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3 Takeaways:
- Latinos helped pull the nation out of the housing recession.
- The Latino community is the only demographic that increased homeownership rates every year for the past five years.
- Despite facing a wealth gap, Latino households are 25% more likely to have an investment property outside their primary households.
For 2020 Hispanic Heritage Month in October, Realogy hosted a series of virtual events that celebrated Hispanic and Latino culture and the contributions the Latino community makes in real estate.
Through its many brokerages, which include Century 21 and Sotheby’s International, Realogy employs 30% of the top 250 Hispanic agents from the National Association of Hispanic Real Estate Professionals. The company also boasts a robust partnership with NAHREP, collaborating on conferences, sharing data, and working together to help bridge the wealth gap between white and Latino communities in the United States.
Realogy’s finale event provided insight into just how important the Latino population is to the world of real estate on both the business and consumer sides.
Hispanic, Latino Buyers’ Pivotal Roles
As a group, the Hispanic/Latino community was largely responsible for the recovery of the housing market during the Great Recession. Noerena Limon, senior vice president of public policy and industry relations at NAHREP, said data presented in the 2019 State of Hispanic Ownership Report showed the Hispanic population is responsible for 51.6% of all homeownership growth from 2009 to 2019, adding a total of 1.9 million homeowners in those 10 years.
“After 12 consecutive years of declines that impacted all population segments, Latinos helped pull the nation out of a devastating housing recession in 2015 when they became the first demographic to show an increase in their post-recession homeownership rate,” Limon said.
Given past trends, NAHREP expects that the Latino population will also be an important factor in economic recovery after the coronavirus pandemic.
A Powerful Buying Community
The Latino community, said Limon, is the only demographic that increased homeownership rates every year for the past five years, making the population an important focal point for the industry. Even amid the coronavirus crisis, in which the demographic is disproportionately affected by job loss and infection rates, homeownership rates and enthusiasm around homeownership has not slowed for the Latino community. This positive outlook remains strong for a number of reasons.
For starters, Latinos are the most active and engaged population when it comes to work and employment, making up 66.8% of the labor force. Possibly the most important economic indicator, though, is age.
“One in 3 Latinos are 18 or younger,” Limon said. “With a median age of 29.5, Latinos are just aging into prime homebuying years, so we can expect that as Latinos age, credit scores will improve, household incomes will improve, and [so will] homeownership rates.”
Additionally, the Latino community, said Limon, is more apt to help each other out and ensure a sustainable future for the population as a whole. An estimated 44% of the population will use extra income to assist a family member or friend in need.
Latinos are driving the first-time homebuyer and millennial buyer populations, but they are also an important demographic to consider when it comes to investment properties.
“Despite the 16-percentage-point white-Latino (wealth) gap, lower median household incomes, and being nearly 14 years younger than the non-Hispanic white population, Latino households in our survey were 25% more likely to have an investment property outside their primary households,” Limon said.
Develop Trust to Engage the Hispanic, Latino Buyer
For real estate agents and brokerages, these facts and figures should make the Latino community an important and viable population to tap. However, Gary Acosta, co-founder and CEO of NAHREP, said it is important that the industry approach these buyers with the right intentions.
“Latinos across the age brackets drive their purchasing decisions based on trust,” he said. “Trust supersedes price in some cases; it supersedes, in many cases, brand. … It’s all about trust.”
To build this trust, agents and brokers should show genuine interest in their families and ambitions. It’s also important to understand the nuances of the Latino household.
For instance, Latinos are 77% more likely than non-Hispanic whites to live in multigenerational households, and the extended family is often a part of the decision-making process.
“If you do that, and then you proceed and facilitate a transaction for a family and it’s successful,” said Acosta, “that family will become your biggest ambassador probably for decades moving forward.”
Brokers and agents not only need to take a genuine interest in the lives of the Latino population, but they also need to work to break down personal bias about the community and have a culturally relevant understanding of what’s important to the community when it comes to homeownership.
Real Estate Could Bridge the Hispanic/Latino Wealth Gap
The Latino community is just as important on the business side of the industry as it is on the transactional side of the industry. Likewise, the industry itself is a catalyst for shrinking the wealth gap between Latinos and non-Hispanic whites.
“Real estate is the best source of wealth creation we have,” said Acosta. “You can still get into the profession with a relatively low barrier of entry, work hard, make money, and potentially become a broker-owner.”
The ability to control one’s opportunity, said Acosta, is attractive to the Latino community. “It’s in our DNA to be an entrepreneur and business owner,” he said.
Still, for real estate to recruit and retain the best talent, some things need to change within the industry, starting with education. The industry, he says, is unique, and education around owning a franchise and making a sustainable living within the industry needs to be readily available.
Representation, Acosta said, should be an integral part of any office structure.
“Nothing replaces recruiting Latinos, not just at the sales level but also at the management level,” he said. “You’ll attract Latino salespeople by having Latinos in the operational ranks of your company.” An infrastructure that includes Latinos at every level provides mentorship opportunities and camaraderie among the demographic, and leads to better retention and morale, he said.
Going forward, NAHREP will continue to provide data and insights, focusing on bridging the Latino wealth gap and making real estate as accessible as possible—as an investment and as a career—for the Latino community. The association also plans to continue to foster connections like the one it has with Realogy so the larger industry will better understand the unparalleled role Latinos play in the business.
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