Oscar Gonzales is managing partner of The Gonzales Group LLC, a strategic consulting firm to the real estate industry specializing in multicultural markets. You can reach him at email@example.com.
Be Prepared for Consumer Diversity
April 1, 2007
The growth and evolution of a multicultural U.S. marketplace is changing the homebuying landscape. If you’re going to capitalize on it, you need to tweak your business plan and marketing approach to accommodate those consumers.
The Hispanic and Asian populations in the United States are growing at three times the rate of the overall U.S. population; the African-American population is growing at double the rate.
As the multicultural population grows and matures, it’s changing in almost every way—from educational levels and workforce composition to household characteristics and accumulation of wealth. Income, which, for the most part, is the magic number used to qualify home buyers for loans, will increase significantly during the next five years among multicultural consumers. The median incomes for Asian Americans, Hispanic Americans, and African Americans will grow by an estimated 11.95 percent, 8.98 percent, and 6.15 percent, respectively, during this period.
As income grows, so will multicultural buying power. According to a study from the Selig Center at the University of Georgia, Asian Americans’ buying power is expected to increase to $626 billion by 2011 from $117.6 billion in 1990. During the same period, the buying power of Hispanic Americans is expected to increase to $1.2 trillion from $212 billion, and that of African Americans is expected to grow to $965 billion from $316.5 billion.
For the fourth quarter of 2006, the U.S. Census Bureau reported that home ownership rates among multicultural home buyers continued to climb but still lagged behind those of traditional white non-Hispanics. The overall home ownership rate for the United States was 68.9 percent—76 percent for whites, 49.2 percent for Hispanic Americans, 48.2 for African Americans, and 60 percent for Asian Americans.
One can conclude that as their economic power increases, multicultural consumers will become much more active home buyers. So how do you prepare to accommodate the increased buying power and growth of those populations? The answer is through cultural awareness and education.
In the past, the process for reaching multicultural consumers was often limited to one-dimensional efforts, such as literal translations of marketing campaigns. Today, however, there are organizations—such as the National Association of Hispanic Real Estate Professionals, the Asian Real Estate Association of America, and the African American Real Estate Professionals—that help educate real estate professionals on cultural attributes.
In addition, real estate companies might need to develop new products and services designed specifically to meet the needs of this new America as many emerging-market home buyers have little, if any, point of reference for what real estate professionals are or the role they play in the transaction. Among the steps a real estate company can take are:
- Providing end-to-end multilingual service.
- Partnering with lenders and title companies that understand multicultural nuances.
- Creating lobbies and closing rooms that can accommodate larger, multigenerational families.
- Providing training for sales associates and staff regarding the language and cultural barriers that may come into play during a real estate transaction.
- Creating separate multicultural departments, allocating a marketing budget, and setting measurable goals for each segment What you can doEven if you don’t have the financial resources to take such steps, you can.
- Do your research. Carefully study customers and their relationship with your products or services. You’ll be dealing with people from high-context cultures, which means they place a lot of emphasis on being in a relationship and not merely transacting business. By doing your homework, you’ll know the right steps to take to put your multicultural customers and clients at ease.
- Exercise cultural connectivity. To connect with people from a different culture, it’s important to demonstrate you understand their cultural context. Every country has context. Americans, for instance, are often emotionally stirred when they hear “The Star-Spangled Banner” or celebrate Thanksgiving with family. Such cultural connectors reinforce people’s values, community spirit, religion, and other societal principles.
- Cultural connectors are often even more profound in the multicultural community, and successful real estate professionals are attuned to those factors when dealing with the multicultural consumer. Consider how you might feel if someone insisted that you sign closing documents on Sunday morning, a day many Americans traditionally set aside for religious and family activities.
- Involve yourself. How a community sees a company is often how an individual will see that company. Many successful companies employ public relations strategies that include cause-related projects focusing on ethnic communities. An example is a literacy walk to raise funds for Hispanic community schools. The key to those endeavors is being genuinely concerned about and involved in the multicultural community and not appearing as if you’re involved just to make a buck.
The growth and maturation of the multicultural population in the United States brings many benefits to this country. Through cultural sensitivity and preparedness, you can serve the needs of those consumers for years to come.