How to find Potential Growth Neighborhoods

[Nick Gerli]

The 18 to 44-year old demographic comprises 70% of the rental housing demand in the US. 

Accordingly, the higher the share of 18 to 44-year olds in a neighborhood, the higher the demand for rental housing (see the relationship in the graph below). 

Yet there are certain neighborhoods that have a high share of 18 to 44 but a low share of rental housing units (green dots in the graph). 

For instance, there's a neighborhood south of Nashville that has an 18-44 population of 2,908, but only 276 rental units. There's probably some pent-up rental demand there, which could result in good rent and value growth. 

What does everyone think about this methodology? How would you look to take advantage of a shortage of rental demand in a more owner-driven area?