Hispanic Homebuyers Facing Challenges, But Homeownership Rate Remains Strong

By Kelly Leighton | April 5, 2022 | 3 min. read

Hispanic homeownership reached 48.4% in 2021, representing a steady increase for the last two decades.

According to the State of Hispanic Homeownership Report from the National Association of Hispanic Real Estate Professionals®, 1.9 million Hispanic households have been added to the U.S. since 2014, with 657,000 added between 2019 and 2021. Despite challenging circumstances over the past two years, Hispanic homebuyers were mostly able to overcome the disadvantages that came with the market. Nearly half of agents (44%) who worked with Hispanic clients reported a switch from Federal Housing Administration financing to conventional financing. Still, the report found that Hispanics were 81% more likely to be denied for a conventional loan than their non-Hispanic peers. However, 40.8% of Hispanic adults 45 and younger were mortgage-ready in 2021, the report found. With so many challenges, Hispanic homebuyers represented only 20.6% of homeownership growth in the past four years, while they represented 78.5% of growth between 2011 and 2017.

First-time homebuyers across all demographics have struggled to find a property throughout the pandemic, and Latinos were not spared either. Just 18.1% of new homebuyers were Latino in 2021, compared to the peak of 68% in 2015. Latinos are also younger than their counterparts, with a median age of 30, meaning they have had less time to save for a down payment and build good credit, especially as their median income has only reached $55,o00, compared to their white counterparts who have a median income of $74,900. However, Latinos are more likely to buy their first home younger, with 34% purchasing their first home in 2021 were between the ages of 18 and 24, while only 17% of the overall population did the same. More and more Hispanics are being born in the U.S., 62.8% are U.S.-born and 93% of those under 18 were born in the U.S., but only 14.9% of Hispanic children grow up in a multigenerational home, which is lower than previous reports.

While financing has been a hurdle for some Hispanic homebuyers, housing underproduction, bidding wars and high home prices are also obstacles. Housing underproduction has been especially prevalent in areas with a high Latino population, while home prices reaching historic highs have also deterred some would-be buyers. With such a competitive market, many buyers are offering over listing price and getting into bidding wars, which is impacting all homebuyers. However, Hispanic homebuyers are determined to make it happen, 52% reported living with someone rent-free to save money to buy a house, 44% reported working more, 39% took an extra job and 38% drove an older car to save for homebuying costs.

Over the next two decades, Hispanics are expected to represent 70% of new household growth and 53.1% of new household formations. What are Hispanic homebuyers looking for? The report found that 31% want more space since the pandemic and are more likely to sacrifice other features, including location, for a bigger home.

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