Peter Francese: People Watcher

Ogilvy & Mather’s demographer tracks census data with an eye toward who will be the customers of tomorrow.

October 1, 2006

What fascinates you about demographics?

FRANCESE: The study of demographics gives us a picture of the social and consumer marketplace in which business operates, not just today but in the future. Businesses can’t do things the same way year after year after year and expect to survive. By understanding demographics, any business can have a much brighter long-term future.

How do the generations differ when it comes to real estate?

FRANCESE: Slightly less than half of the millennials are home owners. For Gen Xers, it’s about two-thirds, whereas nearly 80 percent of baby boomers are home owners. Boomers also have a much higher median household income as well as substantially more equity in their homes.

In addition, millennials and Gen Xers will more readily form nontraditional households, such as single-parent families, unmarried couples, or other unrelated partners. But just because they’re different, it doesn’t mean they’re not legitimate home buyers.

How does immigration today differ from the wave at the start of the 20th century?

FRANCESE: In the first decade of the 20th century, immigrants added almost 12 percent to the U.S. population, but during this decade they’ll add less than 4 percent. A century ago, most immigrants came from Europe. Today a majority are from Latin America or Asia. A century ago, most immigrants went to the Northeast. Today most go to the South or West. Immigration, in general, is a very positive force for real estate professionals; it will provide home buyers long into the future.

What fallout do you see from the current backlash against illegal immigration?

FRANCESE: First, I would take out the word illegal, because even legal immigrants are feeling discriminated against in the current backlash. There are three bad consequences to shutting the borders. The first is the loss of tax revenue. People come here to work, so we’ll lose their spending power and the sales taxes they generate. Second, we’ll lose jobs because the entrepreneurial spirit of immigrants creates jobs. Third, without that labor pool, large employers in the United States will either move operations offshore or not start a facility in the first place, again killing jobs.

What demographic trends deserve more attention?

FRANCESE: One is the unfortunate trend of fewer men graduating from college. When so many men decide not to go to college, much of their earning potential is lost. As a result, Gen Xers and millennials probably will not do as well financially as the baby boomers did.

The other disturbing trend is the decline of the middle class combined with a sharper concentration of wealth at the top. Long-term growth in the business of residential real estate professionals—selling homes—has to be based on a return of the middle class, people who make reasonably good wages and are in the homebuying market.

On the positive side, the fear that all boomers are going to retire at once is entirely unfounded. Millions of baby boomers will delay retirement, and that’s a good thing for the country’s economic health.

A most wonderful trend is the rapidly growing economic power of women. A majority (52 percent) of managerial and professional workers in the United States today are women. Their rising income and increasing educational attainment will profoundly change the country.


For more about Francese, and a list of demographic resources, visit www.francese.com.

Chuck Paustian is a former REALTOR® Magazine senior editor.

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