Latino Homeownership Rate Outpacing Others

When it comes to buying homes, the Latino population is outpacing all the rest. According to the Hispanic Wealth Project out of San Diego, Hispanics were the only major racial or ethnic group to “increase” their homeownership rate in 2015. All the others were down.

Hi I’m Kathy Fettke and this is the Real Estate News for Investors.

This report shows that Latinos bought 245,000 homes last year. That’s 69% of the total net growth of U.S. homeownership. It’s the fifth year in a row for growth and it’s the first time in 10 years that the Hispanic rates surged upward while rates for the rest of the country stalled.

Hispanics have gone from almost 4-and-a-half million owner households in the year 2000 to more than 7-million owner households last year. That’s a 67% increase in homeownership in 15 years. And the growth trend is expected to continue. Researchers are predicting that Latinos will increase their hold on the homeownership market by 5.7 million in the next decade.

The increase in Hispanic homeownership goes hand in hand with an increase in the U.S. Hispanic population. According to Pew Research, that number is now up to 57 million or about 18% of the total U.S. population, and growing. Researchers expect another 30% surge in the Hispanic population by the year 2060.

The Hispanic Wealth Report also says that Latinos lead the pack when it comes to “workforce participation”. In other words, there’s a higher percentage of Latinos who are working compared to the overall U.S. labor force. It’s about a three percent difference with 66% of Latinos punching a time clock compared to about 63% for all workers.

Hispanic income levels are also rising and poverty levels are decreasing. The median income was about $42,000 in 2014. That’s up from about $39,000 from 2013. That’s a salary increase of almost 8%.

And the higher incomes are adding up. Economists say the purchasing power among that group grew from $1 trillion to $1.5 trillion in just five years, from 2010 to 2015.

Also contributing to this financial success is a higher rate of education. About 1 in 4 U.S. public school students are Latinos. Hispanic business-ownership is also increasing. Those businesses have more than doubled since 1996 to a little over 4 million last year.

Latinos are becoming a bigger part of the real estate demographic going forward. According to a report from Lenders One, Hispanics and Millennials will make up the lion’s shares of the mortgage market this year.

And the numbers don’t even account for the millions of Latinos who want to buy homes but can’t quite yet. The Demand Institute says that almost 4 million Latinos want to purchase their own homes but only one-and-a-half million can afford it.

Obstacles to homeownership among Latinos include a low inventory of homes for sale, and high rent prices that make it tough to save enough money for a down payment. Tight mortgage lending requirements are also making it tougher to get a loan.

One federal program that could help is called HomeReady. It helps homebuyers qualify for a loan by combining income from primary borrowers with money earned by other members of the household. I talked about the HomeReady program in episode #9 of Real Estate News. Check it out.

The CEO of the Mortgage Bankers Association, David Stevens, says the Hispanic Wealth Report should be required reading for everyone in the real estate business. He says, “The significance of Hispanics to housing and the economy will only grow, creating opportunity for all who focus on this vibrant, dynamic, and impactful part of the U.S. economy.”

The Hispanic Wealth Project is an organization that is creating a roadmap for the overall success of Hispanics trying to get ahead in the U.S. Among its many initiatives is one to increase current Hispanic homeownership rates, and Hispanic financial success in general.

So where do most of the Latinos live? You may have guessed this already. States with the highest numbers of Latinos are California, Texas, and Florida. Those three states account for 55% of the U.S. Hispanic population.