How to Work With the Fastest-Growing Consumer Group

 

The U.S. housing market faces a glut in supply right now, but there’s one group that will add a lot of demand in the coming years. Who are they, and how can you work with them?
By Kelle Sparta // | February 2011

 

With the deflation of the real estate “bubble,” the collapse of major financial institutions, and bad mortgage lending policies and processes, we’re in the midst of the perfect economic storm. The problem is that the storm isn’t over yet.

The oldest of baby boomers — people born in the United States between 1946-1964 — are starting to retire. Many boomers own more than one home. As boomers leave the workforce and want to divest themselves of some of their properties, and as they die and pass along those homes to children who already have houses of their own, we’re going to see an increase in the total available inventory. We’re just at the beginning of this stage; it will unfold over the next 10-20 years.

In many markets, we already have a glut of housing inventory due to the mass foreclosures that have happened in recent years. This is not good. Too much supply and not enough demand is a recipe for further drops in prices. And declines in housing values will make many properties good investment properties — meaning an open market for foreign investors — one property at a time.

But there is a largely untapped market in the United States: the Latinos. This demographic makes up 15.8 percent of the U.S. population but only 1 percent of the home owner market. If cultivated, this group could balance out supply and demand in housing during the next decade.

Why Aren’t They Buying Now?

Hispanic ownership is low for a variety of reasons:

  • Lack of education within the Hispanic community regarding mortgage loans and home ownership.
  • Lack of education within the real estate industry on how to approach and engage the marketplace. (No, you don’t have to speak Spanish, but it doesn’t hurt!)
  • A need to broaden the cultural concept of the “family home” to include more than just the nuclear family.

 

The Benefits of Working With Latino Buyers
 found out through personal experience that working with Latino buyers can be really rewarding — both emotionally and financially. What you have to understand about the Latino market is that they decide if they like you first. If they do, then they’ll talk business. It’s a relationship issue. You have to talk about family, personal activities, and matters of the heart before matters of business become relevant. But once you are accepted, you are like family to them. You will be invited to social gatherings and referred to everyone they know.

But the flip side of that is you must honor the relationship or risk losing it. This means that you have to truly be interested in building relationships over the long term in order to operate effectively in this market. So if you’re like the practitioners who have come by my booth at the NAR Conference & Expo and said, “I don’t want to get to know them better; I just want to sell them a house,” when I talked to you about relationships — well, this probably isn’t the market for you.

Ahead of the Game

There are organizations that have seen this trend coming and are ahead of the curve. You may be able to find support and information from them. For instance, the National Association of Hispanic Real Estate Professionals has advice for practitioners of all nationalities about working with the Latino market. You also might look into getting your At Home With Diversity certification to understand this underserved market even more. Here are some additional resources:

 

The market is in trouble, and it could continue to falter. But we, as a group, can influence it for the better. If each of us could make a few families from this group home owners this year who otherwise might not have considered it, we could collectively create millions of home sales. This would go a long way towards solving the housing crisis. The key question here is: What will you do to help yourself, your industry, and consumers?

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