PREDICTIONS, DEMOGRAPHICS… AND MONEY

Many people find demographics boring - just another kind of statistics.

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I’m not going to bore you with math or charts, but let’s talk about how powerful demographics can be.

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Demographics are all about the big trends in a society. If you pay attention to the direction of change, you can get a much better understanding of the world, the economy, and how to make money.

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There are a few big trends in the US that are strongly influencing how Alliance invests. These trends play out slowly, but real estate investments do too.

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The first is that we have a large aging population. As the baby boomers hit retirement, many of them are choosing to downsize and relocate, seeking warmer weather and lower costs of living. This is a big part of why the sunbelt is growing so quickly.

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Whenever there is population growth, you can also expect increased demand for all kinds of supporting services. Population tends to drive broad-based economic growth, although there is more to it than that.

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Retirees aren’t the only people moving to the sunbelt. Younger people have been flocking to lower cost cities too. But these populations have some distinctive needs. While younger people are generally looking for more space and quality schools, retirees have higher demand for amenities and health care, without caring about schools at all.

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Understanding these trends – where is population growth and who is driving that growth – can be the key to predicting future consumption. And future consumption is great for real estate values.

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Since Alliance loves to invest in healthcare facilities, which tend to concentrate, we want to get ahead (and stay ahead) of these trends. Over a period of years, newly developing areas can fill in and grow quickly. Initial properties serve as anchor points that attract more development in a continuous cycle. This drives property values up rapidly.

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Seeing the future is a vital advantage for investors, and the study of demographics is one of our most powerful tools.

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