Posted by Elena del Valle on December 9, 2005
Roger Selbert, Ph.D.
Projections show U.S. Hispanics will need 4.6 million housing units over the next 20 years. According to John Burns Real Estate Consulting, the Hispanic home-buying market is:
- Huge: Latinos currently pay more than $30 billion per year in rent, and own U.S. homes valued at more than $360 billion.
- Growing exponentially: The Hispanic population will triple in size from 2000 to 2050.
- Geographically concentrated: Approximately 75% of Latinos live in five states, and three of these states (Florida, Texas and California) are already the top three states for single-family construction. The other two states are Arizona and New York.
- Buying homes: More than 230,000 Latino households will join the ranks of homeowners each year over the next 20 years. Census figures show that Hispanic homeownership in the U.S. rose from 40% to 47.4% in the 10-year period from 1993-2003.
- Young: 50% of Latinos are under age 25 and 70% are under age 36. In fact, the number of traditional entry-level buyers (33-year-olds) of Hispanic heritage is projected to rise by 12% over the next six years, compared to a 10% decline among other U.S. residents.
According to American City Vista, a homebuilder headed by former U.S. Housing Secretary Henry Cisneros, ten million new households will be formed by the end of the decade; half of those will be minority, and more than half of those will be Hispanic. That’s almost 3 million new homes that can be sold to Latino households. And they’ll be able to afford them: disposable income of U.S. Hispanics reached $686 billion in 2004, having grown 36 percent from 2000, or double the rate of the U.S. population as a whole.
Homebuilders are responding to the Hispanic market’s needs and desires. As greater numbers of Latinos buy homes, a wide range of industries including realtors, lenders, developers, insurers, furniture and appliance stores and home-improvements outlets will also serve the market and reap the benefits. The National Association of Hispanic Real Estate Professionals estimates that 1.5 million undocumented immigrants in the United States could become homeowners if barriers such as identification, legalization, traditional credit requirements and language were no longer issues.
Self-employment by Latinos grew 41 percent between 2000 and 2003, while overall self-employment grew 6.2 percent. And the number of Latina-owned businesses surged 62.4 percent for the seven-year period that ended in 2004, while the overall number of businesses grew just 9 percent. According to Loui Olivas, professor at Arizona State University¹s Carey School of Business, one of the striking things about Hispanic businesses is that their clientele is predominantly non-Hispanic.
The U.S. Census Bureau’s 2002 Survey of Business Owners, released this year, shows that while the number of all U.S. businesses increased by 10 percent from 1997 to 2002, the rate of growth for minority- and women-owned businesses was far higher. The survey found 1.6 million Hispanic-owned businesses (up 31 percent from 1997), with total receipts of $226.5 billion (up 22 percent). There were 6.5 million women-owned businesses in 2002, up 20 percent from 1997.
The Kauffman Index of Entrepreneurial Activity shows similar results. The number of Latinos who start businesses jumped to 0.48 percent of the adult population in 2004 from 0.38 percent in 1996, and higher than the 0.39 percent rate for white non-Latinos.
According to the Center for Women’s Business Research, as of 2004, Hispanic women-owned businesses number nearly 554,000, employ 320,000, and generate nearly $44.4 billion in sales nationwide. Further:
- Firms owned by Hispanic women represent 8.3% of all women-owned firms in the U.S.
- 38.8% of businesses owned by minorities are owned by Latinas
- 34.9% of all Hispanic-owned firms are owned by Latinas
- Latina-owned businesses employ 18.5% of the workers in all Hispanic-owned firms, and generate 16.3% of the sales
Growth Strategies Implications: Trends in Hispanic homeownership and business ownership confirm a basic theme we have been sounding in these pages for many years: Hispanics are acculturating to the mainstream while changing the mainstream in the process.
This article was excerpted from the December 2005 issue of Growth Strategies, a leading newsletter on economic, demographic, social and marketing trends. To subscribe or for more information, go to http://www.rogerselbert.com.