Home appreciation among Hispanic homeowners lagged behind white homeowners throughout the COVID-19 pandemic, with the home value gap peaking at 12.4% in December 2021. However, the latest housing trends report by Zillow found that Hispanic-owned homes regained lost ground over the past two years, shrinking the home value gap to the narrowest it’s ever been.
Currently, Hispanic-owned homes are worth 11.9% less than non-Hispanic, white-owned homes -- an improvement over last year’s 12.1% home value gap. In 2012, following the global financial crisis of 2007 to 2009, the home value gap was as wide as 18%. The slow and steady recovery of Hispanic-owned home values continued for several years, leading up to the disruption in 2021. Zillow reports that the course has recently been corrected.
“Systemic barriers have unfairly hindered many people of color from acquiring homes valued comparably to those of their white counterparts," said Treh Manhertz, Zillow senior economic research scientist. "Efforts to improve access to down payment assistance, credit-building programs, zoning reforms, and affordable housing construction and preservation in desirable areas are key initiatives to help this progress continue."
Compared to other homeowner demographic groups, more Hispanic homeowners have wealth tied to their primary residence. As a result, fluctuating home values have a bigger impact on Hispanic homeowners. More than two-thirds of the 100 largest metro areas saw the home value gap decrease for Hispanic homeowners over the past year. Significant reductions were observed in several large Florida markets, including Miami, Orlando, and Tampa.
Metros that have a larger home value gap between Hispanic and white homeowners also saw their gaps narrow. Of the 40 largest metros with home value gaps larger than the national average, 31 of them reduced their gaps by more than the national average. Los Angeles has the largest home value gap, with 32% lower home values for Hispanic homeowners compared to white homeowners. The gap in that metro shrunk by 0.75 percentage points in the past year.
Still, the jump into homeownership remains a significant hurdle for many Hispanic people, who represent 18% of prospective buyers but only 13% of successful purchasers, according to Zillow's 2024 Consumer Housing Trends Report.
Data from the Homeowners Mortgage Disclosure Act shows that Hispanics face higher fees when purchasing a home, averaging $2,812 compared to the national average of $2,072. Mortgage denial rates are also higher for Hispanic borrowers, with 18.8% experiencing denials compared to 10% for non-Hispanic whites. Mortgage denials are often due to elevated debt-to-income ratios, accounting for 38% of denials.
Zillow's analysis indicates that the home value gap for Black homeowners has slightly narrowed over the past year as well, to 17.7% from 17.9%. However, the gap remains wider compared to mid-2022 (17.2%) and mid-2007, shortly before the housing bust (16.3%).
