Homeownership has been positioned as a core aspect of the American dream for many years. The renewed urgency for brands and consumers to prioritize, understand and embrace social equality has brought some issues to light in the real estate industry. Unfortunately, although homeownership rates in the U.S. grew to 65.1% by Q4 2019, the rate of minority homeownership is lagging far behind the national trends. Major real estate brands and organizations, such as the National Association of Realtors (NAR), real estate firms, such as RE/MAX and Coldwell Banker, and financial institutions are adjusting their marketing strategies and brand messaging to re-establish their commitments to serving Black and other minority consumers.
NAR’s Snapshot of Race & Home Buying In America Report Noted Unique Needs Of Prospective Black Homeowners
NAR analyzed the change in homeownership rate among Black consumers and reviewed the characteristics of home buyers, properties sought by each racial group, motivations for buying homes and the financial background of buyers by race. The NAR homebuying report found there was an average 30-basis point difference between homeownership rates among Black consumers compared to White consumers. In the last ten years, homeownership rates for Black consumers only increased in Delaware, South Dakota and Vermont.
Based on report data, NAR identified the following traits and characteristics unique to Black home buyers:
- Student loan debt for Black home buyers was higher than all other racial groups, at an average of $38K.
- More than all other racial groups, Black consumers sought to purchase multi-generational homes with 22% of prospective buyers seeking multi-unit properties.
- 13% of prospective Black home buyers were rejected for mortgage loans compared to the national average of 11%
- Although the average age of Black buyers is the same as Whites (38 years old), 51% of prospective Black homeowners are first-time buyers, whereas 30% of White consumers are first-time home buyers, which means White homeowners typically purchase their first homes earlier.
- More than any other racial group, Black consumers claim their primary motivation for buying property is the “desire to own their own home.” Other racial groups note interest in developing an investment and growing personal wealth as motivations to buy residential property.
NAR Promotes Five-Point Plan To Minimize Gap In Black Homeownership Rates
The homeownership rate for Black consumers have been slowly but steadily declining since 2004, hitting its lowest point since 1994 (40.6%) at the end of 2019. In 2020, NAR advanced its focus on minimizing the gap in Black homeownership. In a recent statement published by NAR, Chief Economist Lawrence Yun said, “Given the events of the recent weeks, [the gap in Black homeownership] highlighted the progress, or lack of progress, among the African-American community.” One of the main issues preventing Black consumers from attaining homeownership levels similar to other racial groups is obstacles related to home financing and financial distress. In the five-point plan announcement from NAR, Yun noted that reliance on financial support from family members is not as accessible among Black consumers. Yun stressed the importance of increasing access to down-payment assistance for prospective Black borrowers. He also discussed NAR’s commitment to strengthening the FHA loan program, which is the loan program that has empowered the greatest number of minorities to purchase homes due to more flexible acceptance of higher DTI ratios, lower down-payment thresholds, buyer education programs and higher multi-family loan limits.
The National Association of Real Estate Brokers (NAREB), an equal opportunity and advocacy organization for African American real estate professionals and consumers in America, provided data to NAR, pointing out how Black consumers could benefit from an alternative credit scoring system. NAREB and NAR agree that credit bureaus should embrace credit scoring models that consider regular rent and utility payments in addition to their current factors. According to a recent HousingWire article, NAREB claimed, “alternative credit scoring would open up buying to 115,000 Black Americans annually.”
In order for NAR’s five-point plan to be impactful, professionals such as real estate agents and loan originators who are at the core of the real estate transaction, in many cases will need to rely on enhanced marketing tactics that attract, inform and educate Black consumers on the programs available to them.
RE/MAX Sticks To Red, White & Blue To Celebrate Ethnic Diversity
RE/MAX is an international real estate company that represents more than 100,000 agents and 6,800 offices as part of their franchise system. RE/MAX relies on its social media pages to connect with home buyers, home sellers and prospective real estate agents. On its Instagram and Facebook pages, RE/MAX reinforces its brand dedication to diversity and regularly celebrates and calls attention to holidays and special days unique to specific ethic and racial groups. Unlike many of its counterparts, the RE/MAX brand relies heavily on the use of graphics and illustrations instead of photos featuring people. By prioritizing the use of brand colors and aesthetics, RE/MAX allows all prospective agents to see themselves as a RE/MAX agent or broker. Prospective hires typically look for companies that align with their identity and values. In addition to its graphic strategy, RE/MAX regularly posts video content for home buyer and seller resources, consumer campaigns and agent business tips to its YouTube channel. In all three of these content areas, RE/MAX positions people of color in consumer and agent roles, which help minority groups to feel more connected to the RE/MAX.
Coldwell Banker Promotes Diversity & Inclusion Among Homebuyers And Prospective Agents
Founded in 1906 and owned by Fortune 500 company Realogy, Coldwell Banker is one of the largest and oldest real estate franchises in the U.S. In February 2020, Coldwell Banker announced it’s “Diversity In Ownership” program. The program amended the current franchise agreement and created new opportunities to provide additional support to encourage and facilitate successful brokerage ownership among prospective real estate professionals who identify as racial minorities, LGBTQ+ and women. Diversity among agents and brokers is closely correlated to the diversity of the consumers a brokerage serves. Coldwell Banker also specifically positions photos of Black consumers and agents on its website and social media pages to encourage relatability and representation among prospective Black home buyers and agents. Furthering its dedication to inclusive representation, Coldwell Banker was one of the only national real estate companies to celebrate Juneteenth on its social media pages.
Black-Owned Financial Institution OneUnited Bank Connects With Black Consumers
Founded 50 years ago, OneUnited Bank is the largest Black-owned bank in the U.S. and the first Black-owned internet bank. On its website, OneUnited promotes its commitment to increasing the financial literacy of the Black community and offers a series of workshops, training events and affordable financial services programs to “meet the needs of an urban community.” In addition to in-person events, OneUnited dedicates an area of its website to consumer finance education where it positions blog posts and video content to help Black consumers expand their knowledge in areas such as financial basics, career planning, mortgage information, credit reporting and taxes.
OneUnited also empowers Black consumers via the content on its social platforms. Using the hashtag #BankBlack, #BuyBlack and #BlackExcellence, OneUnited regularly positions relevant social responsibility, lifestyle and financial content to its target audience. With nearly 230,000 likes on Facebook and 167,000 followers on Instagram, OneUnited has dedicated its brand to empowering the Black community through representation and education. OneUnited has successfully aligned its brand to identify with and elevate the values of its core audience by going beyond typical consumer finance content. From celebrating Nelson Mandela Day to promoting virtual financial literacy workshops for entertainment professionals, OneUnited maintains a cohesive presence and connects with its customers in a more personalized way.
Real Estate & Mortgage Marketers Need To Increase Engagement With Black Consumers
There are more than 50 million Black consumers in the U.S. In the 2019 “Black Consumers: Path To Purchase” report, Nielson indicated Black buying power exceeded $1.3 trillion in 2018 and was growing at a faster rate than White buying power. Nielsen’s Senior Vice President of Community Alliances and Consumer Engagement and co-writer of the report, Cheryl Grace, said, “This year, we wanted to help brands and marketers understand the multi-faceted process that Blacks take to buy the products they buy. There are several drivers, but culture is at the center of them all. Further, with their love for technology, they are much more savvy and conscious consumers.”
Black consumers are paying attention to how companies and brands speak to them and about them, and note when there is a lack of representation. Real estate and mortgage marketers have an opportunity to capitalize on the growing buying power of the Black population, but to do so they must create and sustain marketing messaging and campaigns that represent and connect with the needs of that audience. Real estate and mortgage marketers may need to review their marketing plans and invest in the developing campaigns and running media on channels that will help them reach, attract, engage and convert Black consumers into borrowers and homeowners.