One of the biggest drivers in housing demand is population growth. Simple math here. If you have more people, you need more houses. There are essentially 2 ways people come to Phoenix – they move here or they are born here. And folks, the number of people born here is on the decline.
My friends at Cromford Report, pointed out the shift in the population make-up we are seeing in this country. Nationwide, folks are living longer and having few babies, so the population is essentially aging, skewing towards an older demographic. This will result in a slowing population growth. We have seen this trend in the United States before, so it will be interesting to see how it all plays out.
Here’s how things looked in 1961, a year in the era known as the Baby Boom. Lot’s of babies, so the distribution has a wide base, with a second spike in the age range of working adults, ages 35-39. Some of the peak earning years.
Currently, there are fewer babies, as evidenced by the narrow base. The most populous age range are the 55-59 year olds, folks theoretically headed towards retirement and looking forward to grandkids. In addition, folks are living longer so the distribution is decidedly top-heavy.
We are definitely seeing this trend in Phoenix. According to the Census Bureau, the number of children in Maricopa County ages 5 and under dropped 3% between 2010 and 2015. Ages under 18 only grew by 2%, while those of working age (18-64) grew by 8% and those of retirement age (65+) grew by a 27%, skewing the population towards the older age ranges. The median age in Maricopa County increased from 34.7 to 36.1, a 4% increase in just 5 years.
Something to watch in the years ahead.