In this article we will summarize the zip codes with the highest forecasted population growth in the United States, expressed as a compound annual growth rate (CAGR).
Population growth is uneven—even though a zip might be growing overall, specific blocks within that zip will grow faster than others. This is why when using population & demographics for evaluating commercial real estate it’s valuable to get even more granular than a zip code, and zoom in on the individual blocks.
VestMap allows you to do this easily and quickly, click here to learn more.
Now, what if we’d like to compare that to the historical growth? To do that, we ask:
Which zip codes had the most population growth from 2020 to 2022?
As you can see, only Sacramento and Overland Park made it on both lists.
Population growth usually benefits investors in the form of increased rental demand and appreciation that comes from buying in growing areas.
To get a better picture of a location, it helps to layer in median incomes.
Increasing incomes are highly correlated with the so-called “path-of-progress” that investors are always looking for. The path of progress meaning areas that are on the upswing in terms of population, stores opening, new construction - and all of these things are usually accompanied by the average income of the residents going up - either because they are now making more money in a booming town, or they just moved from out of state and brought their W-2 with them.
2022-2027 Median Household Income: Compound Annual Growth Rate (Esri)
We can also filter out the smaller zips by limiting the list to only those zips with at least a population of 1,000:
Looking at per-capita income growth can also be helpful, as you can see if we look at per-capita growth it is dominated by larger cities (not surprising since the highest earners tend to live in expensive cities and ther incomes tend to go up faster than places with a lower cost of living).
To counter this we can look at the relative growth incomes in 2022 as a percentage of the forecasted growth, which yields this list:
Population and demographic tools are an incredibly powerful way to understand locations and make better investing decisions. This data is small sample of what’s possible with VestMap - with VestMap you can get even more granular and target growth down to the block.
The data shows clearly that investing in areas of high population growth results in returns far above average for real estate investors.
What is the relationship between population growth and home price appreciation?