For residential developers and volume builders, the future is the present. To recognize a budding population pattern, and model correctly how that pattern will play out over time is a skill-set critical to land investment strategy, product design, pricing, and marketing. At the same time, reality, as it occurs, tends to toy with even the smartest predictors.

Since most big builders are putting real money investments a minimum of two years ahead and as much as five to seven years ahead of when those investments will come to fruition, the ability to detect a demographic trend when it's a mere trickle, and cash in on it when it becomes a steady stream goes with the territory.

Thing is, thanks to something called the "illusion of validity," a bias of thinking brought to light by Daniel Kahneman, we're all apt to be poorer predictors of the future than we believe. So, what do we do to try to manage for that as builders--who by nature have to wager future returns on huge present-day investments?

Kahneman's counsel is to trust the data, not our guts, for one. That's easier said than done because intuition can exert a stronger sense of belief than the laws of math, which are often counter-intuitive. Far more often than we'd like to think, the algorithm is right, and we're wrong about what's going to happen next.

Now, one of the fascinating demographic opportunity-challenges that has showed stirrings of something big in the past few years for home builder-developers is a household composition trend, more pronounced among some cultures than others, but making gains across society as economic forces sway housing choices. In general, households occupied by more than one family unit of adults--related or unrelated--have been increasing in a noteworthy pattern since the Great Recession, but also prior to the downturn.

New-home builders have been clocking in on the multigenerational trend for years now; the "double-master down" floor plan is not new. Lennar, however, seized strategic high-ground with its NextGen product and marketing in 2015, even as the household population pattern was nary a demographic equivalent of a rugrat.

What's in store for multigenerational households, and how will their formation impact household formation, particularly as 55+ adults elect or are compelled for economic or health reasons to move in with their younger children?

This is a question Ivy Zelman and her team of researchers and analysts at Zelman & Associates take on in the latest deployment of The Z Report, a twice-monthly compendium of smart, medium dives into events, developments, forces, and trends that impact the housing business.

The Z Report's "Reversing Roles--MultiGenerational Households Where Parents Live With Children," looks under the skin-deep assumption that a new wave of demand for multigenerational new-home products and communities may be in the making. The analysis notes:

"In 1990, 2.7% of 50-plus year olds lived in their child's home, ranging from 1.2% for 50-59 year olds to 8.2% for 80-plus year olds. Fast forwarding to 2010, those figures stood at 3.6%, 1.8% and 8.7% respectively, and further moderate increases have been evident thus far in the current decade."

Still, what real estate players need to act on is how even "modest" evidence of a new population pattern may offer opportunity, or rather represent disproportionate risk to one's current business model, in its pre-tipping point stage.

That's why, as Kahneman would recommend, it's better to run your business by the numbers than by your instincts.

You can subscribe to The Z Report here.