California households are changing – and their housing demands are changing with them.
The population is aging and shrinking. From 2000 to 2012 alone, the population under the age of 18 shrank from 27.3% to 24.3% of the total state population. On the other end of the spectrum, the population over the age of 65 grew from 10.6% in 2000 to 12.1% in 2012.
The most recently reported birth rate (2009) for California shows a drop of nearly one-third over the past 20 years. Where agents were closing deals involving four- and five- bedroom homes, the new typical family will be looking for two- and three-bedroom homes.
Racial demographics are also changing. An increasing percentage of California’s immigrants are coming from Asia. The number of individuals born in Asia increased by 30% from 2000 to 2012. In contrast, those born in Latin America only increased by 11%. According to the 2012 American Community Survey, Asian immigrants are more likely than average to be:
- highly educated, with 47% holding a college degree (compared to the state average of 31%); and
- married, as only 8.4% of this population was divorced (compared to state average of 9.6%).
As our state becomes more educated, the result will be more stable home price rises, supported by rising average incomes as the highly educated take high paying jobs.
In general, more Californians are marrying later in life or choosing not marry at all. 36.6% of individuals have never been married as of 2012, up from 33.8% in 2000. In 2012, the median marriage age for men was 30 and 28 for women. Before the 2008 recession, the median marriage age was 27 for men and 25 for women.
Fewer marriages may be a sign of our unstable economic times. Household formations have been stifled since the 2008 recession, as the unemployed and underemployed have been forced to move in with relatives or find roommates. Once our state’s bumpy plateau recovery picks up enough momentum, this trend of delayed household formation will likely reverse. Then, expect to see most of these formations taking place in multi-family housing.
The effects of the 2008 recession will linger beyond the end of the recovery (likely around 2016) for members of Generation Y (Gen Y). Starting their careers later in life means they will purchase their first homes later in life, after working long enough to save a down payment. Further, Gen Y will largely settle in urban areas, where it often makes more sense to rent than to buy. Thus, the homeownership rate is likely to remain low for the next couple of decades.
Some agent advice: take a look at the demographics in the area you farm. Are they young renters, stable families or Baby Boomers? Once you identify the demographics, study the trends of that group to divine how your services can best be applied in the coming years.
Where can you find these demographic trends in your area? The U.S. Census is a useful place to start. From there, you can research your neighborhood’s median age, income, education level and home occupancy status.