Sunday, 18 November 2018
Agent Resource Center
This Old House - Do-it-Yourself

Agequake: can the population pyramid affect the real estate market?

Written by Posted On Monday, 14 May 2018 05:41

Do you know what is an Agequake? It’s a term coined by writer Paul Wallace on his 1999 book “Agequake: Riding the Demographic Rollercoaster Shaking Business, Finance and our World” that basically describes a phenomenon of change in the population pyramid. In the book, Wallace foresees a trend where, due to medical advances, humans would live longer, while the birth rate would plummet because of better birth control methods and changing social conventions.

Fast forward to almost 20 years later and we are starting to see this population pyramid change prediction come true right before our eyes. The so-called Baby Boomer generation is living (with quality) longer than they’ve expected and that has the potential to change everything. In this article, we will address, of course, real estate. What does the Agequake phenomenon mean to the real estate market?

Our biggest takeaway from this demographic data is that: rent will play a much more significant part on the real estate market. Here’s what’s happening:

With Baby Boomers living longer, they end up staying in the workforce for longer. Their burden to social security becomes larger too. That makes things devastating for the Millennial generation, that have to insert themselves into a much more saturated job market. Because of an Agequake, their chances of climbing the corporate ladder – thus increasing salary - becomes much slimmer. And when they climb that ladder, they do it with a sense of “what for?”, since chances are that, when they reach their retirement age, the nation’s social security funds will have been completely spent by Baby Boomers.

So you have the majority of a demographic profile with an incredible insecurity regarding its economic savings (Millennials) and a newfound risk-averse - to an otherwise very economically optimistic - demographic profile (Baby Boomers). For the first, rent is most of the time a necessity. And even if they can afford to buy a house, influenced by the pessimistic scenario inherited by them, Millennials tend to invest their money on their self-improvement or on emotional assets (like travels that create memories and overall “living” rather than “staying in”); rarely on real estate. Now, for the Baby Boomers, it’s not that Agequake will make them start to live as tenants. But they might think about becoming landlords.

What’s happening with Baby Boomers because of Agequake is something worse than facing mortality; it’s the possibility of living, for the first time, a low-quality life. With the health system becoming increasingly expensive, retirement becomes more distant for a lot of people. You are one accident or one disease away from going bankrupt or exhausting your rainy day funds. That means that buying real estate, one of Baby Boomers' go-to investments, gets a priority backseat. That hunger for land, vacation homes and luxurious homes becomes less latent. The same happens when selling a house; they have to be more cautious, more responsible regarding the sale of their property because they might need that money in its entirety. $10,000 dollars might make a huge difference, so renting a property to someone else becomes an interesting alternative. You produce an income regardless of an overall house price trend.

Another interesting thing to analyze via this demographic data is how will the real estate market behave culturally to this population pyramid shift. Again, we are already seeing the effects of Agequake around: you have the revival of TV series like Roseanne (ABC), Will and Grace (NBC) and Twin Peaks (Showtime) with new seasons after 10+ years since their ending - and even a Karate Kid sequel series called “Cobra Kai” on YouTube Red more than 30 years after the original movie premiered. This is happening because corporate Hollywood noticed the population pyramid change on their viewership. TV used to be targeted mainly to the 18-34 demographic with little crumbs left to teenagers. But nowadays, teenagers barely watch linear TV and the 18-34 demographic has much less buying power – remember that ad money keeps TV alive – so the 40-year-old and up crew, all of a sudden, became a large demographic to them with a lot more money to spend. It’s fair to say that the real estate is used to dealing with an older extract of people since the get go. It’s not like we used to sell to teenagers and now have to learn to sell to grandparents. However, we do tend to market real estate with a concept of “young family” in mind. Are we lying? Aren’t real estate agents and their homeowner clients approaching house price trends through the proximity of a property to the best school districts? The demographic profile Agequake presents to real estate is of parents, yes, but parents of adults; not kids. Those sons and daughters of the principal homebuyer might even live in the house, but they’ll hardly need to be close to school and children activities and facilities. Guesthouses and other independent vicinities - like She Sheds - are more likely to become “a must” because of this population pyramid change. It can be a way for the Millennials to experience some independence and for the Baby Boomers to have help nearby. A nice compromise between both parts.

Home Staging could get a completely new point of view. Rather than showing how a house could accommodate different lifestyles, with this wave of nostalgia produced by the most prominent consumer demographic profile (Baby Boomers) wishing to relive their younger years, real estate agents could try to capture the 1930’s to 1950’s zeitgeist to reach into their clients deepest memories of their home. Vintage objects can become the new go-to artifact of a home stager because they can get that “old but reliable” aspect Baby Boomers see in themselves transferred to the house. Agequake can turn home staging as a whole into less of a proposition of the future, and more of a guarantee of return to a past.

With all of that, plus new adjacent technologies like Self-driving cars, Cryptocurrencies, Blockchain and more, the real estate market will definitely get completely transformed in a short while. The whole world is. And, as we’ve seen, the Agequake and its population pyramid shift is one of the main factors behind it. The sooner we realize that and think around it, the better prepared we’ll be for it.

Rate this item
(0 votes)
Theresa Hus

THERESA HUS, CONTENT WRITER AT REALESTATEAGENT.COM

Theresa Hus is a member of the content team at The OFFICIAL Real Estate Agent Directory ® producing countless informative and trendy real estate articles monthly for RealEstateAgent.com and its many outlets.

Real Estate with a twist; that's how one could define Theresa's writing. With 16 years of experience in the industry, Theresa is all about coming up with topics that go beyond the basic real estate agent advice and home buyers/home sellers "how to" articles you see around. Her main goal with her writing is providing not only information that will make readers lives easier when dealing with real estate, but a good time through a fresh, fun and insightful read. While the site is called RealEstateAgent.com, Theresa likes to keep away from generic real estate agent content; her articles are all about thinking outside the box, stepping in the consumer's shoes, and warning readers of things they might've never thought of. Sometimes they're quirky and very specific - like an article questioning if you would live in a haunted house if the price was right - sometimes they just contemplate issues that no one bothers to talk about but are very important to a lot of people, like articles regarding the pros and cons of living near a highway or real estate agents specialized in homes for the disabled.

To do that in a responsible way, Theresa is constantly talking with the many nationwide real estate agents registered on The OFFICIAL Real Estate Agent Directory ®, researching the newest real estate niches, trends, and overall best practices.

Specific areas/topics that Theresa is able and willing to share her expertise and knowledge on include:

·         Real Estate Entertainment News

·         Trending Markets Around the United States

·         Advice Columns for Home Buyers or Home Sellers

·         Articles on How to Add Value to Your Home without Breaking the Bank

 

To contact Theresa, please email Theresa@realestateagent.com.

www.realestateagent.com/

Agent Resource

How to capture your next prospect - click here

Realty Times TV

View More

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.