Healthy population growth is essential to a strong housing market. In the U.S., however, trends are shifting.

On this week’s Walker Webcast, hosted by Ivy Zelman, Walker & Dunlop executive vice president of research and securities, housing leaders said the country’s falling replacement rate reveals a cultural shift that is reshaping demand for housing — and reshaping it quickly.

One-third of adults under the age of 35 live with their parents. The U.S. fertility rate hit a record low in 2024. Only 47% of all U.S. households consist of married couples. And about four times as many people work from home today compared to before 2020. The list goes on, the experts assembled for Walker & Dunlop’s summer conference said.

Similar patterns still to emerge will not only influence where people decide to live but also the types of homes they choose and whether they buy or rent.

“We need population growth ultimately to continue to grow our business, so we pay attention to it a lot,” said Ryan Marshall, president and CEO of PulteGroup Inc., the third-largest homebuilder in the U.S. “We really focus on where population growth is going and, more importantly, where the jobs are going, because ultimately the population follows the jobs.”

The post-pandemic environment produced exceptional prices and margins, he said. Now, markets like Denver, Austin and Phoenix, which experienced rapid growth and price increases, are witnessing a bit of a “fallout,” he said. Markets that perhaps aren’t flashy, such as Columbus, Ohio, Minneapolis or Indianapolis, are faring well overall.

“These … aren't the sexiest markets, but there's a lot of people that want to be there,” he said. “They're more affordable. They've got good jobs. They're very stable because there's arguably less competition. They've been great markets for us.”

Steven DeFrancis, founder and CEO of property management company Cortland, said that even though national population growth is down and the multifamily industry is slowing due to oversupply, not all markets are feeling the heat. He has found that coastal markets are faring well in the multifamily space because of migration patterns.

However, even markets that are performing well have their peculiarities.

“In most of these places, if they don't have immigration, they're losing population,” DeFrancis said. “They are net negative until people immigrate into those places, which, long-term, is obviously very tough to run a housing business.”

DeFrancis’ advice: Be mindful of regional idiosyncrasies when building new projects.

Dallas Tanner, president and CEO of single-family-home leasing and management company Invitation Homes, said his firm has large concentrations of homes in states that were struggling after the Great Financial Crisis, such as Florida and California. Because of this, it is now trying to balance growth potential with portfolio concentration and operations.

“I’m more bullish on the Southeast than the Southwest,” Tanner said. “At the end of the day, people want to be where the sun is shining, and I hate to make it so partisan, but red states are easier to do business in than blue states. [The Southeast] is going to be a net winner over the long haul.”

A bright spot in the housing market across the board is active adult communities, given that by the end of 2030, 20% of the population will be 65 or older, Zelman said.

Marshall said approximately one-third of Pulte’s business is in this segment, under the Del Webb brand. It has been a lucrative sector for the firm historically, in no small part due to the lifestyle brand it sells along with each home.

“We’ve created a lifestyle opportunity for these individuals that are either retired or moving toward retirement to be around people that are like them and living their best version of their retired life,” he said.

The only downside is that the baby boomers aren’t a growing demographic. As a result, Pulte unveiled Explore by Del Webb, recognizing that Generation X wants to live a similarly amenitized lifestyle.

“We think there is a big growth opportunity for us over the next decade,” Marshall said.

Tanner said private capital will play a meaningful role in expanding this segment of the market. This is a relatively new sector, and some concepts will be gimmicky and may not stick, but others will flourish.

What is happening in the for-sale and build-to-rent spaces is making an impact on multifamily product, DeFrancis said.

“About half of our markets aren’t gaining ground, but they're not losing ground, either,” he said. “The remainder are close to turning, and we think by next spring, all of it will have turned. We think we’ll get back to a more normal rent growth type of year. Thankfully, developers continue to struggle to be able to make deals pencil.”

Even with oversupply on the multifamily side, the U.S. needs more single-family homes for sale, especially in the affordable segment, DeFrancis said.

He added that private developers like Cortland can’t solve the shortage by simply building more homes. In many areas, even if every project were subsidized, affordable sales prices — or rents, for that matter — wouldn't justify the lofty construction and operating costs.

“It's become a political narrative that we don't have enough housing in the U.S., and we truly do not have it,” he said. “I don't know the solution, but it's not getting the developers to just build more housing.”

The panel ended on the topic of artificial intelligence, with all panelists concluding that the future of AI and its impact on commercial real estate are unknown.

DeFrancis said it hasn’t had an impact on staffing at Cortland. There may be signs that AI will impact hiring more generally in the future, but the more pressing issue in multifamily today is that young people aren’t forming their own households at the same historical rate.

Pulte has also implemented some AI on the back end, aiming to eliminate any operational inefficiencies, Marshall said. The biggest opportunity is in loan origination, an essential but costly process, he said.

Tanner said his firm is using AI to improve routine administrative work, rather than to recalibrate the way his business operates.

“The way we’re using AI right now is not reinventing the wheel, but it's definitely making our teams faster,” he said.

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Neither Zelman, Ivy Zelman or her family own PHM or INVH stock. INVH is an investment banking client of Zelman Partners LLC. Zelman has received compensation for products or services other than investment banking services. Zelman is a Walker & Dunlop company. Zelman Partners LLC is a registered broker-dealer and member of FINRA and Securities Investor Protection Corp.

This article was produced in collaboration between Walker & Dunlop and Studio B. Bisnow news staff was not involved in the production of this content. 

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