The Real Estate Minority Opportunity

February 2007. Today 33% of the US population is non-Caucasian. By the year 2050 the US Census projects that number to increase to 50% - half of the entire US population, yet walk into the average gathering of Realtors^®, anywhere in the country today, and one is greeted by a predominantly Caucasian group.

According to the 2007 Swanepoel Trends Report the minority and immigrant population segments, and hence home buyers and sellers, are not being served effectively.  The numbers are getting more disproportionate by the day. “It’s time the real estate industry more effectively addresses the growing need for more real estate professionals of other ethnic backgrounds,” Swanepoel says.

One third of the US population is made up of minorities and that percentage will continue to increase due to strong immigration numbers. At the same time, while global traveling and the Internet are making the world smaller, more and more people are buying real estate in countries other than where they live; the demand for US property by international buyers is growing.

Only 2.5 million immigrants came to the US in the decade of the 1950s, whereas in the 1980s that number jumped to 7.3 million and in the 1990s to 9.3 million.  The projected number for the first decade of the new millennium is between 11 and 12 million. There is a very strong commitment among immigrants for homeownership and hence this group will have an increasing impact in the decades ahead.

Swanepoel warns agents that the immigrant and minority segments will increasingly become a larger part of the real estate market and brokers and agents that fail to respond will be turning away a rapidly growing market.  And this is a market in which over 50% want an agent to help them find the right property.  While minorities and immigrants share many of the same characteristics of all buyers and sellers, they also have many characteristics that require special attention.  

Foreign-born and minority households continued to be the fastest growing segments of the housing market. Accounting for nearly two-thirds of household growth in 1995-2005, minorities contributed 49% of the 12.5 million increase in homeownership over the decade.

Minorities were 28% of all homeowners in 2005 but are expected to grow to 30% by 2010 and 32% by 2015. Harvard predicts that this group will have a projected combined buying power exceeding $1.5 trillion by 2008 (more than triple the 1990 level).  According to projections by HUD and Fannie Mae, minorities could account for up to 60% of all first time home purchases during the next 5 to10 years.

Cultural diversity is a growing phenomena and the successful real estate professional of tomorrow will need a few different strategies to effectively interact with people of different ethic backgrounds and countries. 

Here are few tips for Realtors^® considering entering this market:

·         Don’t just purchase a book on cultural diversity … absorb and understand it.

·         Consider learning another language or adding staff members that are fluent in another language.

·         Target a specific niche market.

·         Implement a referral program within that market.

·         Recruit agents from the ethnic group(s) in your market.

·         Buy an existing company already established in another ethic community.

·         Consider adding culturally related staff support.

The 2007 Swanepoel Trends Report provides information with regard to what Realtors should be aware of and how they can explore the diversity and global markets. This 159-page report is exclusively available at www.RealEstateBooks.org.