Blanche Evans is a writer/editor and CEO of evansEmedia. Formerly, she was a senior editor with Realty Times, where she was named by REALTOR® Magazine as one of the most influential people in the real estate industry.
What Practitioners Should Know About the Hispanic Market
A new study shines light on the attitudes Hispanics have about the homebuying process.
October 1, 2004
Hispanics are expected to account for as much as 40 percent of all new homeowners over the next 20 years, according to the Harvard Joint Center for Housing Studies. That statistic suggests that the real estate community would be smart to learn more about this growing demographic.
A recent survey of more than 1,800 Hispanics by Texas A & M's Real Estate Center shows unique homebuying attitudes and expectations. A look at some of the key findings can be helpful to practitioners who serve Hispanics.
Here are eight of the Center's findings:
- For real estate advice, Hispanics are more likely than the three other ethnic groups surveyed (blacks, whites, and Asians) to first consult a parent rather than a real estate practitioner. That suggests real estate salespeople should think in terms of family, friends, and relationships when working with Hispanics. If agents provide good service, referrals from family members are likely.
- More than half of the Hispanics surveyed believe it’s difficult to qualify for a mortgage. The finding is supported by research from the Harvard Joint Center for Housing Studies, which says that only 49.9 percent of Hispanics have access to prime loans, compared with 74 percent of whites.
- Hispanics are less likely than other groups to consider the homebuying process to be easy, thanks in large part to language barriers, negative attitudes toward debt, and the complex nature of U.S. real estate transactions, among other things.
- Most Hispanics surveyed say they’re comfortable buying a home with a small downpayment. However, fewer say they’re willing to extend themselves financially by making larger monthly payments than they make as renters to be able to own a home.
- Hispanics have the lowest expectations of what they will pay for a home. They are the most financially conservative group of the four ethnic groups surveyed by the Center.
- Many Hispanics in all income ranges prefer a real estate practitioner who can relate to them. Respondents say that means the agent speaks Spanish, has the same ethnic background, is of the same age group, and has a neat workspace.
- All survey respondents want the practitioner to manage the closing process in its entirety. They consider it important for the practitioner to explain the process, explain contracts, set the right asking price, and negotiate on their behalf.
- Forty-eight percent of Hispanics who do not own a home say that they are likely to purchase a home in the next two or three years.
Access to credit is one of the top challenges and fears facing Hispanics who want to become homeowners. "About 80 percent of Hispanics are first-time homebuyers,” says Gary Acosta, co-founder of the National Association of Hispanic Real Estate Professionals. “There is significant cultural aversion to debt, so 25 percent of Latinos have no credit score. That creates challenges for automated underwriting programs."
In Latin America, mortgage lending is "rare and you have high inflation so getting a long-term mortgage is hard,” he says.
Acosta also points out that Hispanic homebuyers prefer to communicate in Spanish if it is their first language. That means practitioners who can speak Spanish have a big edge over their competition.
"Bilingual marketing support and the understanding of the drivers behind cultural characteristics" will go a long way with Hispanic homebuyers,” he says. "[Practitioners] must become fluent in the products and services that the Hispanic market needs."
(c) Copyright 2004 Realty Times. Reprinted with permission.
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