On this REAL Trending special edition, we speak with Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals.
Want to learn from the brightest minds in real estate? Then you’ll love our REAL Trending special edition podcast. Editor-in-chief of content, Tracey Velt, interviews brokerage leaders, top agents and teams, and industry experts on leadership, recruiting, marketing, and more. Subscribe today at realtrendsinc.podbean.com.
Tracey Velt:
This is Tracey Velt, editor-in-chief of content for REAL Trends. I’d like to welcome Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals.
In his capacity as CEO of NAHREP, he created the Hispanic Wealth Project, a 501(c)(3) nonprofit organization with a strategic plan to triple Hispanic household wealth by 2024. In 2018, he co-founded Latitude, a mega event that celebrates the achievements of the Latino community in business, entertainment, technology and politics.
Tracey Velt:
Gary is also a former appointee of the Consumer Advisory Board of the Consumer Financial Protection Bureau, the federal agency responsible for regulating consumer protection in the financial services industry. He served as the 2014 chairman of the Consumer Advisory Board Mortgage Committee. So welcome, Gary.
Gary Acosta:
Hi, Tracey. Good to be here.
Tracey Velt:
Yeah. Yeah, thanks for joining REAL Trends. So we’ll start with, I mean, there’s so much happening around the country, and then obviously this year with the pandemic and the elections and civil unrest, and gosh, we’ve got so much going on right now. So how do you see this kind of unprecedented year impacting how real estate is transacted and where is your focus?
Gary Acosta:
Well, you mentioned a lot of things, and I think that given the pandemic and the impact that it’s had in our economy, and all the other things that you spoke about, the real estate industry is one of the sectors of our economy that has actually been spared. We’ve done quite well. I think some of that has to do with interest rates.
I think there was a lot of pent up demand moving into the pandemic that is being fulfilled right now. And I think there’s probably some intangibles, like people are reassessing their living environment. They’ve been staring at the same four walls for the last six months and they’re thinking about finding something better.
Gary Acosta:
And I think all of those things are contributing to a strong housing market, but moving forward, I think there’s still some uncertainty out there. We have a lot of people unemployed. We’ve had a lot of businesses that have struggled, if not gone under altogether. And at some point, that’s going to have an impact.
Gary Acosta:
But one of the things that I think really has stood out in the real estate industry is how well we’ve been able to adapt. We’ve been able to deal with a virtual environment probably much better than a lot of us anticipated.
We were able to get things done such as virtual notarizations and get that legislation done to get that sort of thing available to people and in a timely basis. And there’s been other innovations as well that I think were really created to help us survive the pandemic, but will stay with us beyond this particular cycle.
Tracey Velt:
Yeah, definitely. And I do think that real estate professionals are incredibly resilient. So they’ve had record, I know a lot of the companies had record quarters, so hopefully that continues.
Gary Acosta:
For sure.
Tracey Velt:
Yeah. You recently released the fifth State of Hispanic Wealth report. I know that focuses on home ownership, small business development and wealth building. And there were some encouraging statistics in the report.
I saw that 40% of Latinos who don’t currently own a home expect to purchase one in the next five years, and that number is higher than any other demographic, according to NAHREP. So tell me, why is that, and what are some of the more encouraging things that came out of the report?
Gary Acosta:
Well, that particular data point, it’s something that’s been trending for a while, and that is Latino renters tend to be much more optimistic about the prospect of home ownership in the near future. And I think there’s three reasons for that. I think number one is age. Latinos are a younger demographic, 14 years younger on average than the non-Hispanic white population.
So the average Latino in this country is 29 years old and just entering those prime home buying years. So they’re starting to make more money. They’re starting to build up a little bit of wealth, and they are preparing themself for home ownership. So that’s one.
Gary Acosta:
Two is marriage and family makeup. Latinos are 50% more likely than the general population to live in a household that contains two parents and at least one child. So that household formation description really is prime for a home buyer.
Gary Acosta:
And then thirdly, it’s just this general passion that Latinos have had for a long time around home ownership, passion because it fulfills, I think, one of the primary elements of the American dream, the way we see it. Plus, of course, family is so central to Hispanic culture. The home is something that just plays into that very, very well.
Gary Acosta:
So for all those reasons, I think that Latinos are very much optimistic about the prospects for home ownership.
Tracey Velt:
Well, that’s great. I read through the report, it seems very positive. So let’s talk about some of the other findings that you think are significant that brokers and real estate professionals would be interested in knowing.
Gary Acosta:
Well, we do this report every year, but this year, we decided to do something a little bit different, and I’m glad that we did. We usually compile data that’s mostly from government sources, but some other sources as well. And most of the data that we are able to get is from the previous year.
And we just thought the world has changed so much in the last year, a report that’s going to be reflective of what happened in 2019 or before that is just not going to feel like it really is telling us anything that’s useful.
Gary Acosta:
So we commissioned a study with Morning Consult that surveyed 2000 families, and half of those families were Latino families, so we were able to benchmark a few things. And it gave us some very fascinating information.
We’ve been able to see home ownership trends broken down by demographic on a quarterly basis because that’s provided to us by the Census Bureau. But we asked a question that I had never seen asked before, and that is not are you a homeowner, but do you also own investment real estate?
Gary Acosta:
And it turns out that Latinos have a higher propensity to own investment real estate than any other demographic. So despite the fact that we’re younger, despite the fact that we have less wealth, despite the fact that we earn a little bit less, we actually are more likely to own investment property than any other demographic, at least according to this survey. So that was really, really encouraging and I think is some very interesting information for the real estate professional community.
Tracey Velt:
Yeah, definitely. That is interesting. I want to talk a little more about the pandemic. It seems to be threatening to slow not just Latino wealth growth, but wealth growth in general. So what actions can be taken now to combat that?
Gary Acosta:
Well, there’s things that we can do and I think there are things that the government should look to do maybe a little bit more than they have in the past. I think the first relief packages focused on small businesses as they should, but they really missed a very substantial segment of what I consider to be micro small businesses, and these are small businesses that have five or less employees.
Very, very few of them were able to qualify for PPP loans or other relief, and they represent the large majority of small businesses in this country.
Gary Acosta:
Latinos in particular are very entrepreneurial, and one in three Latino families own a small business. So if you’re going to do something to help the Latino community in terms of wealth, or the general population, I think a focus on small business support is critical.
Gary Acosta:
If you go back to the last recession, 2008 to 2012 during the foreclosure crisis and when things were really, really bad in our industry, there was data that showed that Latinos were disproportionately affected to the negative during that period of time.
We had lost something like two thirds of our household wealth during that stretch of time, which really is what inspired us to create the Hispanic Wealth Project in the first place.
Gary Acosta:
We studied that and we recognized that one of the reasons that Latinos were hit so hard was because of a lack of diversification in our assets. So we didn’t do things like participate in 401ks and the stock market and other safer investments that are sometimes I think a little bit foreign to Latinos and sometimes people in the real estate industry in general.
Gary Acosta:
So we really have been on a campaign to encourage our network of real estate professionals, who are very much trusted advisors in their communities, to talk about diversification.
And our study showed that this time around, Hispanics were a little bit more diversified than they were in the past. And I think it’s one of the reasons why we’re holding up a little bit better this time around.
Tracey Velt:
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Tracey Velt:
Now, back to our podcast.
Tracey Velt:
And so tell me a little bit about the Hispanic wealth Project and what you’re doing right now. Like I know the plan is to triple Hispanic household wealth by 2024, but tell me a little bit about some of the programs or activities that you have currently.
Gary Acosta:
Yeah, so the Wealth Project, as I said before, came about because of what we saw in 2008 through 2012. And we were looking at that issue and recognized that NAHREP in particular was in a unique position to provide some leadership around the issue of household wealth for a couple reasons.
And one is the largest source of wealth for most families in this country, but particularly for Latino families, is home equity. And we’re an organization that’s all about advancing sustainable home ownership for the Latino community, but a secondary source of wealth for many, many Latino families is small business ownership, and our network is largely made up of small business owners.
Gary Acosta:
So that really gave us a sense that we, as an organization, should provide leadership around this, and in a very specific way. So we created this blueprint. So we attacked it like you would sort of a business challenge. And we said, if our goal is to triple household wealth over the next 10 years, given the influences that we have and the network that we have, what would we do?
Gary Acosta:
And we decided to focus on three things. One of course is to advance homeownership rates beyond a certain sort of tipping point, which we saw to be 50%. The second is to provide support for small businesses. We know that Latinos are prolific in starting small businesses, but the overwhelming majority of those businesses are small and tend to stay small.
So how can we help Latinos scale those businesses? Is it access to capital? Is it mentorship? Is there some knowledge gap that we can help close that can help these families or these small business owners build these businesses to become a little bit larger? And we’ve partnered with the Stanford Latino Entrepreneurship Initiative to create an actual program that coaches and teaches small business owners on how to scale their business.
Gary Acosta:
And then the third piece of the puzzle or of the blueprint is diversification and savings and investments, and that is just creating new disciplines around investing in some of the things that, quite frankly, are so compelling from a financial standpoint, it’s a crime that we haven’t done a better job.
And I’m speaking specifically about things such as retirement accounts and 401ks. And we’ve seen from that effort that we’ve already seen an impact in that in particular.
Gary Acosta:
And so just to kind of consolidate it into a strategy, those are the goals, those are the objectives, how do we get it out to the marketplace? How do we get it out to the public? Well, one of the things that we know is that real estate professionals, particularly, once again, Latino real estate professionals, aren’t only facilitators of real estate transactions in their communities, they tend to be trusted advisors.
People come to them for all sorts of advice, especially as it relates to their finances. So our thoughts were if we could improve the disciplines of the influencers, that’ll have a cascading effect in those communities.
Gary Acosta:
So that’s fundamentally the strategy of the Hispanic Wealth Project. And we’ve done things like create the [inaudible 00:14:02] Principle, which provides very specific guidance to our members, and many, many of our members subscribed to those principles and share those principles with their customers, clients, and family.
Tracey Velt:
Okay. That’s great. It’s definitely an interesting project, so I’ll be looking forward to reading on updates on that as well. And I noticed that you have a vlog. It looks like a lot of them are coming soon. Is that something you’ll be working on or is that something that you’d like to talk about?
Gary Acosta:
Yeah, well, one of the things that we’ve learned from this pandemic is that we need to be more creative on how we disseminate information. If you think about what NAHREP is at the end of the day, we are a platform of information.
Some of it is peer to peer masterminding that takes place amongst members. Some of it comes from the national organization as it disseminates to its network. Some of it is bringing industry participants into the network of NAHREP to help educate them about the nuances that exists within serving Hispanic consumers.
Gary Acosta:
And the vlog and my personal blog and different mediums that we’ve pursued in the past, including theater, are different things that we’re looking at and are pursuing to disseminate those messages in a more creative way.
Tracey Velt:
Okay. I’ll look forward to seeing that. So you mentioned kind of the nuances of serving the Hispanic community. And so what do you think real estate professionals should know or need to know about serving the Hispanic community?
Gary Acosta:
Two things, trust and loyalty. So Hispanics, the surveys have showed this time and time again, will make their purchasing decisions based on trust more than anything else, more than brand, and even more than price. If they trust you, they will do business with you. So you want to present yourself in a way that’s going to create trust.
Gary Acosta:
The second thing is loyalty, and that is there’s a concept that we refer to in business called the long-term value of a customer. And if you look at Hispanic home buyers and you recognize that they tend to be very young, they tend to be extremely loyal.
Not only if you do a good job in terms of servicing that Hispanic customer will they be loyal to you, they will refer you business within their family and their friends and their sphere of influence for a long, long time.
Gary Acosta:
So trust will get you that business and loyalty, the loyalty that exists between that relationship, especially if you serve them well, will benefit you in the long run for a long, long time.
Tracey Velt:
Yeah. Great advice. I have two more questions for you. The first is opportunities. Where do you see opportunities for brokerage leaders in the coming year?
Gary Acosta:
Well, I think that it’s a great time to be in our business, frankly, but if I were in the business directly, if I were a broker, if I were somebody that was building a real estate business, I would look at pursuing two different, and maybe you could pursue these simultaneously, but there’s two different tracks.
One is a virtual track, because I think that being nimble and having a very low cost structure is something that positions you for success and growth in the long run, or go big. And when I say go big, I mean have a full service resource center as a real estate office.
Gary Acosta:
For the Latino community, that’s particularly appealing because, as I said before, Latinos will make their purchasing decisions based on trust. And if they have an established trusting relationship with a real estate agent, and that agent then can also hand them off to a mortgage lender or somebody who can handle their insurance and it’s all very contained in kind of a one-stop shop, that’s going to be very appealing to a Latino customer.
And I just think it’s going to be the type of business that’s going to be much more resilient and much more positioned for growth in any sort of business environment moving forward. So virtual or go big, and if can do both, even better.
Tracey Velt:
Yeah, an the virtual… Oh, go ahead. I’m sorry.
Gary Acosta:
No, no. I said if you could do both, even better.
Tracey Velt:
Yeah. The virtual is definitely, I’ve talked to several brokers who are putting together compensation models for virtual agents. Even though they’re a traditional brokerage, they want to offer that option as well. So I think you’re going to see some hybrids coming out of this as well. It’ll be interesting to see.
Gary Acosta:
Absolutely. Very much so.
Tracey Velt:
And finally, if you had just one piece of advice for brokerage leaders who are managing in an uncertain market, however, it has been a good market, but what would it be?
Gary Acosta:
Well, it might be a bit of a cliche, but I would say to embrace change. Change is good and change breeds opportunity. You can fight change if you choose, but it’s better to embrace it and try to exploit it.
Because whenever there’s a changing environment, there’s incredible opportunities that come from that. So stay true to your principles, but leverage change for the better and embrace it.
Tracey Velt:
Great advice. Definitely. And there have been quite a few opportunities that came out of just the pandemic as well, increased agent adoption of technology, and people pivoted pretty quickly. So, great. Thank you so much for joining the REAL Trends podcast. We appreciate all of your insight.
Gary Acosta:
Tracey, it was a pleasure. Thank you very much, and anytime.
