Demographic Income Opportunity


Demographics, inflation and crime are creating a multi currency opportunity.

Yesterday’s message looked at crime in Ecuador and I concluded: “I would let my grandchildren go more places in Cotacachi Ecuador than in the suburbia of Rockwood Oregon where I grew up.”

This is not just because Ecuador is good. US Suburban neighborhoods are becoming places of crime.

Growing crime creates a huge problem. Big problems create huge opportuity.

A recent message also pointed out that in times of inflation a growing income is increasingly valuable.

A recent USA Today article outlines the suburban problem and says:

Devastated by the subprime mortgage crisis, hundreds of homes have been foreclosed and thousands of residents have been forced to move, leaving in their wake a not-so-pleasant path of empty houses, unkempt lawns, vacant strip malls, graffiti-sprayed desolate sidewalks and even increased crime.

Many homeowners not only cut their own grass but also trim the yards of vacant homes on their streets, hoping to deter gangs and criminals from moving in.

Other residents discovered that with some of the empty houses, it wasn’t what was growing outside that was the problem. busted several pot homes with vast crops of marijuana growing from floor to ceiling.

This trend, according to Christopher Leinberger, an urban planning professor at the University of Michigan and visiting fellow at the Brookings Institution, stems not only from changing demographics but also from a major shift in the way an increasing number of Americans — especially younger generations — want to live and work.

“The American dream is absolutely changing,” he told CNN.

Instead, they are looking for what Leinberger calls “walkable urbanism” — both small communities and big cities characterized by efficient mass transit systems and high density developments enabling residents to walk virtually everywhere for everything — from home to work to restaurants to movie theaters.

And aging baby boomers are looking for a more urban lifestyle as they downsize from large homes in the suburbs to more compact town houses in more densely built locations.

The result is an oversupply of depreciating suburban housing and a pent-up demand for walkable urban space, which is unlikely to be met for a number of years. That’s mainly, according to Leinberger, because the built environment changes very slowly; and also because governmental policies and zoning laws are largely prohibitive to the construction of complicated high-density developments.

Yet Nelson also estimates that in 2025 there will be a surplus of 22 million large-lot homes that will not be left vacant in a suburban wasteland but instead occupied by lower classes who have been driven out of their once affordable inner-city apartments and houses.

The so-called McMansion, he said, will become the new multi-family home for the poor.

“What is going to happen is lower and lower-middle income families squeezed out of downtown and glamorous suburban locations are going to be pushed economically into these McMansions at the suburban fringe,” said Nelson. “There will probably be 10 people living in one house.”

The opportunity is in this shift of utility. As single family homes become multiple occupant units, their income producing value will intensify.

We will examine this and three other income producing potentials in my upcoming International Investing and Business Course, October 3-5, 2008.

Gary

Join Thomas Fischer of Jyske Bank, Merri and me Friday to Sunday, October 3-5 to learn more about International investing and business. We selected this weekend as the most likely to be beautiful with the autumnal leaf change. The colors are glorious.

autumn-gold

Here delegates at a previous course chat during a coffee break.

blue-ridge-leaf-change

You can enroll in the October course here.



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