The Hispanic population is expected to more than double in parts of Delaware. How will this shift in demographics impact real estate?
The United States' population is becoming more culturally diverse, evidenced by climbing immigration levels and minority groups representing more of the majority. The question a lot of people within the real estate profession have is how this shift in demographics will affect the industry moving forward.
The Delaware-Pennsylvania area is perhaps the best example of a region that's witnessing a demographic adjustment. As noted by the Press & Sun Bulletin, ethnic diversity in the 14-county region from Delaware to Steuben is projected to increase over the next half-century, based on estimates from the U.S. Census Bureau. Additionally, over the next 50 years, the Census forecasts this same region will see its white population drop, while the population of Hispanics will grow.
The same is true for age groups. Jan Vink, research support specialist of applied demographics at Cornell University, told the New York-based newspaper that young people in portions of the Southern Tier - which includes counties in Pennsylvania, New York and Delaware - already have greater diversity among young people than those who are older. And in the past 20 years, most international migration has been among Hispanics.
"They tend to be younger and, looking into the future because they are younger, there [will be] more births in those ethnic groups and less mortality," said Vink. "So the natural increase is a larger Hispanic population."
Between now and 2060, Delaware's white population is expected to drop by 92 percent, while the number of minority residents is anticipated to more than double.
Realtors discuss shift's effect on market at forum
These changing demographics is something that real estate professionals and agents talked about at a recent forum in New Orleans, where Realtors from across the country gathered for the National Association of Realtors Conference and Expo on Nov. 9.
"Among primary residence homebuyers, the demographics have shifted dramatically, especially among first-time homebuyers, whose share of the market has dropped to its lowest level in decades," said Jessica Lautz, director of member and consumer survey research at NAR. "We have also seen an increase in the median age and income of the average buyer, as well as in multigenerational household formations as adult children and elderly family members move back in with their families."
More than 33 percent of U.S. adults in 2012 were living with a roommate or family member. Twelve years ago, the rate was 25 percent, according to a recent analysis from home listing and information firm Zillow.
Stan Humphries, Ph.D., Zillow chief economist, indicated that this "doubling-up" phenomenon is a partial explanation for weak home sales in certain parts of the country. The rate has been most concentrated in coastal areas like in California and Florida, two places where rental rates have outpaced income.
Economic growth will likely spur buying
How these changing demographics will affect the real estate market largely depends on how the economy improves in the months and years ahead. Panelists at the NAR forum noted that millennials this past year saw an improvement in job growth, with unemployment falling to 6 percent. This bodes well for the future, because as job opportunities improve, so should their incentive to purchase a place of their own.
"Millennials are the largest generation of people in the U.S. and represent 60 percent of first-time homebuyers," said Jonathan Smoke, chief economist at Realtor.com. "They are also more likely than any other group to purchase a home in the next year."
He added that real estate agents themselves can attest to the fact that millennials are already participating in the market. This past summer, they represented 37 percent of home shoppers and may account for 66 percent of household formations in the next five years.