On a percentage basis, last year was the best for Hispanic home ownership in the U.S. since 2008. That comes despite the Hispanic population largely located in areas of tight housing supply, according to the 2021 State of Hispanic Homeownership Report released this week by the National Association of Hispanic Real Estate Professionals.
Those numbers come despite difficulties Hispanics face in attaining mortgages. The report said mortgage data “indicates that Latinos experienced a 19.1% home purchase denial rate for conventional loans and were 81% more likely to be denied than their non-Latino counterparts." The real estate group said those numbers are based on “calculations made using Home Mortgage Disclosure Act (HMDA) data for home purchases in 2020.”
Hispanics, along with Blacks, also run into financial headwinds when selling their homes. As National Mortgage Professional reported, “In a study of some 12 million appraisals from 2015 to 2020, for example, Freddie Mac found appraisal gaps — that is, the difference between valuations and contracted sales — for both Black and Latino applicants… 9.5% of Latino loan applicants received an appraised value lower than their contract price when compared to whites, and 8.6% of Blacks received the same.”
“An appraisal falling below the contracted sale price may allow a buyer to renegotiate with a seller, but it could also mean families might miss out on the full wealth-building benefits of home ownership or may be unable to get the financing needed to achieve the American Dream in the first place,” said Freddie’s Michael Bradley when the preliminary report was released in September 2021. “This is a persistent problem that disproportionately impacts hundreds of thousands of Black and Latino applicants.”
Hispanics also face difficulties with the Federal Housing Administration (FHA). They are twice as likely to use the FHA to finance their homes than their non-Hispanic white counterparts, but 85% of survey participants in NAHREP’s 2021 Top Real Estate Practitioners Study indicated that their FHA borrowers faced competitive disadvantages, 44% worked with their clients to switch them to conventional financing, and 17% reported that their FHA borrowers gave up on their home searches completely and continued to rent.
Among new homeowners in 2021, Latinos were twice as likely to have purchased a home at a young age. In a survey conducted by Realtor.com in 2021, 34% of new Latino homeowners purchased a home between the ages of 18 and 24, as opposed to only 17% of the general population.
Additionally, 41% of survey participants in NAHREP’s 2021 Real Estate Practitioners Study reported that at least half of their Latino buyer-side transactions were to first-time homebuyers last year. Similarly, a survey conducted by Realtor.com found that more than half of recent Latino homebuyers were first-time buyers.
The NAHREP report said that, despite an unexpected boom in non-Hispanic white household formations, Latinos continue to create new households at increasing rates. The non-Hispanic White boom is attributed to a delay by Millennials (ages 26-41) in buying their first homes.
Between 2019 and 2021, Hispanics added a total of 1,025,000 new households, a 10.7% increase from the previous two-year period. The report said, “The relative youth of the Latino community, coupled with population growth, will inevitably lead to an increase in Latino households and ultimately new homeowners.”
Since 2014, the first year of positive homeownership growth following the Great Recession, Latinos have added a net total of 1.9 million owner households.
