What to Know About Hispanic Homebuyers
Hispanic homebuyers are ready to move the market.
According to the Pew Research Center, the Hispanic population reached a new high of 57 million (or 18 percent of the total U.S. population) in 2015 — and by 2060, experts project this may surge to 30 percent. While overall homeownership has trended downward in recent years, ownership among Hispanics experienced a substantial gain.
Last year, Hispanics accounted for 69 percent of the total net growth in U.S. homeownership — by comparison, the rate for every other major population group decreased.
Hispanics are no longer clustered mainly in Florida, California and Texas, either.
While the greatest number of Hispanic homebuyers are in cities such as Los Angeles, Miami, Dallas, New York and Chicago, Hispanic homeownership is surging in many other markets, including Atlanta, Phoenix, Las Vegas and Sacramento, according to the National Association of Hispanic Real Estate Professionals (NAHREP).
For Hispanics, buying a home is an important step in achieving the American dream.
“Many have emigrated to the U.S. from other countries and see homeownership as a great piece of the puzzle to building the great American dream for themselves and their offspring,” says Carmen Serrano Giubilei, a licensed Realtor with RE/MAX Vantage in Lake Nona, Fla., whose clientele is 50 percent Hispanic. “At the same time, they fully understand the concept of building equity over time.”
With so much evidence pointing to the importance of this burgeoning market, you may be wondering how you can help your Hispanic clients find their perfect home. Following are a few key facts to help you do just that:
Many Hispanics are first-time buyers.
Hispanic homebuyers are practical, strategic and interested in long-term value.
Access to low down payment mortgages is especially important, says Gary Acosta, founder and chief operating officer of NAHREP. Giubilei couldn’t agree more.
“Latino buyers don’t just want a home that is structurally sound and in a safe area, they also want mortgage payments well within their financial reach with the potential to allow them the realization of the American dream,” she says. “They are looking for homes that will afford them greater possibilities for a more comfortable retirement, as well as an improvement in their children’s lifestyles.”
Like a lot of first-time homebuyers, Hispanics want to be able to provide a sizable down payment to keep their monthly mortgage payments manageable, but many have trouble saving. Research released in 2015 by TD Bank’s First-Time Home Buyer report revealed 66 percent of Hispanics who are planning to buy a home in the next five years want to provide a down payment of 20 percent or more, but the same percentage admit saving enough to achieve that is a challenge.
In fact, Hispanics are more likely than the general population (46 percent versus 38 percent) to consider affordability programs, often looking to real estate professionals to help guide them through that process.
Many Hispanics have multigenerational households.
Hispanic families tend to be very close knit and it’s common for children to live with their parents until they’re older or married. It’s also common for grandparents or other family members to reside in the home as well, making utility especially important. “Hispanics generally look for homes with large kitchens, extra bedrooms and yards,” says Acosta.
For these reasons, many Hispanic buyers prefer split plans. “They look for separate formal living and dining room areas where holidays and family celebrations can be savored amongst family and friends,” says Giubilei.
In contrast, the general market trend moves more toward an open-concept plan with a great room that has little to no separation from the formal living and dining room.
The average Hispanic homebuyer is a full 10 years younger than the national average.
Most Hispanic homebuyers already have children living at home. The typical Hispanic household is twice as likely as the general population to be made up of two parents and at least two children, according to the NAHREP. This means access to good schools, parks and a safe community are key.
“Schools play a significant role in the homebuying process for Hispanics,” says Giubilei. “The rating of a particular school or the specific academic programs it may offer, as is the case of charter schools and various magnet programs, will significantly enhance the market value of a home over properties in areas that are not so favorably allocated and these buyers know that.”
Buying a home is often a family decision.
Purchasing a home is a decision that often involves family members who are not on the actual title or part of the purchase transaction, but whose input and advice is considered an important part of the process.
“Indeed, at the closing table, it’s not uncommon to find many of those interested parties participating in the process, making the need for culturally competent professionals an especially important factor in Hispanic purchase transactions,” Acosta says.
It’s common for several family members to buy a home together.
Sometimes two families pool resources to purchase a home. “In at least one-fifth of my home sales, family members have joined forces with their children, parents or siblings to make the prerequisite financial qualifications to purchase a home,” Giubilei says.
“Since the real estate market meltdown of 2008, financing requisites have become more rigid for individual buyers,” she says. “Nonetheless, I’ve experienced firsthand many instances in which the children of parents who lost their homes due to foreclosures or short sales are qualifying to buy a home with the help of Federal Housing Administration financing, which requires a mere 3.5 percent down. The plan in many of those instances was to share the home with their parents, who would be contributing to the financial expenses of running the household.”
Spanish-speaking real estate professionals may have an edge.
Remember that Spanish class you took in high school? It may be time to sign up for an online class to dust off those skills.
“Our data shows that at least 25 percent of all home purchase transactions are negotiated entirely in Spanish, so access to home mortgage professionals who speak Spanish and have cultural competencies is highly important,” Acosta adds.