Blurred Borders

A DECADE AGO, IN KB HOME'S California division, a grass-roots initiative took place. With a strong focus on the first-time buyer market, associates were convinced there was untapped potential in the Hispanic buyer group. They looked for an innovative way to reach out to the Spanish-speaking segment of their marketplace.

The program they launched to meet that need was 888-KB-CASAS—a bilingual “help line” on which Spanish-speaking employees could answer questions about all stages of the new-home buying process—easing fears and building trust with a market segment few chose to pursue.

In the early '90s, many might have perceived KB's efforts as unnecessary, even risky, as it targeted what was then an unproven buyer segment. But today, by consciously recognizing the power of the immigrant consumer, KB's focused efforts have made it a pioneer. After all, the '90s represented a huge departure from the historical trends of immigration growth. According to a February 2004 study published by the Brookings Institution, the U.S. foreign-born population grew 57.4 percent during the decade.

LIVING LARGE: Not all immigrants are struggling; in fact, many are flourishing. This 3,029-square-foot home from KB Home is popular with established immigrants searching for move-up housing in Las Vegas' Iron Mountain Ranch.

Nine years later, KB's vision has evolved into an elaborate “House Calls” program that lets potential buyers from 35 markets throughout the country call and speak to a knowledgeable associate in one of 12 languages. Its call center, located in San Jose, Calif., is promoted on billboards, on radio, and in newspaper ads, and its Web site leads buyers to the information as well. “We also receive hundreds of calls in direct response to our Spanish infomercial and direct mail,” says COO Jeff Mezger.

Since the majority of immigration growth comes from Hispanics, they appear to be the subculture receiving the first wave of focus from this industry. But as builders search for success in these uncharted waters, it's critical to recognize the complex nuances within the immigrant buyer mix—and those within the Hispanic buyer group itself.

While the word “Hispanic” is used commonly by the U.S. Census Bureau and other official entities, the term is more of a label for people from mixed ancestries that are bound by a common language: Spanish.

Although demographers tend to refer to Hispanics as one ethnic group, there is incredible diversity among them. Many have Spanish or Mexican ancestry. Some have a blend of heritages that includes German, Italian, African-American, and others. Many identify themselves by their original ancestry, while others prefer the term “Latino.” In some areas of California, “Chicano” is favored.

While Mexicans are, by far, the largest part of the Hispanic immigrant group, their lifestyles and incomes reflect a wide diversity as well.

SPANISH LESSONS: KB Home runs various Spanish-language ads in several markets nationwide. The one above touts the firm's top J.D. Power and Associates rating for customer satisfaction in the Austin, Texas, market.

Recent Mexican-American immigrants often face tough times. In parts of Texas, “colonias”—unregulated subdivisions that consist of modest homes, shacks, and trailers that usually lack running water and sewage treatment—are rising around urban areas. While these communities have long existed along the Mexican border, they are now popping up in other areas of Texas, as far north as Dallas and Fort Worth, despite laws from the Texas legislature that prohibit them. Colonias currently house an estimated one million immigrants in Texas.

Immigrant Mexicans who have been in this country for a while are creating neighborhoods throughout urban and suburban corridors. Traditionally settling in areas such as East Los Angeles, this subculture has migrated into new areas, such as Atlanta, Las Vegas, and Orlando, Fla. Many are lower-income—and their influx is feeding a business community of restaurants, specialty supermarkets, and other shops that are cropping up to support their cultural preferences.

Middle-class Mexicans have moved up this country's socioeconomic ladder over time. Many migrated from traditional ports of entry into America's more affluent neighborhoods and suburban areas searching for better schools and housing. Often, first-generation residents spent several years working more than one job and shared housing with extended family members to achieve the income and occupation levels they enjoy today.

According to Dr. Oscar Gonzales, president of the Houston-based Gonzales Group, a consulting firm that specializes in emerging markets, builders need to do more than speak to buyers in Spanish; they need to carry unique cultural considerations into their pricing and design. “These subsections of the population have specific lifestyle considerations,” says Gonzales. “Most want to see a larger kitchen and family room and have no use for a formal living area. They like to utilize outdoor living areas. They prefer strong colors throughout their home and solid doors without glass.”

But are builders delivering? “For the most part, we are seeing some builders talk about addressing these buyers in their marketing,” says Gonzales. “But they aren't really reflecting the nuances in their product mix—and, in some cases, their pricing is way out of line with their targeted buyer.”

BUYING POWER: In the San Antonio market, approximately 50 percent of KB Home's home buyers are immigrants. Many are interested in entry-level product like this 2,124-square-foot Westchester model. Inside, brochures and other sales materials are presented in Spanish.

Trying to advance relations in its communities, KB works closely with the National Association of Hispanic Real Estate Professionals and takes pains to ensure that Hispanic buyers have the ability to communicate with an associate at every step of their sales and construction process. “Spanish-speaking employees are working in our studio, our title company, our mortgage company—in every level of our organization,” says Mezger.

By all accounts, this commitment is paying off: According to Mezger, “somewhere between 25 percent and 33 percent of the company's sales in 2003 were to immigrants.” And while KB's decade of dedication puts it ahead of the pack, the industry at large finally seems to be acknowledging the significance that the Hispanic population represents.

Today, immigration is being blamed for a variety of social problems, from the energy crisis to impending water shortages. It even surfaced as a policy issue during November's presidential elections.

According to the U.S. Census updates from July 2001, there are 36.9 million His-panics living in this country, accounting for 13 percent of the total population. In fact, one in every eight Americans is of Hispanic origin. In 2002, Hispanics surpassed blacks as the country's largest minority.

As a result, marketers across industry lines are investing big bucks to research this growing portion of the population—and they're investing even more to market to them.

A general look at this segment reveals that the majority of Hispanics are younger than the average U.S. population, 53 percent are married, and more than one-third have some college education. A New York City–based national research firm, Scarborough Research, conducted a study that shows Hispanics are more likely to be employed than the average person in this country. In 2003, 13.9 million adult Hispanics had full-time jobs.

Hispanic households tend to be larger than average, with 47.8 percent of them containing four or more members. A 2003 update to the census shows that the majority of Hispanic households have three or more children under the age of 18. And, unlike the average American home, there is a tendency for multiple earners to live in a Hispanic household.

The same Scarborough study reveals that 10.9 million Hispanics are homeowners, and 2.5 million of them own homes valued at $200,000 or more. But, in most cases, the road to homeownership is long and entails a variety of critical factors (see “Barriers to Homeownership,” page 398).

According to the 2002 report from the research group of the National Association of Realtors, “Housing Opportunities in the Foreign-Born Market,” “Home-ownership attainment among immigrants usually hinges on their period of assimilation. During the early years of residency (less than five years), immigrants are more likely to live with other family members or friends. After adapting to their new environment, establishing a stable employment record, and building their savings, immigrants tend to move out and rent their quarters. They become avid home buyers as soon as their economic circumstances improve with time—that is, when their savings and income are adequate to purchase a desired home.” The study also shows that immigrants with at least 10 years of residence have an average home-ownership rate of 68.1 percent—practically mirroring the national average homeownership rate of 68 percent.

“The process takes time,” says Mezger, “and it really feeds into the first-time buyer market.” But he acknowledges there is a need for Hispanics to strive for move-up homes, as well. “They tend to live with extended family and have large households. As relatives come to this country, they are living with family until they can get settled.”

Look beyond the hype, and the message is clear: Immigrants are changing the landscape of today's buyer profile. And, individually and as an industry, builders are developing new ways to reach out to this growing group.

Since 2002, Beazer Homes has included Spanish information on its Web site. In 2003, that Spanish content began to include details on floor plans and availability down to the community level, and in the spring of 2005, the company plans to launch a Spanish portal where home buyers can track their home's progress, research options, and enjoy other services customized to their purchase.

Beazer's research has also shown that buyers are looking for a trustworthy advisor to rely on during the home buying process (see “Barriers to Homeownership,” page 398), so the builder has created a liaison position in which one employee acts as a guide to buyers as they move through the entire buying and building cycle—everything from sales to financing to design center choices. “We have found that buyers aren't as likely to trust a team and be passed from person to person throughout the process,” says Amanda Johnson, Beazer's corporate marketing and Web director. “We are offering a consistent presence for a buyer that will walk with a family through every step of the process.”

Johnson says that offering information to Hispanics in their own language helps create an emotional connection. “As an industry, we are still learning about the benefits,” says Johnson. To date, the company has created a Spanish-language brochure and some targeted print ads and radio spots in Spanish. “We've found that the Spanish market is very appreciative of any gesture.”

On Oct. 20, 2004, the industry's gestures expanded dramatically. Builder Homesite, a consortium of 32 of the nation's largest home builders, launched the industry's first Spanish-language consumer Web site offering new-home listings and information from multiple home builders across the country: www.CasasNuevasAqui .com. This Web site gives Spanish-speaking home buyers the same kind of new-home search capabilities and information that are available on Homesite's English Web site, www.NewHomeSource.com. In addition, it gives today's home builders new ways to market to Spanish-speaking new-home buyers. “We have been hearing builders talk about incorporating Spanish for the past couple of years,” says Builder Homesite COO Melissa Morman. “We realized that everyone could benefit by building a common translation glossary for the industry.”

The group's efforts not only provide the opportunity to learn lessons together, but there is safety in numbers as well: “Builders can get in a world of hurt—both from a cultural and legal perspective—when it comes to translation. It's helpful for everyone to work from a common platform.”

The site allows builders to use the services to varying degrees, from a full translation of their entire Web site to a listing of communities and available properties that can be updated in real time. On the builder end, XML file feeds can be sent on a daily basis to stay in sync with a company's English version of the Web site, or a builder can manually enter by dialing into the site and updating data as needed. The group is working with many common portals, such as Home Gain, and ties into media groups, as well. “We are working with a variety of groups and will add more as they are able to accommodate Spanish,” says Morman.

In development since 2003, the site is currently used by almost 30 builders. Although larger builders are starting to jump out ahead of the pack, Morman stresses the value to companies of all sizes. “The time is now,” she says. “This is a key demographic, and builders understand it's an easy path to migrate into a multilingual environment. Today, every builder realizes he needs to embrace this segment, and almost every builder I talk to plans to at least take some baby steps to reach out in the next year.”

This pooling of mind share gives smaller builders an opportunity to dovetail onto what the big builders have already done. Although a variety of translation options exists today, most services make it hard to predict pricing (see “Translation Tactics,” page 392). “We evaluated all levels and decided that we needed to go with a large-scale shop that could demonstrate that it had [quality-control] processes in place,” says Morman, who chose Translations.com as her company's partner. “They've been very accommodating in helping us build a glossary of terms that expands across the industry.”

By negotiating a flat fee, Builder Home-site is able to offer builders access to www.CasasNuevasAqui.com for as little as $10 a month per community. “It's the same for builders of every size,” explains Morman. “We worked really hard to make it easy and affordable, because it's the right thing for builders to do in today's marketplace.”

Lisa Marquis Jackson is a freelance writer based in Flower Mound, Texas.

Although they represent more than half of the immigrant population, Hispanics aren't the only foreign-born group affecting our industry. Across the country, builders are catering to the unique needs of large clusters of immigrants, each with its own unique dynamics.

According to the 2000 U.S. Census, Asian-Americans remain the second-fastest growing ethnic population, numbering more than 12 million—approximately 4.5 percent of the total U.S. population. This group is expected to triple in size by the year 2050. Much like their Hispanic counterparts, Asian-American home buyers find language and cultural barriers to be their biggest obstacles, according to a recent survey of real estate professionals conducted by the UCLA Asian American Studies Center. A lack of knowledge about the home buying process came in at a close second.

FOREIGN-BORN BY WORLD REGION: 2003

Photo Credit: Source: U.S. Census Bureau, Current Population Survey, 2003 Anual Social And Economic Supplement

“[Asian-Americans are] often referred to as the ‘model' minority group, one which has fully assimilated into American society ... the study helped to dispel several misconceptions about the Asian-American community, including there not being a need for home buying assistance,” says John Wong, president of the Asian Real Estate Association of America (AREAA). Formed in 2002, AREAA works to promote homeownership among the country's Asian community. “Thanks to the work of groups such as the National Association of Hispanic Real Estate Professionals, the dream of homeownership has become a reality for many underserved Hispanics,” Wong says. “Based on the results of this study, Asians share similar cultural obstacles,” including language barriers, lack of credit, lack of knowledge about the first-time home buying process, and undocumented income.

Some builders are going to great lengths to incorporate elements that embrace these cultural differences. In the Houston area's master planned community Sienna Plantation, developers insist that builders abide by feng shui guidelines. No pointed-leaf plants or trees near a home's entrance are allowed. A community meditation garden features water flowing in the correct direction, and a host of other principles are strictly adhered to. “I was absolutely astounded at the lengths [the builders and developers] are going to [to] accommodate Asian nuances,” says Dr. Oscar Gonzales, an emerging-market consultant.

Supporting the critical philosophy that home building is still a local business, you'll find dominant pockets of immigrants throughout the country. Denver boasts a substantial Russian faction. In Los Angeles, there is an influx of Indian immigrants, and Florida is home to a variety of foreign-born residents.

In Miami, Cubans dominate the city, accounting for a vast majority of the population. In America, Cubans found a government offering financial assistance and automatic legal residency until 1995, and they flooded into Florida following Castro's rise to power. As of 1990, 55 percent of Cubans had graduated from high school, and 20 percent held white-collar jobs. But reports speculate that more than one-third do not speak English well, or at all.

In Dade County, Fla., there is a Haitian factor to address. “Remember the nightly news during the Carter administration?” recalls D.R. Horton CEO Don Tomnitz. “We saw hundreds of Haitians coming into Florida by the boatload. Now, 25 percent of my sales in Dade County are to Haitians. Just take a look at the numbers—it's not interest rates that are driving our market, it's immigration.”

According to Melissa Morman, COO of Builder Homesite, when searching for assistance with your translation needs, you are likely to encounter five levels of service available in the marketplace:

In all cases, consider using a third-party proofreader or focus group to ensure that you are presenting your company in an appropriate, professional, and convincing manner to your intended audience.

America's largest companies have taken notice of the spending power of the growing Hispanic population, and, according to Hispanic Business magazine, these companies are spending millions to reach this market segment with a uniquely targeted message.

Photo Credit: Source: Hispanic Business Magazine

$ In 2002, Hispanics had an estimated $580 billion in buying power.

$ Between 1990 and 2007, Hispanic buying power will have grown at an annual compound rate of 8.7 percent.

$ Their growth rate is almost double the non-Hispanic buying power growth rate of 4.8 percent.

$ Projected buying power by 2007 will be $926 billion.

Source: The Selig Center, Terry College Of Business, April 2002

As our U.S. foreign-born population swelled by 57.4 percent in the 1990s, new gateways emerged as a result of the influx of immigrants and settlement patterns. A new study published by the Brookings Institution sheds light on the transformation, noting that “by 2000, more immigrants in metropolitan areas lived in suburbs than cities, and their growth rates there exceeded those in the cities.” The blending of historical settlement patterns with the insurgence of immigrants has produced six types of gateways, defined as:

In a July 2003 report, the U.S. Census Bureau found that Texas edged closer to joining “majority-minority” states Hawaii, California, and New Mexico and the District of Columbia, which all have more minorities than single-race non-Hispanic white residents.

Estimates showed Texas had a 49.5 percent minority population made up of all people except single-race non-Hispanic whites. Hawaii's minority population is 77 percent; New Mexico's is 56 percent; and California's is 55 percent. The District of Columbia is 72 percent minority.

In the country's top Hispanic markets, research indicates that radio is the preferred media outlet.

Photo Credit: Source: Scarborough USA+Release 2, 2002, Individual Market Reports For Top Five Hispanic Markets

According to a Scarborough Research and Arbitron/Edison media research Internet study, 65 percent of Hispanic adults own a computer, and Internet access is increasing rapidly.

ComScore Media Matrix reports:

CREATIVE LICENSE: Capitalizing on the increase in Internet usage among buyers, Beazer Homes has targeted Hispanics with a Spanish portal to its Web site (above). The industry's first Spanish-language consumer Web site launched last fall (left).

Although there was a 64 percent homeownership rate for naturalized Hispanic citizens from 1994 to 2002, the road to homeownership is full of potholes. According to the University of Southern California's “El Sueño de su Casa” report issued August 2004, these are the leading barriers Hispanics encounter in pursuit of the American Dream:

Realtors - 38%

Friends and co-workers - 17%

Family members - 16%

Seminars/classes - 12%

Financial institutions - 9%

Community organizations - 6%

Church groups - 3%