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  • Uplifting Latino Home Ownership

    Posted by on April 30, 2020

    As first seen on cuinsight.com.

    Experts have predicted that this is the year the U.S. Latino population will comprise the majority of new household formations and, correspondingly, new home purchases.

    The last decade has seen the U.S. Latino population emerge as the fastest-growing demographic in an increasingly diversifying nation. We know that the 59.9 million Latinos who currently call the U.S. home account for one in every five members of the U.S. population. Thanks to anticipated continued growth, Latinos will comprise one in every three members of the U.S. population by 2050.

    Along with population growth comes an escalating and formidable financial impact. We’ve already seen it happening nationwide, with significant increases in savings and buying power and a dominant growth rate in labor force participation. For most of us, our ultimate financial goal is home ownership, and more Latinos than ever before are participating in the housing market. Their participation will only increase as the population continues to grow.

    Research data from the National Association of Hispanic Real Estate Professionals (NAHREP) bears this out. In 2018, Latinos represented a net gain of 362,000 new homeowners. This raised the rate of new Latino homeownership to 47.2 percent of all new homeowners, compared to 46.2 percent in 2017. Over the past decade, Latinos have accounted for 62.7 percent of all new U.S. homeownership gains, NAHREP reports, growing from 6.3 million homeowners during the period to nearly 7.9 million homeowners by 2018. By 2030, researchers anticipate that 56 percent of all new homeowners will come from the Latino market, which will then dominate the sector.

    Plainly put, this is a sea of change in the market that could sink mortgage lenders who are not prepared to tap into it. Credit unions, known for working with their members, may be in a better position than other lenders to ride the wave to increased success. However, not all institutions are well prepared in reaching out to Latinos in meaningful ways. Lose enough of these opportunities among Latino borrowers, and rest assured their other business will follow.

    To reach this growing market, you must understand and respect the ways in which the Latino community differs from the more traditional market your credit union may already be serving. And even within the Latino market, there is diversity based on age, family structure and country of origin. My team analyzes geographical Latino markets to determine potential-member product needs and growth strategies to attract what is often an underserved or unbanked community.

    Understanding is the key to everything – from marketing approaches to operational success. The more specialized your efforts are, the more successful they will be. The basics, of course, include involving bilingual staff at all levels who are well trained and culturally sensitized to the needs of Latino members. Creating a corporate culture from the board of directors to the teller line that not only accepts, but embraces this market is a necessity for success.

    For a more nuanced approach to marketing, NAHREP again offers some research-based observations. Research data has shown that Latinos believe advertising is meant for them when it includes people who look like them (52 percent), reflects their cultural values (59 percent), and recognizes their cultural background (61 percent). Integrating those sensitivities in all member communications as well as exploring other operational alternatives [including making loans using Individual Taxpayer Identification Numbers (ITINs)] are critical steps in reaching this market.

    Not every credit union is comfortable making such changes at first, but those that do are already seeing an increase in Latino home mortgage business. Reach out to your Latino community to help more members join the swell of new homebuyers. Explore holistic secondary market options like Inclusiv’s Mortgage. Create an environment in which everyone – lenders and members – can ride the wave of financial success.

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