Where Will Growth Occur?

Everyone finds that, even after controlling for a variety of other variables, U.S. population
growth is extremely persistent; absent other information, the best way to predict
a county’s population growth is to look at how much it grew in the past decade.
Reflecting on the past quarter century of U.S. population growth, five key factors emerge:

• the level of U.S. growth
• where people want to live
• where firms can efficiently produce
• where development is allowed
• “wild cards”
  

The first factor is the absolute level of U.S. population growth. Between 1980 and
2007, the population grew by about 75 million people and 35 million households. This
population growth, slightly in excess of 1% per annum, is a major distinguishing
feature of the U.S. economy relative to other developed economies. About two-thirds
of this growth is due to more births than deaths among those already in the country,
while the other third is due to immigration (both legal and illegal). Through 2020,
this population growth rate will continue, barring any major change in birth rates or
immigration.
The American birth rate remains substantially higher than those found in other
developed countries, as we have a younger population, and the birth rates of native
Americans exceed population replacement rates (partially due to the higher birth rates
among first- and second-generation immigrant families). Through 2020, the U.S. will
add nearly 17.3 million households, assuming the 1.1% historical population growth
continues. It is this growth that fuels U.S. real estate development.

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