In spite of high unemployment, economic uncertainty and tighter credit conditions, homeownership among Hispanics continues to act as a stimulant to the country’s anemic household formation rate.
Across the nation, new owner household formation increased 125,000 in the second quarter of 2012 to 74.8 million from the same period a year earlier, according to the Census Bureau. Within that figure, white and black owner households suffered declines in formations, while Hispanics and other minorities amplified ownership.
Hispanics and other minorites formed 855,000 new owner households in that period, Census Bureau data shows. Of that, 53%, or 453,000, were Hispanic.
But large declines in white homeownership, down by 649,000 households, and black owner households, which declined 81,000, resulted in the net increase of 125,000 among all demographics during the time period reviewed.
Officials from the National Association of Hispanic Real Estate Professionals say many factors, including relative young age, population growth and increased incomes likely signal a heightened share of Hispanic homebuyers.
“The persistent growth of Hispanic homeownership even in the midst of a lagging economy underscores a basic reality: First-time minority homebuyers, led by the burgeoning population growth and purchasing power of Hispanics and Asians, are the key to America’s housing and economic recovery,” said housing economist Alejandro Becerra.
Recognizing the impact the financial crisis had on Hispanics and their growing purchasing power, Housing and Urban Development Secretary Shaun Donovan said in March at a NAHREP conference in Washington, D.C., that they stand to benefit the most from a revitalization of the American economy.
Federal officials point out no demographic has been hit harder by the financial crisis than the Hispanic community. From 2005 to 2009, median wealth dropped 66% among Hispanics and 53% among blacks, compared to 16% from whites, according to Pew Research Center analysis of Census Bureau data.
“That’s an absolute tragedy. Completely unacceptable,” Donovan said at the NAHREP conference, referring to the dramatic decline in wealth among minorities.
Yet the increase in Hispanic owner households since June 2011 helped Hispanics maintain roughly the same rate of homeownership from a year ago, which now stands at 46.5%. In the first quarter of the year, the rate for all Americans stood at 65.4%.
Latino homeownership gains have occurred for far more than a decade. Latino homeownership grew 63% to 6.7 million owner households in June from 4.1 million owner households in June 2000.
Homeownership for whites, on the other hand, grew 2.3% to 57.8 million in June from 56.5 million owner households in June 2000.
Becerra says these Hispanic homeownership gains have been overshadowed by young Hispanics forming households at such a large rate that they will necessarily form a greater number of renter households before they are ready to buy a home.
So while Hispanics accounted for 453,000 additional owner households during the last 12 months, they also accounted for an additional 554,000 rental units during the same time period. Effectively, the gain in total Hispanic household growth over the past year was greater than 1 million.
Purchasing power among Latinos in the U.S. rose to $1.1 trillion in 2011, another sign of their continued growth in influence on the economy and housing market. The robust gains are making up for the heavy losses in Hispanic homeownership, but it will “take a while before these gains lead to a higher rate of Hispanic homeownership,” Becerra said.
“As foreclosures continue to wreak havoc in communities across the country and economic uncertainty prevails, a young and burgeoning Hispanic population will by necessity be creating more renter households than planting roots in homeownership for some time to come,” Becerra said.