As the housing market continues to recover, more and more minority communities will enter the real estate scene. Recent studies have shown that the Hispanic community will soon represent a major segment of the homeownership market, and a newly released 2014 State of Hispanic Homeownership Report found that 320,000 new Hispanic households were formed last year, representing an astounding 40 percent of total U.S. household growth. Hispanics are expected to account for 7 million of the 17 million new households formed between 2010 and 2025, and a recent Wall Street Journal report shows that Hispanics are the fastest growing segment in both first-time buyers and in the luxury market.
Last month, the National Association of Hispanic Real Estate Professionals (NAHREP) welcomed a new president, Teresa Palacios Smith. In the following interview, Smith–also the current Vice President of Business Development for Berkshire Hathaway HomeServices Georgia Properties–dishes exclusively with RISMedia about her new role, the current state of the Hispanic real estate market, and what she hopes to accomplish in 2015.
Zoe Eisenberg: Under your new appointment, what are your plans for 2015?
Teresa Palacios Smith: This year we hope to strengthen the NARHREP brand across the country among REALTORS® that serve the Hispanic community. One area we will focus on to accomplish our mission is to educate our professionals across the country with different programs and mixers to gather real estate professionals in that market. I will also be visiting as many chapters as possible to meet as many members as I can with hopes of empowering them by helping them grow their business, their own self-worth and their wealth-creation potential. We’re also advocating for public policies that support our mission, and we’re trying to advocate primarily for areas important for minorities and Hispanics, as well as facilitating relationships between industry stakeholders, real estate professionals and housing professionals.
ZE: What is a major goal you hope to accomplish with NAHREP?
TPS: Primarily, a huge goal is to be a member-centric organization, to create a place where everyone knows what NAHREP is and where you can’t afford not to be a member. I have a lot of leadership development experience, so I really want to focus on leadership development and help empower Latinos and Latinas in their businesses, especially for women, who are wearing a lot of different hats. We’re hoping to help them develop leadership skills and create mastermind groups where they can share and learn from others in similar markets.
ZE: A recent Wall Street Journal report shows that Hispanics are the fastest growing segment in both first time buyers and in the luxury market. Is there anything specific an agent or broker should be aware of when working with Hispanic buyers or sellers?
TPS: I think building relationships is key with Hispanic buyers and sellers. Learn the culture, and get to know the whole family. We’re very family oriented, and often relatives will pool money together to purchase a home, so your buyer or seller may not just be a traditional husband and wife set-up. It may also include brothers, sisters, their children; you never know who is the decision-maker when buying a home–it could be a grandparent. Hispanics are also very loyal, so once respect has been established with an agent, we will refer everyone we know. Food and music is also big in our culture–we’re always finding a reason to celebrate. So if an agent gets invited to a Hispanic client’s party, GO. That’s where they’re going to gain a referral. In terms of language, you don’t need to speak Spanish, but it certainly helps, especially with first-generation Hispanics that may not speak another language.
ZE: In your opinion, what are the most important issues facing the Hispanic market?
TPS: Tighter mortgage credit. In 2014, Hispanics were turned down for loans at twice the rate of white borrowers, and were more likely to pay more for their loans. Latinos in general have different underwriting needs, as there may be several family members living together and several wage earners contributing to household income. Some may be self-employed. All these factors make it more difficult to qualify for a loan. Sometimes, we’re not trusting of banks, and want to pay for our purchases with cash, and so we don’t have credit established like other Americans. It’s important to teach your Hispanic clients that it’s good to establish credit line. Also, inventory is a challenge in many markets that have a lack of affordable home options. In tight markets, Hispanics are often priced out.
ZE: What unique challenges, if any, do Hispanic buyers and sellers currently face?
TPS: Sometimes the language barrier is an issue if they’re first generation. In my family, my dad spoke English but his accent was thick and hard to understand, so growing up I was an interpreter. This can be a big barrier for many Hispanics. Also, we’re seeing a lot of international Hispanic executives coming to different markets, like New York, Atlanta and California. Even for these Hispanic executives with great paying jobs, their credit is not counted in the U.S. credit system so they have to start from scratch. Often this means they have to put up a huge down payment, sometimes as much as 40 percent. I wish there was a way we could help create some uniformity in the credit system across borders, because it will really make a difference for those who do have money to purchase a home and are coming in with excellent credit that is not being recognized.
ZE: You’re a really fantastic role model, not only as a strong figure for minorities, but for women. What message do you hope to deliver to your audience as NAHREP’s new president?
TPS. Thank you so much. My biggest message is one of hope and inspiration. As a child, I could never have imagined I would one day be president of the most influential minority trade associations in this country. My father came to this country undocumented many years ago, at age 18, and he had to work his way up and in, eventually becoming a U.S. citizen. He was so hardworking; he always had two jobs, like most Latinos in this country. My mother was also a huge inspiration for me. She never learned English but she encouraged me to go to college. I was the first in my family to graduate from college, and the first to hold an executive job, and I am so honored that their sacrifices have paved the way for my success. My family has always believed that homeownership is key to success in America, and that’s what caused me to be so passionate about it. I want to continue to let our audience know that homeownership is attainable, and possible. I also want to let our audience know that you don’t have to be Hispanic to be in NAHREP. We welcome anyone who wants to help our mission to advance sustainable Hispanic homeownership.
I also want to mention our Hispanic Wealth Project Initiative, which we just released, with a goal to triple the wealth in Latinos in the country within the next 10 years. In the last crisis of the real estate downturn, 2/3 of Latino wealth was lost because a lot was enveloped into housing. So as equity fell, wealth fell. With our new initiative, we hope to do three major goals to help increase wealth of Latinos: To achieve a 50 percent or greater rate of U.S. Hispanic homeownership; To increase by 50 percent the first-year success rate of Hispanic-owned small businesses, and to increase by 25 percent the number of Hispanic households owning non-cash financial assets.
For more information, and to keep up with Teresa Palacios Smith, visit www.nahrep.org