After a 10-day vacation abroad, I am feeling refreshed and ready for some real estate talk! However, real estate is a fast moving game these days and it takes some time to catch up on what is going on in the local market after being absent for an extended period.
Instead, I wanted to share a book I read during my vacation. What is the topic of my vacation book of choice? Demographics of course! Not your idea of vacation reading? No worries, I plan to break it down for you.
The book: “Big Shifts Ahead, Demographic Clarity for Businesses” by John Burns and Chris Porter. In my opinion, this is one of the most significant books recently printed that can make an immediate impact on you as a business owner or budding entrepreneur. And for the sake of this blog, there is no greater influence on real estate than massive demographic shifts.
There are three major parts to this book…
Part One: Conclusions and New Frameworks
The new framework Burns and Porter came up with is that large generations, like the Baby Boomer and Millennials, are too large to analyze properly. A 32-year old Millennial father is very different from a 17-year old Millennial in high school. Instead they break down generations by decade. They take a deep dive into each decade from the 30s to the 00s and it is fascinating to see the changes and new shifts coming.
Burns and Porter have come up with the 4-5-6 Rule for Demographic Predictions. It is broken down as follows:
The 4 Big Influencers
- Societal Shifts
During People’s 5 Main Life Stages
- Early Career
- Family Formation
- Late Career
Help Answer the 6 Key Consumer Questions
- How many will there be and how much money will they have?
- What will they purchase?
- When will they purchase?
- Where will they live/spend?
- Who will buy and who will they live with (spend money on and share expenses with)?
- Why will they buy certain products and not others?
A summary of the conclusions: the four biggest opportunities in the coming demographic wave are women, immigrants, retirees, and young adults. To further that into real estate terms, their living preferences will include three massive shifts: rentals, the South, and a new “Surban” way of living (a term the authors trademarked).
Part Two: The Biggest Demographic Opportunities
In this section of the book, Burns and Porter go deep into the four biggest demographic opportunities, what influenced them, their stage of life, and come up with very good cases on how they will consume.
Today women now earn 58% of all bachelor’s and master’s degrees. This has given rise to the working woman. Although equal pay still has a long to go, increasingly women are the breadwinners of the household, make more buying decisions, have delayed families, and are demanding childcare for dual working families. Much of the income inequality between the rich and poor in this country can be attributed to highly-educated working couples that can earn exponentially more than non-educated working couples.
The new wave of immigrant is high educated and affluent. With surging economic growth in China, Russia, India, and Brazil, the new driver of growth and population come from these countries. Mexican immigration peaked in the 90s but that trend has ended. If you can believe it, more Mexicans now leave America than enter! I was shocked. Who needs a wall?
An explosion of retirees is underway. The authors claim three virtual certainties: 18 million more people over the age of 65 in 2025, more older workers than ever before, and a labor shortage due to significant retirement. Obvious opportunities are in assisted-living, and on a morbid note, services that relate to handling one’s passing.
Due to the worst recession since the 1930s, young adults were forced home. Not only was the Great Recession hugely impactful but young adults are saddled with more student debt than ever, thus delaying their household formation. It looks as though young adults born in the 80s and some in the 90s are getting ready to leave the nest in droves. This will have huge impacts throughout the economy.
Part Three: Lifestyle Shifts
This section of the book discusses the lifestyle shifts that really create a clear picture for business owners, entrepreneurs, and real estate professionals/investors. Main chapters include what was stated earlier in the post: 1. Renting in the Sharing Economy, 2. Heading South in Droves, and 3. A New Surban™ Way of Life.
I could dive deeper into this section, but, I want you to read the book! Our readers will benefit greatly in their real estate pursuits (and business) if you take the time to really study this book on demographics. John Burns and Chris Porter make it an easy read that is enjoyable with a ton of graphics and charts to pick up the information quickly.
All in all, California, greater Los Angeles, and our local real estate market will be affected in a massive way from the four big influencers, the biggest demographic opportunities, and the new lifestyle shifts. Educate yourself and I promise you will be rewarded!