The homeownership rate for Hispanics has jumped recently, a fact that could buoy the housing market for years, according to a recent Wall Street Journal1 article.
The homeownership rate of Hispanics is on the rise, according to a recent Wall Street Journal article. It was only three years ago that homeownership for this group was at a fifty-year low. Today, census data shows that it has risen 3.3%, which surpasses the homeownership growth rate of 1.3%. Further, while Hispanics account for only 18% of the U.S. population, they accounted for 65% of the homeowner gains.
Some key factors in the gain were attributed to the Hispanic gains in income, education, and understanding of the U.S. mortgage market, as well as the increasing population of Millennial homebuyers. Some challenges that face Hispanic and other minority groups have been the lack of starter-home inventory and home affordability in concentrated areas. Despite what the WSJ describes as “a growing population of young Latinos increasingly eager to buy homes,” homeownership rates for this group remain well below non-Hispanics—47%, compared with the non-Hispanic 73%, in the first quarter of the year. The latest National Association of Hispanic Real Estate Professionals (NAHREP) State of Hispanic Homeownership Report, says this group accounts for 32.4% of overall U.S. household formation.3
While 55% of the nation’s Hispanic people live in Texas, California, and Florida, the Hispanic population of eleven other states has grown 10% since 2000: Connecticut, Rhode Island, Utah, Oregon, Washington, Idaho, Kansas, Massachusetts, Nebraska, Hawaii, and Oklahoma. Hispanic people will compose 56% of all new homebuyers by 2030, according to the Urban Institute.4
There appears to be an education and communication barrier between lenders and Hispanic borrowers. Hispanic consumers commonly believe that a minimum down payment to buy a home is 20 percent of the sales price. About 56 percent think it’s difficult to get a home loan in today’s environment, yet more than 80 percent think that owning a home is a good long-term investment. From this data, home ownership is a long-term goal for most Hispanic households, yet their perceptions about obtaining a loan keeps them from speaking with a loan officer, much less applying for a loan.
At Chenoa Fund, we see many correspondents who tailor their offerings to provide Hispanic buyers with down-payment assistance in the form of second mortgages, for the purpose of increasing affordable and sustainable homeownership, specifically for creditworthy, low- and moderate-income individuals.
Here are five tips on how you can reach the potential Hispanic homeowner and develop strong relationships:
1. Partner with Local Hispanic Organizations
In almost every city there are events and celebrations throughout the year for the Hispanic community and culture. You can support these local organizations by sponsoring events, attending luncheons, and participating in events. The NAHREP (National Association of Hispanic Real Estate Professionals, https://nahrep.org/) a resource with over 30,000 members, is a great match for lenders to connect with at a national or local chapter level. Reach out to these professionals and consider putting on a series of home buying seminars about first-time home buying, FHA loans, and other housing assistance programs.
2. Understand the Hispanic Homebuyer
It is important to understand the needs and profile of the Hispanic homebuyer and what sets them apart from other homebuyers. Many are bicultural, bilingual, and live in extended family situations that can include several generations. Hispanics are known to be brand loyal, tech-savvy, and 58 million strong. According to Forbes, half of the Hispanic community is under the age of 296. Hispanic Millennials make about 20% of Millennials, according to a Brookings Report5. As a bicultural group they can easily speak and read Spanish at home but just as easily watch a movie in English.
Start by speaking about the goal of homeownership and available product offerings though communication vehicles that communicate to a Hispanic audience. A Spanish-language radio ad may help you reach baby boomer grandparents, while a Snapchat filter can help you reach “il-linenials” or Hispanic Millennials.
3. Include Hispanics in General Marketing Efforts
According to the Harvard Center for Housing Studies2, it is estimated that by 2025 three-quarters of all new US household formations will be minorities. When you think about creating marketing campaigns, you might be tempted to create a niche marketing campaign to reach Hispanics. Rather, it is recommended that you be inclusive in your general campaigns to reach the greater community you serve. Stay away from stereotyping. For example, use images that reflect varied ethnic cultures and races.
According to the Forbes article, more than half of the respondents said that they use English online, even if they generally spoke Spanish at home. While they consume content in English, this doesn’t mean you shouldn’t be making the effort to incorporate Spanish into your marketing campaigns. It was noted that 56% of Spanish-speaking Hispanics said that they were more loyal to companies that advertise in Spanish, which underscores the need for campaigns to connect with Hispanics in their own language. They continued by stating that it’s also important, in marketing, to transmit elements of Hispanic culture, even if it’s in English, because it makes individuals feel that you understand them and their cultural backgrounds. Social media represents an important touchpoint for Hispanic consumers, especially for much-sought-after Millennials, since almost 50% of Hispanic millennials said they had talked about a brand online with others or used a brand’s hashtag, compared to 17% of non-Hispanics. Brands should take care to use social media to cultivate brand loyalty among Hispanics.
4. Give Choices
It’s important to have loan officers in the office that can speak both Spanish and English. Many Hispanics prefer to speak Spanish instead of English, and there are many who buy homes who don’t speak English. On a website and mobile app, consider giving people a chance to review the webpage in English or Spanish. Your blogs and articles can also be printed in both languages. Always prominently include the phrase, “Se habla Espanol” on all media.
5. Consistently Invest in the Community
Create a plan and stick to it. If you are going to include the Hispanic community in your business development strategy, do not take the “one and done” approach. You need to be consistent and sincere in your outreach to develop long-lasting relationships throughout the year. Like any potential homebuyer, Hispanic homebuyers interact with those who are sincere and authentic in their communications. Enter new prospect information in your database and add them to your marketing campaign. Send them regular emails, newsletters, and tweets that cater to the Hispanic market.
The Hispanic community wants to be homeowners, yet many feel they just won’t be able to qualify. By using these strategies, you may begin to connect with the Hispanic audience to build a loyal relationship with long lasting dividends.
1. Wave of Hispanic Buyers Shores Up U.S. Housing Market, July 15, 2019
2. State of the Nation’s Housing report-2018
3. 2018 State of Hispanic Homeownership Report
4. Urban Institute
5. Booking Report
6. Six Facts About The Hispanic Market That May Surprise You