Population Shelter is a basic human need, so the demand for housing grows with the population. Although the total population of the country continues to rise, the demand for Real Estate increases at a faster rate in some areas than in others. In some locations, growth has ceased altogether as the population has declined. This may be due to economic changes (e.g., high unemployment), social concerns (e.g., going green), or population changes (e.g., shifts from colder to warmer climates). The result can be a drop in demand for Real Estate in one area matched by an increased demand elsewhere. Normally the area in which a Leasing Agent is interested in is limited to a neighborhood or suburban community.
Demographics is the study and description of the population. The population of a community is a major factor in determining the quantity and type of housing in that community. Family size, the ratio of adults to children, the ages of children, the number of retirees, family income, lifestyle, and the growing number of single-parent and empty nester households are all demographic factors that contribute to the amount and type of housing needed. In setting up a Business Plan for an apartment building, the Property Manager or leasing Manager attempts to obtain as much information about the demographics of the area or neighborhood in which the building is located, to determine what a Renter may be ablet o afford, the marketing approaches to be utilized, and the building amenities to be stressed to appeal to the local target audience.
Employment and wage levels Decisions about whether to buy or rent and how much to spend on housing are closely related to income. When job opportunities are scarce or wage levels low, demand for Real Estate usually drops. In the case of rental properties, several factors may operate in poor economic times:
- Homeowner who can no longer afford their homes may switch to rental housing, increasing demand
- Young people who would normally enter the rental market may remain with their parents, decreasing demand
- Renters who have lost jobs or can only get a lower paying job may no longer be able to afford their apartment rent, resulting in evictions and empty apartments
- Current Renters may downgrade their apartment on renewal to a 1 bedroom from a 2 bedroom, from a 1 bedroom to a studio, etc., leaving the higher priced apartments only
- Competition for Renters may drive rents down or increase incentives to attract a smaller rental audience
