Why it is important?
Demographic are the data that describes the composition of a population, such as age, race, gender, wage, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced, what types of properties and the major age group are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades like baby boomers and “two-child” policy. Increased population requires more housing, shopping, working (which includes both factories and office buildings) and more hotels for recreation.
However, the number of the population growth cannot explain the inside population structure. So following the previous industry indicators, besides indicators like age, race or gender, demographic indicators would include the total employments and employments in different industries in this case. The first common index is non-farm employment which represents employments working the secondary and tertiary industries who would take up most commercial real estate in the market. But it is not detailed enough to support further research. So, the office-using employment would be an important indicator for office while industrial employment would indicate the quantity of labor in industrial real estate. These specific industry employments can indicate the expansion or contraction of the industry, then indicate its demand/supply in real estate.
While the income in any specific areas can translate into consumers’ confidence index which indicate consumers’ buying power and the affordability of housing.
Overall, demography is a critical driver of real estate demand with the population growth, including immigrants. In 2015, in 44 million immigrants living in the United States. At the current pace, the foreign-born population will grow to 52 million by 2025—more than one of every seven residents.
But most immigrants have their preferences in locations, so the significance of this indicator may work for a few cities which attract immigrants rather than the whole country.
Demographic data can be obtained by U.S. Bureau of Labor Statistics.