By: The Gonzales Group | Published: August 2010

Since 2000, we have seen a significant shift in the profile of the Philadelphia, Pennyslvania demographics. The multicultural consumer has grown both in population size and in buying power. Given the rapid growth rate of Hispanic, Asian, Asian-Indian and African-American population, the Gonzales Group examines Philadelphia, utilizing data compiled by the U.S. Census to identify the overall market potential within the multicultural segments. 

Overall, the total population of Philadelphia is expected to grow by 14.30% between 2009-2013. The African-American population will experience the largest growth, growing by 37.94%. From 2000 to 2009 Philadelphia saw the Hispanic and Asian population increase by 58.34% and 35.94%, while the African-American population increased by 91.91%. The traditional White non-Hispanic population only increased by 25.20%.

While the population growth in Philadelphia shows significant shifts in demographic profile, household median income does not necessarily track with population trends. While the Hispanic population trends show growth compared to the White non-Hispanic population, median incomes of Hispanics are only 77% less than non-Hispanic population.

In 2009 two-thirds, 66.43%, of the Hispanic households earn under $49,000, compared to 42.22% of non-Hispanic households. In household incomes between $50,000 to $74,999, Hispanics fared well with a 4% difference compared to non-Hispanic households. However, only 9.74% of Hispanic households earn over $100,000 compared to 25.03% of non-Hispanic households.

In 2009, Philadelphia homeownership rates for Hispanics (49.35%), Blacks (53.98%) and Asian American (52.67%) were lower compared to the home ownership rate for the total population rates (70.50%) and non-Hispanic white (77.67%) populations.

Between 2000 and 2013, the Philadelphia MSA will continue to show homeownership growth among all races and ethnic groups. Like the population trend, the multicultural consumer will demonstrate the highest rate of homeownership growth among Asians, African-Americans, and Hispanics. Similarly, rental rates will also increase as the population grows and younger Asians, African-Americans, and Hispanics enter the workforce. Much of the disparity in rental and home ownership rates comes from a lack of education about the home buying process. This lack of education is often compounded by language and cultural barriers.

The growth rate within the Hispanic, African-American, and Asian population is occurring in the younger age segments. Nearly 78.21% percent of the Philadelphia Hispanic Population is less than 44 years old and 47.77% are under the age of 24. 68.91% of the Philadelphia Asian Population is less than 44 years old and 36.53% are under the age of 24. While 39.63% of the African-American population is under the age of 24 and 66.89% are under the age of 44. Philadelphia is reflective of the changes occurring in the U.S. The aging of the Baby Boomer generation will create a growing demand for younger workers. The White population in Philadelphia tracks with the overall U.S. trend with 43.92% of the White population in Philadelphia being over the age of 45.

It’s important to understand the impact that immigrants and their children will have in filling the jobs left by the retiring boomers and economically supporting the social needs of this aging segment. Immigrant homebuyers will play a huge role in shoring up the housing surplus left by the retiring boomer who will sell their homes as they age and become net sellers versus net buyers. Soft marketing in heavily populated ethnic zip codes can help with branding your organization in the community, but sales may take longer to germinate. Target marketing is more effective if a broker or lender concentrates his or her efforts in zip codes where qualified buyers have the median income, buying power and wherewithal to purchase a home rather than basing their assumptions on population alone. Many marketers make the mistake of marketing in a heavily populated Hispanic, Asian, and African-American zip codes expecting quick and measurable results. Density does not necessarily equate to qualified homebuyers given the young age of the multicultural population.

While the Puerto Rican population in Philadelphia is the largest among Hispanics, its important to know the profile of the Hispanic homebuyer coming through the door to avoid any embarrassing situations. Hispanics are proud of their heritage and calling someone Mexican who is in fact Puerto Rican can be insulting and visa versa. Nearly three fourth of the Asian population in Philadelphia is Asian-Indian (28%), Chinese (23%), Filipino (16%) and Vietnamese (11%). These four groups represent the largest Asian-American immigrant group in the Philadelphia metropolitan study area.

In Philadelphia, 67.24% of Hispanics speak Spanish at home and 49.44% speak an Asian/Pacific Islander language in the home. Language and culture are typically the biggest barriers to reaching the multicultural consumer. Knowing the language usage of the Multicultural consumer is vitally important for decision makers. This help to determine the marketing dollars needed to provide language appropriate collateral material to provide the service and create a branding mechanism for the organization. Even if a large percentage of the multicultural population speaks English, you cannot discount the influence of culture in the home buying decision. Multicultural homebuyers often look to extended family for advice when purchasing a home. For example, a valid Hispanic cultural practice shows that decision making is based on the opinions and influences of the community and extended family, not just that of the homebuyer.

Just as important as language, the level of assimilation plays a significant role in the home buying decision for the multicultural homebuyer. In places where immigration is rising, assimilation levels are low. In MSA’s where second and third generation immigrants have settled such as Chicago, the assimilation levels are higher demonstrating an immigrant with an understanding of U.S. business practices and command of the English language. As the new immigrant arrivals begin to understand their new surroundings, they begin to understand business practices and U.S. cultural norms. It is not a phenomenon that occurs instantly but instead over time. As new arrivals make their way to new gateway cities, helping to accommodate that transition can yield relational equity for the real estate professional that can generate leads and transactions.

Summary

Market expansion targeting the Philadelphia multicultural consumer is a sound one. Given the exponential growth in population and increasing buying power, expanding marketing efforts that accommodates language and cultural nuances can yield sound economic results and expand market share.

Philadelphia multicultural families have substantial income and credit worthiness that provide business opportunities for real estate and financial services firms willing to accommodate the language and cultural nuances of this new consumer. There are strong indicators which point to demand and ability for multicultural consumers to become first-time homebuyers. Although the housing market has weakened and will likely remain weak throughout 2010, a large percent of Hispanic, African-American, and Asian homebuyers still believe “it is a good time to buy a home” and have continued to buy during the current economic downturn.