Mortgage

Despite hardships from pandemic, 40% of Latinos still plan to become homeowners: survey

Despite the economic volatility, 35% of Latino households reported “expecting to be better off economically a year from now”

The American dream of owning a home remains resilient in Latino communities despite high unemployment, high COVID-19 infection rates, and greater loss or reduction of income compared to non-Hispanic Whites, according to a new survey.

The August survey from the National Association of Hispanic Real Estate Professionals found that 40% of Latinos who do not currently own a home have plans to buy within the next five years, the highest among any demographic.

According to the survey, Latino households were twice as likely (18%) as non-Hispanic White households (9%) to report having had at least one household member laid off due to the pandemic. That number reached its peak in April when Latino unemployment sat at 18.9% – the highest recorded since the great depression, according to the Bureau of Labor Statistics.

Undeterred by the economic uncertainty, 47% of Latino renters who were able to continue saving during the pandemic reported the possibility of home ownership as their main motivation, higher than any other demographic of renters. The survey also noted evidence that predominantly Hispanic neighborhoods, or neighborhoods with a Hispanic population of 50% or more, saw more than double the amount of first-time home buyer activity than that of the rest of the country between the second quarter of 2019 and the second quarter of 2020.

A report by the Latino Donor Collaborative found that Latino GDP grew 72 percent faster than non-Latino GDP over the entire period from 2010 to 2018. However, the report found that the state of Latino debt was slightly higher than its non-Hispanic White counterparts in both primary residence mortgages as with regard to investment properties.

The HWP survey also noted data that Latinos are simultaneously more likely to have been considered essential workers (21%) during mandatory stay at home orders while 46 percent of respondents (compared to 42% of non-Hispanic Whites) are reacting to COVID-19 related reduction in incomes by drawing on savings.

Despite the economic volatility, 35% of Latino households reported “expecting to be better off economically a year from now,” compared to 23% of the non-Hispanic White population.

In terms of optimism, Latinos aged between 35 and 44 were considered to be the group with the most favorable economic outlook within the next year, at 39%.

But the greatest number of incoming homebuyers will likely be slightly younger, according to the survey – the median age of Latinos being 29.8 or 8.6 years younger than the general population and nearly 14 years younger than their non-Hispanic White counterparts.

While Latino homeownership boasts great potential, NAHREP’s survey cited a 16-percentage point homeownership gap between Latinos and non-Hispanic Whites.

“Today, the wealth gap between Latinos and non-Hispanic White households threatens the long-term viability of the U.S. economy, particularly as it creates downward pressure on demand growth,” the survey said. “According to the Survey of Consumer Finances (SCF), in 2016, non-Hispanic White households held $8.30 in wealth to every $1 for Latino households, a 20% gap reduction than three years prior.”

The NAHREP demonstrated three methods for tripling Hispanic median household wealth by 2024 and helping the Latino community gain in terms of homeownership:

  • An increase in housing inventory especially in the stock of affordable homes
  • Strong Community Reinvestment Act (CRA) and affordable housing goals that are met through programs that truly serve communities and homebuyers
  • Practical consumer protection that reduces risk for predatory activity while simultaneously promoting fair housing and improving credit access.

While barriers, these goals are not unachievable. The National Association of Realtors saw the median home price jump 8.5% in August year-over-year, however Fannie Mae economists expect single-family housing starts to rise to 933,000 this year to combat inventory pressures.

According to the report the Office of the Comptroller of Currency and the Consumer Financial Protection bureau are making efforts to assist low-to-moderate income borrowers. Most recently the CFPB is moving away from the DTI ratio as a sole determinant of QM. Together with a pricing model and strong fair lending protections, the NAHREP said expanded access to credit opportunities can arise for Latinos.

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