 25 to 34 years oldThe second graph is for the 20 to 34 year old age group.

This favorable demographics is a key reason I've been positive on the apartment sector for the last several years - and I expect new apartment construction to stay strong for several more years.

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