Hispanic homeownership rate increases for sixth consecutive year
The Hispanic homeownership rate increased for the sixth consecutive year to 49%, according to the National Association of Hispanic Real Estate Professionals’ 2020 annual report released Tuesday. Mortgage applications increased 13% from 2019, representing more than 600,000 new homeowners.
“Despite strong headwinds, [Hispanics] drove homeownership growth in America for the sixth year in a row, ”said Gary Acosta, co-founder and CEO of NAHREP, in a press release. “This was particularly important in 2020 as it was home to more than any other sector that pulled the country out of the coronavirus-induced recession.”
NAHREP said the boom can be attributed to generational, educational and financial trends that have pushed Hispanic buyers to the forefront of the battle to increase the stagnant homeownership rate in the United States.
“The overwhelming amount of [Hispanics] aging in years of high value for buying a home remains the biggest catalyst for the growth of homeownership, ”the report read. “With a median age of 29.8, Latinos are almost 14 years younger than the non-Hispanic white population. In 2020, almost half (43.6%) of Latino homebuyers were under 34, compared to 37.3% of the general population. “
In addition to generational trends, Latino homebuyers have lower median student loan balances ($ 17,600) compared to their black ($ 30,000) and non-Hispanic white ($ 23,000) counterparts, as only 17.6% of Hispanics aged 25 and over have a university degree.
But declining student loan balances are a double-edged sword for the Hispanic community – while it may help gain a mortgage qualification, it also represents a lack of access to higher education that has made them particularly vulnerable to the crisis. unemployment boom induced by the pandemic.
“Over the past decade, Latinos have almost single-handedly fueled the American workforce, accounting for 90.8% of its overall growth,” the report read. “However, due to the overrepresentation of Latin Americans in the service sector, the annual unemployment rate of Latinos in 2020 was 10.4%, the highest annual average since 2011.”
A wide racial gap in salary and wealth has put many Hispanic buyers between a rock and a hard place, with a median credit score of 668, a median debt-to-income ratio of 41%, and a median down payment of 3.5%. . harder than ever to qualify for a mortgage as lenders tighten the standards.
Despite these financial hurdles, the report says there are 8.3 million Hispanics ‘loan-for-a-mortgage’ who are taking over property by moving into markets with better employment opportunities and better opportunities. more affordable real estate prices, such as Durham / Chapel Hill, NC, and Boise, Idaho.
NAHREP National President Sara Rodriguez said the report was evidence of the Hispanic community’s deep commitment to homeownership and reveals several ways the real estate industry can support this upward trajectory.
“A strong work ethic has taken Latino homebuyers to near record numbers,” Rodriguez said. “Improvements in housing supply and mortgage lending rules will ensure robust growth for the next decade and beyond.”
The main opportunity for change is in the mortgage approval process, which is significantly more difficult for the self-employed and workers in the odd-job economy. Thirty-one percent of Hispanics reported “non-traditional income” in 2020, and the number of Hispanic-owned small businesses has increased 34 percent since 2008.
Higher levels of entrepreneurship have made it more difficult for Hispanic buyers to qualify for mortgages at favorable rates and terms. “The repayment capacity of the Consumer Financial Protection Bureau (CFPB) and the dependence of the Qualified Mortgage Rule on Schedule Q to determine the income of independent borrowers makes credit to many small Latin American businesses too. heavy, ”the report reads.
In addition to a more holistic credit system, NAHREP said land use and zoning reform is needed to help future Hispanic homeowners access more affordable “mid-level housing,” including duplexes, triplexes and other units for sale in small multi-family buildings. . Additionally, NAHREP said immigration reform is needed not only to strengthen Hispanic homeownership, but also to secure the future of the United States.
“Undocumented workers contribute $ 1 trillion to the country’s GDP, generate $ 190 billion in government revenue and support nearly 20 million jobs,” the report reads. “Granting a pathway to citizenship for undocumented workers would create an additional $ 1.5 trillion in GDP and $ 367 billion in tax revenue over ten years.”
Finally, NAHREP said real estate brokers can do their part by hiring more Hispanic and bilingual real estate agents, brokers and staff, translating documents into Spanish, and connecting with Hispanic communities in their markets to learn more about their specific wants and needs.
“The real estate industry is a matter of who you know,” the report read. “First-time homebuyers often rely on their network, including close friends and family, to guide them through the home buying process.”
“Just having physical offices in predominantly Latino neighborhoods will make it easier to hire and service more Latinos,” he concluded. “It’s so simple.”
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