Have you built a presence among Hispanic customers in your market? If not, consider that they are the fastest-growing ethnic group in the U.S., and their incomes are growing rapidly as well. Within five years, they'll control more than a trillion dollars in income. Furthermore, when Hispanics remodel, they do it on a large scale, adding bedrooms and updating kitchens and baths.
Even though Hispanics are currently clustered in just a few states, they'll spread out, just as every other immigrant group has — and that, too, will happen quickly. This group will be a significant market for remodelers, if not immediately, then very soon. “Hispanics will get older and wealthier, and they will be very important to the remodeling industry in the next decade,” says Kermit Baker, senior research fellow at the Joint Center for Housing Studies at Harvard University. “If remodelers aren't thinking about marketing to them, they're shortsighted.”
For this article about the importance of marketing to Hispanics, we spoke to remodelers in Illinois, Indiana, Oregon, Minnesota, Virginia, California, Texas, and New York. Most of them answered our query with the same two comments: There aren't enough Hispanics in our community to make it worthwhile to market to them; and Hispanics in this area don't have high enough incomes to afford us.
FOLLOW THE NUMBERS
In 1995, Hispanics in the U.S. — who can be of any race and whose family comes from a Spanish-speaking country — numbered approximately 22.6 million, according to the Selig Center for Economic Growth at the University of Georgia. That population will be just over 51 million by 2011, a 126.4% increase. The non-Hispanic increase will be 15.4%. Hispanics are young, too. In 2004, 34% of Hispanics were aged under 18, as opposed to 25% of the total population.
The Selig Center also reports that Hispanic buying power in the U.S. — $212 billion in 1990 — will reach nearly $1.2 trillion by 2011, a 457% increase. Non-Hispanic buying power will increase by just 176%.
According to the U.S. Census Bureau, Hispanics bought 3.1 million homes between 1995 and 2005, increasing their total home ownership to 6.9 million. Again, the increase of 81% is much greater than the 19% increase for non-Hispanic home buyers.
What do all these numbers mean for remodelers? “More money and more opportunities,” says Paul Montelongo, a design/build/remodeling consultant, sales trainer, speaker, and the founder of Paul Montelongo International. Hispanic households, because of their relatively young age, will only continue to grow, and Hispanics will leave the border states where they're largely clustered. “Just by virtue of the natural growth cycle, they will move to other areas,” Montelongo says.
As Hispanics spread geographically, they'll keep buying houses in record numbers. According to Michael Lee, founder of the ethnic research and market consulting firm EthnoConnect, the houses they're buying were built before the 1980s, which is “perfect for remodelers.” What Hispanics want in remodeling includes “lots of bedrooms, bathrooms, and a big kitchen with all the modern appliances.”
Remodelers may wonder where the dollars to pay for all this will come from. “History tells us that any immigrant group is mostly made up of young, aggressive, entrepreneurial families,” Baker says. All such groups, Baker indicates, work hard and their incomes start to rise. Within a few years, their spending patterns start to look just like those of native-born inhabitants. “Spending per house increases dramatically as a function of how long they've been here,” Baker says. This is precisely what's happening now, as Hispanic buying power soars toward that $1.2 trillion mark in 2011.
TEST YOUR ASSUMPTIONS Still thinking that the Hispanic market isn't big enough or rich enough for you? Baker invites you to test those assumptions. Head to the U.S. Census Bureau's Web site (www.census.gov), which contains national population statistics, including information on incomes, home ownership, and more. You can examine these statistics down to the level of a Census tract, a small and permanent subdivision of a county. Finding local information is easier than you might think.