Do you know how to reach them?
Over the last few years, rising home prices, interest rates, and inflation — combined with insufficient inventory — have caused unprecedented affordability challenges in the home market. But one demographic has defied the odds and posted steady growth: Hispanic homeowners.
And this is only the beginning. Demographic and industry projections depict a future where the United States continues to become more diverse and Hispanic homebuyers grow as a market force. This represents a significant opportunity for real estate professionals to grow their business. But to do that, they will have to understand how to meet the needs of this emerging market.
“Hispanic” is generally used to describe anyone who lives in or has heritage from Mexico, Central America, South America, Puerto Rico, and much of the Caribbean, but not everyone embraces this term. Some prefer the term Latino/Latina/Latinx, Chicano/Chicana, or their specific cultural identity (Puerto Rican, Mexican, Cuban, etc.).
Remember that this is not a monolithic population. Each group has its own cultures, traditions, and concerns. Learn about the populations in your community and understand how you can meet their specific needs.
For decades, Hispanic Americans, along with all minority populations, faced an uphill battle for homeownership. In addition to economic challenges and societal prejudice, these groups were disproportionately affected by redlining — a practice endorsed by the American government that discouraged home lending in neighborhoods with a high percentage of minority residents. This barrier was compounded by the practice of steering (directing minority homebuyers towards or away from certain neighborhoods) and the fact that agents and home sellers often refused to show properties to minority applicants.
The Fair Housing Act, passed in 1968, made all of these practices illegal, but even today, housing discrimination is a very real problem. A recent survey showed that 50% of Hispanic homebuyers experienced or witnessed discrimination in the form of steering towards or away from specific neighborhoods, and 46% reported that a homeowner or agent refused to show a property based on the race or ethnicity of the buyer. [2]
Hispanic Heritage Month is timed to encompass important independence anniversaries for multiple Latin American countries. These include:
September 15: Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica
September 16: Mexico
September 18: Chile
September 21: Belize
Other holidays celebrated in this time include Virgin Islands–Puerto Rico Friendship Day on October 9
Despite these historical challenges, today Hispanic Americans represent a robust market segment. As of 2022, there are 9,164,000 Hispanic-owned households, and this number could easily be doubled by outreach to the millions of Hispanic prospects who are on the bubble of homeownership. [1] This includes:
Going forward, the Urban Institute predicts all net-new household growth through 2040 will be among non-white households. This represents a significant opportunity to further minority homeownership, and that begins with understanding the barriers that still exist today. [3]
To get those 10 million potential homebuyers from “almost there” to “Home Sweet Home,” the housing industry will need to confront the barriers that most commonly challenge Hispanic Americans and other minorities looking to get their share of the American Dream. These include:
Earlier and better education on financial planning and homebuying can help address many of these issues, but the housing industry also faces a more subtle challenge: A lack of Hispanic representation among real estate agents and loan officers. Employment in the housing industry grew a remarkable 66% between 2000 and 2019, but Hispanic representation grew only 5%, and Black representation showed less than 2% growth. [4] At this rate, Fannie Mae estimates it will take 114 years for representation in the industry to mirror the diversity of our country. [4]
These challenges are intimidating, but they’re not insurmountable. Better still, by taking action to improve homeownership rates for Hispanic Americans and other minority homebuyers, real estate professionals can achieve significant business growth while also promoting a more just society overall. Industry professionals can:
1. Provide education on home equity and credit.
Public libraries, community events, and schools may offer venues for reaching potential homebuyers.
2. Learn more about Hispanic cultures in your areas.
Canadians, Americans, and Britons all speak English, but they have very different cultural norms and outlooks. The same is true of people from Cuba, Mexico, Puerto Rico, and all other countries that contain Spanish-speaking peoples. The more you understand the people in your market, the better you can serve them.
3. Understand that discrimination still exists.
Listen to your clients and colleagues when you hear about negative experiences and practices, and be prepared to report violations of the Fair Housing Act.
4. Use Spanish-language marketing the right way.
Federal and state laws regulate wording of marketing in a language other than English. Make sure you comply with all such regulations and ensure that any Spanish-language marketing you do is culturally appropriate as well as correctly worded.
5. Partner with professionals who can extend your reach.
Network with loan officers, attorneys, appraisers, builders, and other housing market professionals who can help you connect with and effectively serve Hispanic homebuyers.
6. Promote diversity in the housing industry.
Look for job fairs and other community or school events where you can talk about career opportunities in the housing industry, or mentor individuals who are new to the industry or interested in joining the profession.
7. Join and support local, state, and national fair housing groups.
Real and lasting change will only come from broad policy, economic, and societal shifts. Real estate professionals have a responsibility to push for this change, and more importantly, are positioned to reap significant business gains by promoting minority homeownership.