The Quill Intelligence Interview Series — Destructive Demographics with Dennis McGill

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The decade to 1810 remains one for U.S. history books. The end result of the nation’s second census: a 36.4% increase in the U.S. population, which remains unparalleled. While this level of population growth has never been matched, the nineties, as in the 1990s, ran a good race. The population, though not growing to the same degree off a base level as the prior century, the 32.7 million added is unrivaled, even after accounting for the post-enumeration forensics, which found the number to have been overcounted by about four million. It’s fitting that when I made this observation to today’s guest Dennis McGill, co-founder of Zelman Associates, he sent me a link to a puzzle he has that was created by the artist Jim Mellett. The collage features notable 1990s figures from O.J. Simpson to Ross Perot to Sadaam Hussein; it harkens a period in which we referred to the Internet as the “World Wide Web”; and it elicits laughter to be reminded we were entertained by Dumb & DumberSeinfeld and the Spice Girls.

McGill would naturally have completed such a puzzle. The body of work he has recently published on U.S. demographics is nothing short of revolutionary in its simplicity. The title of the comprehensive report leaves little to the imagination: “From Cradle to Grave: Let’s Face it, We Have a People Problem.” Exhaustive analyses don’t just happen. The premise was that the study of housing necessarily incorporated multifamily. In studying this fast-growing sector that benefitted from the ravages of the housing crisis, McGill noted a novelty he’d never come across in his prior decade of exploring housing: “As I got more familiar with all the demographic data that was out there and started to triangulate out a lot of this, what dropped out of the middle was single family for rent, which at that time nobody spoke about it. This was in 2011. Nobody’s talking about single family rental. It was before Invitation Homes and American Homes for Rent, the two biggest in the country.”

Today, single family rental (SFR) is practically all that those in housing talk about. It’s the darling asset class that’s been embraced by Wall Street given its above-market rents and the appealing narrative that accompanies it – “Live the American Dream even if you can’t afford it!” Critics of SFR fear it will place a ceiling on mobility and inevitably the ability to retire. In a recent New York Times feature on the sector’s rapid penetration, Aaron Graf, CEO of the New York City real estate brokerage LG Fairmont cautioned that, “The single-family home market has become an inevitable asset class for institutional money. A normal buyer can’t compete with an all-cash offer from an institution, especially if it comes in high. Young people are thus being priced out of the starter single-family home. It’s a vicious circle in which a shortage of homes perpetuates a shift toward renting, which will exacerbate the housing crisis.


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