# Real Estate Values to Suffer if Negative Population Trends Continue

SUMMARY: This post will try to take a calm look at the bad news. I will show that while we have much to worry about, no imminent demographic catastrophe is coming unless trends worsen. The current tendencies will soon affect demand for housing, leading to a population-driven decline in real estate values.

Some Demographic News

A few current mortality and birth rate news first:

Sweden’s live births for November were just published, and they are down 12% year-on-year
Sweden’s excess deaths last week were approximately 17% of normal
UK’s last few weeks excess deaths are also very high at about 20% of normal

The UK calculates “excess mortality” based on the previous five years’ average. This, unfortunately, includes 2020 and 2021, which saw excess deaths due to Covid and Covid vaccination. So, the excess mortality for 2022 is therefore understated. Someone did a great job calculating weekly excess mortality based on the 2015-2019 average instead:

Reasons to Stay Calm

This mortality and birth rate news is unfortunate. More than usual, people’s friends, relatives, and loved ones lose their lives. The birth rate news is disappointing: families wanting to have a child may not be able to conceive the baby they dream of having. Each life is valuable, and each death is tragic.

Does it mean that under the current trends, the society we are used to will disappear in a few years? No.

Demographic changes are slow. I created a simple model in a spreadsheet that simulates population trends over the next 50 years. There are parameters, such as the current birth rate, life expectancy, and fertility (number of births per woman) pre-pandemic.

This is a very simplistic model because I am not a demographer. However, it generally captures the essence of demographics and demonstrates what would happen under various assumptions. It calculates:

The number of infants born per year, based on the birth rate
The number of deaths per year, based on the death rate

Consider a hypothetical country, let’s name it Westonia, with exactly 100,000,000 population. Westonia’s life expectancy is 78 years, and the fertility rate is 1.62 children per woman. This is generally in line with the UK, for instance.

Every year, one out of 78 Westonians dies, and 1.62/2/78 = 0.01 children per person are born. For simplicity, I assume Westonia does not allow immigration or emigration.

We can make two projections: the population at the exact parameters above (no pandemic or vaccines) or the population with excess mortality and birth rate decline factored in (with currently observed mortality and birth rate effects).

We can develop two population projections for the next 50 years: one continuing the pre-pandemic trends and another including excess mortality and reduced birth rate. For example, let’s incorporate 20% excess mortality and 16% reduced birth rate, sort of the worst of what we are seeing now.

The table would begin like this:

Here’s the chart of 50-year trends comparing demographics of Westonia “without pandemic” vs. “with reduced birth rate and excess mortality.”

If the pandemic did not happen, Westonia would have 88.5 million people after 50 years. With reduced births and increased mortality, Westonia would only end up with a population of 71.6 million. The pandemic-related reduction of Westonia’s population is 16 million people. Our hypothetical country would have 24% more people at year 50 had the pandemic not occurred!

Is Westonia, and our green planet, better off with the reduced population? People can have different opinions on this. Let us know what you think.

The important thing is that Westonia would not rapidly “die off” under the current trends — and the population would shrink very slowly.