For as long as I remember, demographics have influenced the real estate industry. Whenever a certain generation reaches their peak earnings stage, the real estate market roars. After WW2, when soldiers came home, we saw a massive housing boom shortly after and the birth of the suburbs happened. This coincided with many of those soldiers getting married and building families. This cycle continued with Baby Boomers, Gen X, and since 2012, the Millennials. I gained this observation by watching many documentaries on American History and having discussions with American History teachers. But for readers of Ben Carlson's blog, they knew for over a decade that demographics are destiny in the housing market.
For Millennials, they formed households later in life because of the Great Financial Crisis of 2008 and because more of them pursued higher education. For Gen Z, they've recently started entering the workforce and more of them are pursuing higher education. But as someone who's surrounded by members of Gen Z, I'm concerned that the growing trend of "situationships", the high frequency of hookups, the normalization and "coolness" of cheating on your partner, and the bullying of others for liking someone. The social dynamics of Gen Z are the most complex I've ever seen and I bet it's contributing to the deteriorating mental health of that generation. As famous Youtuber Jordan Howlett said, "this generation can't date
." If they can't date, then I doubt they'll be able to get married and create a new household. Sad to see Gen X work so hard to give their kids a great life, only to see their kids not give their parents grandkids.
I want to be optimistic on Gen Z. I've written a memo on the financial reasons for why I see Gen Z doing well in the future
. But the more I interact with Gen Z, the more I realize that the wealth gap in that generation is wider than I previously thought and that the gap correlates with other things like their social skills and their willingness to experiment with different types of relationships. The pandemic has exacerbated this gap among members of Gen Z and after years being out of the pandemic, I do not see any progress in this gas narrowing.
If the people with great social skills, who are blowing their paychecks or parents' allowance on dates and looking cool on Instagram, aren't willing to commit to one person, then the economy can't rely on those people to boost demand for homes because clearly they have no intention on ever settling down in the future and anyone who meets them will be disgusted by the diseases they carry. If the people with bad social skills, who are sitting on so much money or maintaining great financial habits, are struggling to get any momentum in the dating world because of their hindered social skills development, then the economy can't rely on those people to boost demand for homes because they have a low chance of ever finding someone to get married with in the first place. Same applies to other industries like clothes and cars. It's difficult to find members of Gen Z who have the ideal blend (decent to great social skills, doesn't spend over half their paycheck on dates, willing to settle to one person and avoids experimenting these new types of relationships) as those people tend to be the ones who get married. The social skill issue was minor back then because people needed to learn how to communicate with strangers face-to-face to survive. Now, young people are going through great lengths to avoid talking to people.
With less optimism on Gen Z's marriage prospects, the future economies will soon be reliant on nations who have embodied traditional values as those nations will be the ones with growing populations. I'm talking about countries in Latin America, Africa, and the Middle East. America, Canada, and Europe won't be leading the global economy in the future simply because the younger generations of those nations don't have any interest nor are able to get married and form their own family. I believe that the Middle East will be the new epicenter of the world economy. The region is able to grow fast while preserving traditional values. Whether it's Saudi Arabia, UAE, Qatar, Bahrain, Kuwait, Oman, or even Israel, these nations have shown that you can become prosperous without allowing moral decay to run rampant in their societies. The other Arab nations, like Egypt, Jordan, Morocco, and Iraq are going to see themselves rising alongside the rich Arab states as the Middle East becomes more powerful. Outside of the Middle East, many Asian nations are dealing with declining birth rates and their populations are destined to collapse. While those societies value hard work, it has come at the cost of less family formation and families choosing to only have one child for the sake of convenience. Africa and Latin America are becoming new epicenters of manufacturing. Latin America, already big on manufacturing, needs to invest more in upskilling their labor force while Africa needs to attract more manufacturing of any kind in the first place. I continue to believe that Africa will become the next China (still finding the link to that memo).
The complex social dynamics and deteriorating relationship skills observed in Gen Z are like dark clouds gathering on the horizon. Will they unleash a storm that washes away time-honored traditions of courtship, commitment, and family formation that shaped past generations and economies? Or will the clouds pass, giving way to brighter skies as tomorrow's youth rediscover the joy of intimate human bonds? None can predict if current trends represent a momentary gust or an enduring climate shift for society.
Yet I cling to hope. For relationships and human connection are more powerful forces than any demographic destiny. If Gen Z peers through the clouds to see the light, learning to value vulnerability over vanity and heal growing divides, they may yet author a new chapter of promise. For now, we watch the winds of change, hearts open to possibility. The ending has not yet been written. And as long as hearts can change, the future remains undecided. Gen Z's story is theirs to shape.