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This article was published on: 06/01/2004

Multicultural impact
The Changing Face of Homeownership

The demographics of the U.S. population and homeownership will dramatically shift over the next few decades. Are you prepared for your new customers?


Where Immigrants Are Coming From
Where Immigrants Live
What to Know About Multicultural Homebuyers
Target This Niche
How You Can Reach This Market
Certification Programs to Serve the Multicultural Market
Additional Resources

Look around, and you’ll see that the makeup of the American population is changing. Growing numbers of both immigrants and citizens of Latin American, Asian American, and African American descent are creating an increasingly diverse population in the United States.

Consider these numbers:
  • During the 1990s, the foreign-born population in the United States grew by 11.3 million. By 2000, the number of foreign-born residents totaled 31.1 million and made up more than 11 percent of the total population, according to the Fannie Mae Foundation.
  • Continued immigration and growth in the number of members of minority groups will lead to even more dramatic shifts in the U.S. population. The non-Hispanic white population, which makes up more than two-thirds of the population today, will decline to 50.5 percent of the population by 2050, projects the U.S. Census Bureau.
  • At the same time, several minority groups are expected to double or triple in size. The Hispanic population will jump from 35.6 to 102.6 million, or from 12.6 percent to 24.4 percent of the population. The number of Asian Americans also will triple, growing from 10.7 million to 33.4 million, or from 3.8 percent to 8 percent of the population. The number of African Americans will grow from 35.8 million to 61.4 million, or from 12.7 percent to 14.6 percent of the population, according to the U.S. Census Bureau.
  • During the 1990s, minorities accounted for more than half the increase in the numbers of homeowners in 10 states, including California, New York, Maryland, Oklahoma, and Illinois, according to the Fannie Mae Foundation. Nationally, minorities accounted for 40 percent of the net increase in homeowners during the same period.
  • Minorities currently make up nearly a quarter of first-time homebuyers, according to The 2003 NATIONAL ASSOCIATION OF REALTORSŪ Profile of Home Buyers and Sellers.
  • The pace of minority homeownership is likely to heat up. Between 2000 and 2020, the number of U.S. households headed by a minority will grow by more than 15 million, predicts “The State of the Nation’s Housing: 2003report by the Joint Center for Housing Studies at Harvard University. As a result, minority households will make up about two-thirds of new households, the report says.

What do all these numbers mean for real estate professionals?

Your customer base is changing. Americans buying homes, especially first-time homebuyers, in the next 10 to 20 years will increasingly be ethnically and culturally diverse. Although major metropolitan areas are the most immediately affected, these changing demographic trends will permeate every geographic corner of the real estate industry in the next 50 years.

Are you ready to face the challenges of working in an increasingly multicultural marketplace?

“Given the size of these markets, it’s a business imperative to be in them,” says Nicolas Retsinas, director of the JCHS in Cambridge, Mass.

Where Immigrants Are Coming From

Even as immigrants continue to make the United States more diverse, the places from which they come are increasingly concentrated. In 2000, immigrants from Latin American countries accounted for 46 percent of the total immigrant population. That’s up from about 37 percent in 1990, according to the Center for Immigration Studies (CIS), a Washington, D.C.-based non-profit research organization.

This trend largely is being driven by the growing number of foreign-born residents from Mexico. In 2000, this group accounted for 30 percent of the total number of immigrants, up from 22 percent in 1990, reports the CIS. In 2000, Mexican Americans comprised the largest numbers of foreign-born residents in 30 states.

According to CIS figures, other countries besides Mexico from which most foreign-born residents had immigrated in 2000 included: China/Hong Kong/Taiwan, India, the Philippines, and Vietnam. Together, these countries accounted for about 14 million, or 45 percent, of the total foreign-born population in the United States, according to the U.S. Census Bureau.

Where Immigrants Live

Immigrants arriving in the United States today are blazing paths different from previous generations. They’re forming new gateway cities and increasingly are heading to suburban, rather than urban, areas.

The metropolitan areas of New York City, Los Angeles, San Francisco, and Chicago received the highest numbers of immigrants between 1995 and 2000, according to William Frey’s October 2003 study, “Metropolitan Magnets for International and Domestic Migrants for The Brookings Institution, an independent think-tank in Washington, D.C.

The study reports that in 2000, six states—California, Florida, Illinois, New Jersey, New York, and Texas—housed more than two-thirds of all foreign-born residents.

Even so, several clear shifts are underway:
  • The share of immigrants living in these states dropped from 72.9 percent in 1990 to 68.5 percent in 2000. The reason? Immigrants sought better job prospects in other states, including North Carolina and Nevada.
  • Between 1990 and 2000, North Carolina, along with Georgia and Nevada, experienced increases topping 200 percent in the numbers of their foreign-born residents. Another 16 states saw increases of between 100 and 199 percent, according to the U.S. Census. “Immigrants are spreading out more widely and more quickly,” Retsinas says.
  • Several U.S. counties that are miles from traditional immigrant gateways have foreign-born populations topping 20 percent. Examples include Clark County, Idaho; Finney County, Kan.; and Adams County, Wash.
  • A growing percentage of immigrants are moving to the ’burbs. During the 1990s, about 3 million minority-headed households moved to urbanized or inner-ring suburbs, reports the JCHS’s “The State of the Nation’s Housing: 2003.”
  • Currently, about 51 percent of foreign-born residents call the suburbs home; that’s about equal to the percentage of native-born Americans. Less than half—43 percent—of foreign-born residents live in central cities, according to the CIS.
  • The increasing numbers of foreign-born residents in the suburbs reflect “secondary” or “domestic” migration. These phrases refer to the movement of people already living in the United States from one part of the country to another. About 11 percent of domestic migrants between 1995 and 2000 were foreign-born, according to The Brookings Institution.

As the shifting make-up of suburban populations suggests, minorities are making up larger shares of the residents leaving urban areas. For instance, the proportion of white residents leaving Los Angeles dropped from 78 percent to 41 percent between 1985 and 1995. New York, San Francisco, and Chicago also saw the proportion of white residents leaving for other communities drop over this period.

What to Know About Multicultural Homebuyers

Several other characteristics distinguish foreign-born and minority homebuyers in the United States:
  • Minority homebuyers tend to be older than white homebuyers. While the median age of first-time homebuyers is 30 for native-born white Americans, it’s 31 for Hispanics, 33 for Asian Americans, and 36 for African Americans, according to the JCHS’s “The State of the Nation’s Housing: 2003.” On average, it takes foreign-born residents 12 years after they arrive in the United States to become homeowners.
  • Foreign-born first-time buyers also tend to make larger downpayments. In fact, their median downpayments of 7 percent almost double the 4 percent median of native first-time homebuyers, according to the U.S. Census Bureau.
  • This isn’t to suggest that minority residents face no obstacles as they consider purchasing a home. A major obstacle is money. Nearly one-third of foreign-born residents earned less than $20,000 in 2001, compared with 17.4 percent of native workers, according to the U.S. Census Bureau.
  • As a result, foreign-born residents typically allocate more of their income to housing. For instance, 39 percent of foreign-born residents say that their mortgage payments consume at least 30 percent or more of their income vs. 28 percent of native-born homebuyers, according to NAR.
  • Currently, the homeownership rate among African American and Hispanic households, at 49.4 percent and 47.7 percent, respectively, lags that of the nation. Overall, 68.6 percent of American households are homeowners, according to the U.S. Census Bureau.
  • Members of minority groups in the United States tend to be younger than the rest of the population. “A much larger share of the minority population is under 40,” says Michael Carliner, economist with the National Association of Home Builders in Washington, D.C. As a result, they’re steadily moving into what typically are the prime homebuying years of 25 to 44.

Target This Niche

Some real estate professionals have already developed thriving businesses by addressing the needs of foreign-born and minority customers.

“If you intend to be in business, you have to understand that this is an international workplace,” says Robin Mueck, CRB, co-owner and chief executive officer of Heritage Texas Properties in Houston. Since its inception, Heritage has focused on working with Houston companies that are relocating employees from other parts of the country, as well as the world, Mueck says.

Mueck and her associates do more than help employees find homes. For instance, they may help an overseas relocation employee figure out which inoculations his or her children will need, and the steps needed to register a car in the United States.

Not surprisingly, Heritage invests heavily in training and education in order to offer these services. There’s a payoff, however. Heritage is the largest independent real estate firm in Houston, says Mueck, with sales approaching $1 billion.

Admittedly, a focus on different ethnic markets isn’t entirely new. In the late 1980s, a number of real estate practitioners reached out to non-English-speaking markets. “But, much of it was driven from a social justice perspective,” says John Wong, San Francisco-based broker-associate with Prudential California Realty and president of the Asian Real Estate Association of America.

That’s no longer the case. “The drive (to reach these markets) in the last four to five years comes from the business model, and recognizing that this is where the market is,” Wong says.

A look at recent changes in homeownership rates illustrates the shifts. According to U.S. Census data, from 1994 to 2003, homeownership among white-non-Hispanic households rose 7.7 percent from 70 to 75.4 percent. In contrast, the homeownership rate among African Americans jumped 13.7 percent, from 42.3 to 48.1 percent. The rate for Hispanic homeowners grew 13.3 percent, from 41.2 to 46.7 percent.

To be sure, the larger gains in minority homeownership rates reflect the smaller numbers from which they started. Even so, the number of minority homeowners jumped by 4.4 million during the 1990s, reaching 12.5 million in 2000, according to the Fannie Mae Foundation.

How You Can Reach This Market

Working effectively with foreign-born and minority residents requires real estate professionals to avoid making assumptions about these potential customers, says Ida Freimer, CRS, GRI, broker-owner of Internet Real Estate in Dover, Mass. Between 50 percent and 75 percent of Freimer’s clients are immigrants or minorities. Freimer herself is foreign-born, having emigrated from Poland in 1987.

For instance, many Asian American buyers, even those living on the East Coast, where older homes are in high demand, prefer newer houses, says Freimer. And, different ethnic groups bring their own perspectives to the home-buying process. For instance, “cul-de-sacs are very American,” says Freimer. Many foreign-born homebuyers prefer homes on traditional streets.

To reach these markets, firms may want to hire people that already are familiar with the culture and even speak the language, Wong says. Some companies may purchase other companies that have been working in emerging markets. To date, many of the companies focusing on minority markets were smaller and independently owned.

Danette O’Neal, CRS, CRB, broker-owner of Coldwell Banker Danette O'Neal, REALTORSŪ, in New Orleans, is one example. Just about all the clients that O’Neal and her 62 sales associates have served since O’Neal started the firm in 1999 are members of minority groups.

Many also come with credit problems or lack a credit history. O’Neal often must help her clients improve their financial situation before they can begin looking for a home. Her firm offers classes on consumer finance topics like balancing a checkbook, budgeting, and investing. “After we do all that, we’re ready to sell them a house,” O’Neal says. “So, it takes us longer to earn our money.”

Still, O’Neal’s efforts appear to be paying off. Last year, the company had a sales volume of $44 million. Another sign of O’Neal’s success is her decision to affiliate with real estate giant Coldwell Banker, which she did in early April. “They were looking for an urban company that dominates an urban market,” O’Neal says.

The rewards also include the intangible. O’Neal and her colleagues often help families that have lived in public housing or been victims of abusive relationships experience homeownership for the first time.

“We’re changing lives, not just selling houses,” she says.

Certification Programs to Serve the Multicultural Market

At Home with Diversity Course
NAR’s professional education initiative is designed to provide real estate professionals with training and tools to expand their business as well as homeownership opportunities for more Americans. The program provides training in working with and understanding a variety of cultures and cultural issues. It takes one day to complete, and is offered throughout the country.

Certified International Property Specialist (CIPS) Designation
Conferred by NAR, this designation recognizes real estate professionals who focus specifically on the international market. Whether traveling abroad or serving an immigrant niche in local markets, CIPS designees are trained to serve consumers in the unique aspects of international real estate.

NAHREP Certified Professional (NCP) Designation Program
The National Association of Hispanic Real Estate Professionals (NAHREP) offers this certification program at its annual conferences. It trains Hispanic and non-Hispanic real estate professionals and mortgage brokers to work with the Hispanic population in the United States.

Additional Resources

Book Review: Opening Doors: Selling to Multicultural Real Estate Clients, February 2004

Helping the Real Estate Community Respond to the Needs of a Multicultural Marketplace, On Common Ground Magazine,

At Home With Diversity program,

Diversity Toolkit for REALTORŪ Associations,

Field Guide to Diversity for REALTORSŪ,

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