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Special Reports
Emerging Markets
Focusing on the Reggaeton Buyers
By Amilda Dymi
The Hispanic market has long attracted the attention of the mortgage industry
as a significant source of new business, so the issue, some industry insiders say, is how to best serve it and
not miss the mark. "We have identified a couple of trends in the market including a new focus on the U.S.-born
Hispanics, second- or third-generation young Latinos," said Jim McGuire, president of AmeriCasa Mortgage.
"In order to be successful in serving the emerging minority markets you need to understand that there are
different segments or the Hispanic market, with the primarily distinction being foreign born and U.S. born."
He maintains that while many in the industry are focusing on how to make available bilingual services, documents
and loan officers, they are missing out on noticing how language trends within the Hispanic population are rapidly
changing along with the characteristics of the demographic they represent. He is one of many within the community
itself who think that transition to the English language "is happening much faster than people realize."
Also, these first-time buyers tend to be much younger, better educated and better off, compared to first-time buyers
whose first language is Spanish. "They are the second-generation Hispanics who are born in the U.S., so they
speak English but feel they are culturally Latinos," Mr. McGuire said. "The difference in trying to appeal
to that segment is that it is more English language based and also by using some new kinds of media like Reggaeton,
which is in Spanglish, a hybrid of Spanish and English used in this kind of music that Latinos listen to on the
radio stations we are doing a lot of advertising."
Reggaeton is known as the urban Latin music that brings together and has become the favorite type of music for
younger generations of Latinos. And it is not possible to reach out to that demographic, he said, "through
what is traditionally considered the Hispanic emerging market media," which generally is the Spanish language
mediums like Univision TV, Telemundo and others. "It's a matter of finding ways to reach them through English
language media, or sometimes cross-over media that are part English and part Spanish," he said. "The
exciting thing about focusing on U.S. born Latinos is population trends."
His brand-new company is catering to a well-defined segment of the Hispanic marketplace and trying to position
itself as a leading broker-banker in the area. "We are trying to sort of figure out how you reach that segment
of the population and how you connect with them," he said.
According to Mr. McGuire, 2015 may be a milestone. Between 2010 and 2015, one can predict that a large majority
of first-time homebuyers are going to be Hispanic. Currently in Phoenix, one-third of the first-time homebuyers
are Latinos, so about one-third of the first time purchase mortgage market will tend to be young, English-speaking
Hispanics, he said.
However, even though he believes the majority of Hispanics who live in the U.S. eventually integrate linguistically,
"it still is important to have Spanish-speaking employees," he said.
Another emerging markets trend, he said, is Fannie Mae and Freddie Mac taking a key role in serving multicultural
markets through products tailored to specifically serve their needs. "Fannie is very much trying to capture
the emerging Hispanic market, and I think take some of the weight from the subprime lenders," he said, thus
Fannie is trying to capture this business diverting it into the FHA market, which also means better prices for
these buyers, and more underwriting flexibility.
However, Mr. McGuire recognizes that most of these first-time homebuyers face at least one of the classic three
roadblocks to homeownership - lack of downpayment funds, traditional credit history and financial education. "The
industry is starting too late to educate people," he noted. "We need to start financial education early
on when prospective buyers are teenagers, since the parents tend to not fully understand the American financial
system."
Also, he added, these buyers are on their own financially because they do not inherit much form their immigrant
working parents who usually cannot accumulate significant wealth.
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