By Jessica Verduzco
Recent statistics indicate the diversification of the U.S. population continues to grow, and yet the rate of multicultural homeownership lags significantly behind others. Real estate professionals may benefit by recognizing the opportunity to grow their business by reaching out to the ever-expanding multicultural home-buying communities.
A “win-win” strategic move for business growth and success in the 21st century can often come from breaking through cultural, ethnic and language barriers and advancing financial education in terms of the home-buying process within multicultural markets. Using innovative methods to teach financial literacy can not only empower real estate professionals to succeed, it can help transform the “American dream” of home ownership into a reality for traditionally underserved communities.
Multicultural communities and new immigrants often come from countries with traditions where a handshake is a contract. Trust is a major factor, and many do not have the frame of reference and lack an understanding of the complex real estate and lending process in the U.S. In addition, language and cultural barriers can exacerbate the reluctance of qualified potential homebuyers in regards to doing business with companies who are not culturally-competent.
With extensive news reports about multicultural homebuyers being hit the hardest by predatory real estate practices, there is escalating pressure from regulatory agencies and consumer protection groups to better inform multicultural and low-income consumers regarding all facets of the real estate transaction. Companies that take the lead in voluntarily implementing real estate financial literacy initiatives within the growing multicultural segment of homebuyers could find themselves reaping the rewards.
The U.S. Demographic Shift
• As of 2008, one-third of the U.S. population is of either Hispanic, Asian or African-American origin. Currently, Hispanics make up 15.8 percent, African-Americans 12.3 percent and Asians 4.7 percent. By 2013, it is estimated that these three major ethnic groups will represent a combined U.S population of more than 109 million, with Hispanics representing nearly half at 54,375,657 (Source: Latin Force Group LLC; U.S. Census Bureau).
• The U.S. Census Bureau has projected that in 35 of the country’s 50 largest cities, non-Hispanic Whites are, or soon will be, in the minority. It is this kind of data that has made expanding into the multicultural market a strategically sound decision full of opportunities for the real estate industry.
• In 2007, the buying power of these three multicultural communities included:
Asian – $459 Billion
Black – $845 Billion
Latino – $862 Billion (Source: Selig Center)
Best Practices to Diversify and Expand
Here are some key tips on what steps to take to combine innovative business solutions with financial education, and cultural insights on how to grow your business in an expanding multicultural market.
1.Develop alliances with national organizations and industry partners that will foster partnerships within local multicultural communities served by your business. Such organizations include:
• Neighborhood Housing Services of America (NHSA), a national nonprofit working to revitalize neighborhoods and strengthen communities across America.
• Operation HOPE Inc., a social investment bank and a national provider of financial literacy and economic empowerment programs.
• The Greenlining Institute, a multi-ethnic coalition that promotes home ownership and inner-city economic development.
• The Asian Real Estate Association of America (AREAA).
• The National Association of Hispanic Real Estate Professionals (NAHREP).
• National Association of Real Estate Brokers (NAREB).
2. Educate staff to increase their multicultural competency and insights, and enhance their knowledge of acceptable, culturally-sensitive approaches to the marketing of the products and services you offer.
3. Create training for real estate professionals regarding the use of culturally-specific materials to help dissolve barriers that often arise when members of ethnic communities enter what may be an unfamiliar home-buying process.
4. Provide financial literacy education and customized products and services to multicultural borrowers to help them buy a home that they can afford and maintain, which industry experts have determined are critical components to closing the multicultural home ownership gap.
5. Organize educational events for real estate professionals regarding effective communication to ethnically diverse communities of the importance of building credit, banking, financial planning, understanding the home-buying process, interest rates and understanding the title and escrow process.
Any and all of these value-added services could help your company be perceived as an informative and trusted partner with the best interest of the multicultural homebuyer in mind.