ULI Report: America’s Changing Demographics

Washington, D.C.--The results of this year's U.S. Census survey are not yet out, but big changes are already apparent.

(This article first appeared in our sister publication Commercial Property Executive)

Washington, D.C.–The results of this year’s U.S. Census survey are not yet out, but big changes are already apparent—and they promise to impact real estate strategies, according to findings Brookings Institution senior fellows William Frey and Anthony Downs discussed during the Urban Land Institute’s Fall Meeting.

The most immediate change comes in January, when the first Baby Boomer finally turns 65. Much anticipated, this will mark the aging of a significant group that has “always broken the mold,” noted Frey, creating a need for a new approach to an age sector that by around 2030 will constitute 20 percent of the U.S. population, an increase from the current group of seniors, which make up 14 percent. More educated, they are likely to work longer, and they will have fewer children to take care of them as they age.

Another critical change that is already underway and has been much publicized is the shift in the country’s racial and ethnic make-up. Driven largely by immigration, it will impact both language and culture. Around 2042, Caucasians will cease to be the majority segment, dropping to 46 percent of the U.S. population.

More immediately, immigration is the driving force behind movement within the country, as movement by existing residents has stopped in the last few years. Indeed, it has led to a new grouping of states, Frey has found, naming three general regions which he termed Melting Pot America, the New Sunbelt and the Heartland. He defined The Melting Pot as comprising nine states (including such big ones as California, Texas, Florida, New York and Illinois) that have attracted non-black minorities. Seven percent of foreign-born U.S. residents live in those states and 76 percent of people that speak Spanish at home, with more mixed-race marriages than other states. The New Sunbelt, generally covering states from Virginia through Georgia and much of the Northwest, has attracted domestic migrants, with Southern states attracting much of the black migration to the point that Atlanta has surpassed Chicago as having the second-largest black population in the country (New York City remains the largest), while the Heartland’s 29 states have attracted lower migration.

Another critical trend is that about half of the country’s states are seeing a reduction in number of children.

A critical impact of the racial and ethnic rebalancing of the country will come if education is not improved, Downs emphasized. Because minorities that attend schools populated largely by their own groups tend to score lower on tests than those that attend integrated schools, it is important to integrate schools better to improve education. But because, generally speaking, all racial and ethnic groups tend to gravitate to areas where their own group lives, it will be very difficult to achieve. And that will make it very difficult for the United States to compete in the global economy—and in turn to maintain its standard of living. For that reason, Downs stressed, real estate developers need to think about ways to de-segregate living spaces.

An additional broader trend, according to Downs, is an anticipated return to suburban growth after the past two years’ halt. While cities have grown 27.6 percent, outer areas have grown 72.4 percent, and that will resume—despite the hopes of urban planners, he said.

Indeed, younger members of the population are exhibiting a similar interest in the suburbs, he said.

Interviews with Frey and Downs will soon be available on CPE TV.