For the second year in a row, Hispanics were the only ethnic demographic with an increase to their homeownership rate
While overall homeownership rates in the U.S. dropped for the 12th consecutive year and are at their lowest levels in almost 50 years, Hispanics have broken from this trend due to their high workforce participation and their fervent desire to own a home.
According to The National Association of Hispanic Real Estate Professionals (NAHREP®), for the second year in a row, Hispanics were the only ethnic demographic with an increase to their homeownership rate, which surged from 45.6 percent in 2015 to 46.0 percent in 2016. The improvement came in a year when Hispanics also led in net household formations, adding a total net increase of 330,000 households.
Initiatives from major corporations focused on Hispanic homebuyers, and a sharp growth of Hispanic entrepreneurs in mortgage banking and the real estate brokerage business are helping to advance this growth.
“With credit remaining tight and limited housing inventory in several markets, these numbers are extremely encouraging and a testament to the economic resilience of the Hispanic community,” said 2016 NAHREP President Joseph Nery.
According to Census Bureau data, the overall homeownership rate dropped from 63.7 percent in 2015 to 63.4 percent in 2016. At the same time, the African-American rate also dipped from 43.0 percent to 42.2 percent and the Asian-American rate dropped from 56.5 percent to 55.5 percent.
Follow the Money
We aren’t just talking about homes. We are also taking about buying power. Cha-Ching.
While Hispanic homeownership continues to increase, so does the average household income. According to U.S. Census data, the average Hispanic household income had increased to $42,396 in 2014 from $40,946 in 2009, and the percentage of Hispanics with a household income greater than $50,000 increased to 43% in 2014 from 30% in 2000. Additionally, income levels for both U.S.-born and foreign-born households have increased; U.S.-born households with incomes exceeding $50,000 increased to 48% in 2014 from 33% in 2000, while foreign-born households with incomes exceeding $50,000 increased to 38% from 26%.
In 2015, Hispanics controlled $1.3 trillion in buying power, according the Selig Center for Economic Growth, up 167% since the turn of the century. The increase is more than twice the 76% growth in non-Hispanic buying power during the same period. The center’s projections show U.S. Hispanic buying power continuing this trend, reaching $1.7 trillion by 2020. That is a lot of buying power.
“This trend isn’t going away,” said Maria Zywiciel, President of NAHREP Consulting Services, a strategy and marketing company specializing in housing. “The numbers don’t lie and they clearly demonstrate why companies need to act now. Diverse segments, in particular the Latino market, is a key market driver for long term business growth.”
An Opportunity to Connect & Engage
The continued growth in Hispanic homeownership reinforces the opportunity that companies have in connecting with this growing segment. Companies that offer insurance, home décor, cable/internet providers, lawn products or services, and tool manufacturers are just a few of the industries that can take advantage of the trend.
Even companies not in those particular industries should take notice and ramp up their efforts. Think about the marketing opportunities for moving companies, security corporations, furniture stores, supermarkets, utility providers and, of course, home improvement “big boxes”.
There are lots of innovative ways to engage with new homeowners beyond traditional advertising. Hispanics are among the most mobile consumers, are you reaching them in their preferred way? Are you effectively connecting and reaching Hispanic homeowners? Are you poised to engage with the consumer segment that is set to take over as the chief shopping officers in the U.S? The demographics of America continue to change and so does the American consumer. Brands need to make sure they adapt accordingly.