Hispanics in the U.S Housing Market

Hispanic Heritage Month is an annual celebration of the history and culture of Latin and Hispanic communities in the U.S. As this year’s Hispanic Heritage Month comes to a close, let us take look at how Hispanic and Latino communities are the future of homeownership. According to NAHRAP’s 2021 State of Hispanic Ownership Report, Latinos make up 18.7 percent of the U.S. population, and are responsible for 51 percent of the nation’s population growth over the past decade. They also accounted for 80.8 percent of the U.S. labor force growth. In 2021, the Latino homeownership rate reached 48.4 percent, an increase from 47.5 percent in 2019. At this rate, Latinos could reach a 50% ownership by 2025! 

Challenges to overcome

Before we get ahead of ourselves, let’s take a look at the obstacles and hurdles that must be dealt with. According to mortgage data, Latinos experience a 19.1 percent home purchase denial rate for conventional loans. They were also 81 percent more likely to be denied than other non-Latinos. This is due to a high debt to loan ratio and bad credit. Latinos were also twice as likely to utilize an FHA loan as opposed to a conventional loan. This hurt many Latinos’ as rising home prices push out first-time homeowners. The highly competitive housing market led to many paying over-asking price due to bidding wars. In turn, these bidding wars created a strong seller bias in favor of individuals who were able to make large down-payments in cash, conventional borrowers, and institutional investors. Luckily, the seller’s market has begun to cool down, and FHA loans will begin to look more favorable and open up more opportunity. The biggest barriers besides the income gap are housing underproduction, with homebuilding experiencing a significant decline, creating a shortage in housing. Today we are facing a 3.8-million-unit shortage relative to demand. 

Hispanic and Latino communities are working hard!

With interest rates rising so is the issue of affordability. This means that for every 1-point interest rates rise, that is 10 percent less house you could potential afford! As of 2021, the median Hispanic household income was $55,000. Unfortunately, the minimum salary necessary to afford the median priced home nationally is $68,000. But these communities are working hard to close the gap with 44 percent working longer hours and 39 percent getting an extra job. This community also represent 15.5 percent of all self-employed individuals, overall generating a median household capital of $174,920! This increase in Latino entrepreneurship has been significant in wealth creation! Pair this with the fact that 40.8 percent of Latino adults age 45 and under are mortgage ready and 34 percent of new Latino homeowners purchased a home between the ages of 18 and 24 meaning, there is a tremendous chance Latinos will account for 70% of homeownership growth over the next 20 years. There have already been many large homeownership gains occurring in more affordable markets such as the Midwest and the South. Looking forward, there are opportunities every day and the Hispanic and Latino communities are taking advantage of them! For the top 25 hot and ready market areas for mortgage qualified Latinos, reach out today!

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