Early in my career, I was working in origination in Houston and received a referral to a Hispanic buyer. It was 2001 and many lenders had a one-size-fits-all approach that made them ill-equipped to serve this demographic. There were no specific marketing materials for this population and I soon realized the Hispanic community needed to be catered to in a different way than other demographics. Small things, like communicating with them in Spanish or translating reading materials, helped me to better assist my client and made for a successful transaction.
After working with the buyer through the loan process, he started sending friends and family from his network to me. I quickly found that Hispanic customers were a growing portion of my business. I quickly began hosting on-site open houses with my real estate and construction partners serving the Hispanic community. Recognizing that the Hispanic market was driving my own success and was an area of significant opportunity, I positioned myself as the face for that market within my company.
I tell this story because serving the Hispanic homebuyer remains – nearly 18 years later – a significant market opportunity that many companies, large and small, are failing to tap into. Hispanics have huge purchasing power in the U.S. and the rate of homeownership among this population has grown every year since 2014, reaching 46.2% in 2017. In fact, Hispanics are the only demographic in the U.S. to increase homeownership rates for each of the past three years and are driving gains in the real estate market overall. By understanding the unique needs and expectations of the Hispanic community and positioning yourself to fulfill those needs, real estate professionals can become an important servicer of this consumer demographic and experience related growth.
Industry wide, the data shows that Hispanics are responsible for 46.5% of the growth in net U.S. homeownership since 2000 and this is not expected to slow down. These stats should come as no surprise since this demographic also accounts for the largest share of the U.S. population growth. Since Hispanics are also the youngest demographic group in the U.S. with a median age of 28 years old and nearly 30% of Hispanics are Millennials, not only will this population continue to grow, but they represent a community that is currently, or soon to be, the prime age for first-time homebuyers. Simply put, the market opportunity is large and is continuing to expand.
For real estate services companies looking to grow, serving the Hispanic community may be a prime opportunity, but it requires more than translating a few materials into Spanish. Just as consumer product manufacturers have come to understand that they can create a product or service to cater specifically to women and men separately because of differing needs or wants, so too can an organization create a strategy to serve a diverse group or demographic.
When I first began focusing on Hispanic homebuyers my business quickly picked up, but so too did the challenges of qualifying these borrowers with a product that would not only get them into a home, but would keep them in their home. I was able to utilize down payment assistance programs with our existing products at no real additional cost to our company and still have the GSEs purchase our loans. My company took notice as the business started to grow and a short time later hired another Spanish-speaking loan officer.
When I think back to those early days in my career, being a bilingual professional, I was well-positioned to serve the Hispanic customer who was referred to me. Today, as demographics shift, it’s important that front offices shift as well. A front office that mirrors the local market, or market the company is trying to reach in age, race and language skills, is better positioned for success. With a less than ideal pipeline of young professionals in the real estate industry, this means that companies must invest in recruiting and training the next generation of real estate professionals. This may require retraining professionals from other industries, mentoring young talent or creating and/or partnering with professional groups in the industry.
Among all populations, referrals from friends and families drive business in the real estate market. After working with that first Hispanic buyer through the loan process, he started sending friends and family from his network to me. Hispanics have been shown to place greater emphasis on referrals from within their networks and a greater willingness to promote to their inner circle when they have a positive experience with a business. In the case of my story, this – coupled with the positive experience I provided to my customers – drove significant growth for the company within the Hispanic community. Understanding this referral culture can help a business succeed by finding ways to encourage satisfied customers to share their experience more widely and allow you to develop a more deliberate referral process and strategy to capture the business of this demographic.
One of the reasons referrals are so heavily relied upon in the Hispanic community is trust. Having a trusted relationship with a real estate professional means a buyer is more likely to heed advice about what they should and shouldn’t do. It’s important for real estate professionals to fully understand the many options that can serve the nuances of your customers and be prepared to educate prospective customers on the full range of opportunities.
For example, many Hispanic consumers believe the 20% down payment myth and 56% of Hispanics, compared with 41% of the general population, think it would be difficult to get a mortgage today. Education is essential in changing misperceptions about what benefits homebuyers most in the long run. Additionally, despite the presence of other high-quality choices like private mortgage insurance, Hispanic borrowers are disproportionately more likely to apply for FHA loans, even if they could qualify for a conventional loan. Homebuyers can learn more about their options at AchieveTheDream.com
Reaching homebuyers in today’s world also means being where the customer is. Not only should a business explore opportunities to enter growing Hispanic communities with a brick and mortar office in areas that serve as community hubs, but a strong virtual presence targeted to a Hispanic, bilingual audience is also essential. Hispanics spend 25% more time on their phones and engage with social media at higher rates than other demographic groups. The National Association of Hispanic Real Estate Professionals points to this as an essential part of any strategy to reach the Hispanic market.
NAHREP states, “As brands decide how to engage with Hispanics or Hispanic Millennials, it is critical to develop a fully articulated social media engagement strategy for these audiences.” A relatively simple way to showcase the diversity of gender, age, race and language is to make sure the photos and posts on social media channels are reflective of the audiences you serve.
With the ever-changing demographic landscape in this country, it is imperative for real estate professionals to understand the marketplace and recognize how better serving the diverse groups within the local community can help achieve growth objectives. If you can fully understand and represent the demographics of the footprint you serve or wish to serve, then the right marketing strategy, business plan, resources and tools to serve the targeted customer base will fall into place.
