By: Pierre G Villere
The immigration debate continues to rage in Washington, D.C., with some in the Republican party now parting ways with President Trump on the issue of the 5 percent tariff on goods manufactured in Mexico. The move has roiled much of American industry because we are so reliant on Mexican imports, and likewise our own domestic manufacturers are so reliant on exports to Mexico’s burgeoning middle class. The dispute is just another example that points to how important prudent immigration policy is for our nation, as legal immigrants have been the mainstay of America’s population growth, and corresponding economic expansion, for almost 250 years.
Demographers and housing economists are therefore very focused on the impact that minorities will have on the housing market over the next decade; they all report that the sector will be deeply influenced by this ever-growing segment of home buyers. For example, just look at the growth in the Hispanic population and their impact on housing demand. As the largest minority constituency in the U.S. today, their formidable influence on the national housing economy has resulted in several recent reports by the Pew Research Center, National Association of Hispanic Real Estate Professionals (NAHREP), Urban Institute and others, which conclude that as the United States becomes more diverse, Hispanic buyers have been key in driving the rise of national homeownership rates.
One influential publication recently reported on the topic, noting the growth of the country’s increasingly eclectic Hispanic population, which is one of the largest and most consequential demographic shifts taking place in the U.S. right now. This shift is therefore is bringing diversity to communities across the nation. According to a recent Pew Research Center report, the country’s Hispanic population, which reached 58 million in 2016, accounted for half the national population growth since 2000. This community has played a large role in stabilizing or growing the population in parts of the country that would otherwise see population declines. But here is the punchline I find most surprising of all: Hispanics will comprise the majority of new household formations by 2020.
That trend has also fueled a marked increase in Hispanic homeownership. According to the latest NAHREP report, this group accounts for 32.4 percent of overall U.S. household formations. But that’s just the start. Economic and population data suggests Hispanic homebuyers will become an even larger part of the real estate market in coming decades, in more parts of the country. And Hispanic homeowners’ buying power is set to rise; the median income of Hispanic households grew from $46,000 to $60,000 the 10 years between 2007 and 2017, according to data collected by UnidosUS, a nonpartisan Hispanic advocacy group.
A fifth of the millennial population in the country is Hispanic, suggesting many have just entered their prime home-buying years. While 55 percent of the nation’s Hispanic people live in Texas, California and Florida, the Hispanic population of 11 other states has grown 10 percent since 2000: Connecticut, Rhode Island, Utah, Oregon, Washington, Idaho, Kansas, Massachusetts, Nebraska, Hawaii, and Oklahoma. With these factors in mind, Hispanic people will comprise a stunning 56 percent of all new homebuyers by 2030, according to the Urban Institute.
But at a time when overall homeownership rates hover near historic lows, and affordability becomes an increasing challenge across the country, is the real estate industry doing enough to court a new generation of Hispanic homebuyers? Experts agree that despite progress, the industry has some way to go to fully cater to this growing customer base and take advantage of a lucrative opportunity.
From the small local builders to the large national new home building companies, the growth and changes in the minority composition of our nation’s total population will positively impact the housing market, as it continues to benefit from the household formations driven by Hispanics and America’s other minorities—a trend that will assure continued growth in the concrete industry over the next decade.
Pierre G. Villere serves as president and senior managing partner of Allen-Villere Partners, an investment banking firm with a national practice in the construction materials industry that specializes in mergers & acquisitions. He has a career spanning almost five decades, and volunteers his time to educating the industry as a regular columnist in publications and through presentations at numerous industry events. Contact Pierre via email at [email protected]. Follow him on Twitter – @allenvillere.