Latinos are a growing force in the housing market

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So the couple decided to upgrade, buying a 4,000-square-foot, four-bedroom home with a large garage and finished basement in the same city for $435,000 this past August. They now have space for separate home offices, a guest room, and enough space in the yard for their young son to run around.

“During Covid, we were blessed that it didn’t affect our employment,” says Gomez, 38, who works for a mortgage lender. “But we were spending a lot more time at home, so it became clear that we needed more space,” he says.

In the United States, Latino home ownership is growing at a record pace, with younger buyers fueling much of the surge, data shows. The surge is changing the real estate landscape in many parts of the country, making this demographic a growing force in the booming housing market.

According to data released Wednesday by the National Association of Hispanic Real Estate Professionals (NAHREP), the homeownership rate for Latinos rose to 48.4 percent in 2021, up from 47.5 percent in 2019, the highest since mid-2019 2000s. (The black homeownership rate hit 45.3 percent in 2020, up from 42.1 percent in 2019, census data show.)

“They’re the fastest of any group we see,” says Tatiana Busch, a real estate agent for Re/Max Gateway in Chantilly, Virginia, who helped the Gomez family find their new home. “We’ve seen an increase in Latino buyers in recent years, but it’s accelerated during the pandemic and even in a tight market, it hasn’t really slowed down.”

NAHREP, which is hosting its National Convention and Housing Policy Summit in Washington this week, used data from the Census Bureau to compile its annual State of Hispanic Homeownership Report. It shows that Latinos added a total of 657,000 new owner households between 2019 and 2021, with the number of Hispanic homeowners reaching 8.8 million.

The housing markets of Riverside/San Bernardino, California; Greater New York; and Orlando saw the largest increase in Hispanic homeowners in 2021, adding more than 230,000 new Hispanic owner-occupied households overall, according to NAHREP.

Despite the rising numbers, market conditions have been difficult for Latinos, according to the trade group, especially for first-time homebuyers in areas with housing stock and affordability problems like Arizona, Florida and Texas.

The NAHREP report highlights several places where a growing population of younger, mortgage-ready Latinos could spur homeownership growth this year, including Las Cruces, NM; Memphis; Cleveland; and several cities in south Texas.

“Many Latinos were already considering homeownership before the pandemic,” said Gary Acosta, executive director of NAHREP. He points to NAHREP data showing that Latinos have added a total of 1.9 million new owner-occupied households since 2014.

“The numbers suggest the wheels were already in motion for this type of growth, but it’s just expanding now,” says Acosta.

And this expansion is set to continue.

The Urban Institute projects that by 2040, 70 percent of net new homeowner households in the United States will be Latino. The group expects homeownership rates for blacks and whites to fall over the same period. And though Hispanics make up about 18 percent of the country’s population, they accounted for more than half of the nation’s home gains in the decade before the pandemic, research from the Urban Institute shows.

The purchasing power of Latinos is only likely to increase because their population is much younger than other racial and ethnic groups, says Jun Zhu, visiting associate professor in the finance department at Indiana University-Bloomington and a nonresident Urban Institute grantee.

According to Pew Research, Hispanics in the United States in 2019 had a median age of 30, about 15 years younger than the median age for non-Hispanic White Americans.

“This demographic is now entering their early 30s, and those are the most typical years for many first-time home buyers,” Zhu says. “So we should expect Hispanics to continue to have a strong impact on the housing market for years to come.”

The growing reach of Hispanic homebuyers has coincided with one of the sharpest increases in homeownership rates in decades.

According to data from the National Association of Realtors, home sales rose to a 15-year high in 2021 as low interest rates and a protracted pandemic helped boost demand. Home prices rose at a record pace across the country last year as buyers struggled with dwindling inventories and a faster pace of sales in many markets. According to the real estate group, the median price for existing homes hit $350,000 in January, up 15.4 percent from the same period in 2020.

Redfin broker Liliana Perez spent years in the Dallas market before recently relocating to Birmingham, Alabama. She served the growing Latino population at both locations by providing clients with bilingual services and guiding first-time buyers through all aspects of the buying process from applying for a mortgage to providing financial advice on saving for a down payment.

“Breaking down the language barrier is really just the beginning,” says Perez, who estimates that 2021 was one of her busiest years ever working with Hispanic clients. “Some of them come to me a little nervous about the process because it’s their first time shopping,” says Perez. “So I try to help them understand each step of the process so they feel more comfortable and see buying a home as an investment.”

Carlos Garcia worked with Perez when he and his wife Alama began looking for a home in Dallas last summer. He says she walked him through the entire process and helped him understand the fine print of the loan application process and credit check. And because his wife didn’t speak much English, Perez helped her with open houses and house tours in Spanish.

The couple bought a three-bedroom home in the Green Meadows neighborhood of Irving, Texas last August that was listed for $250,000.

“She really understood where we needed help with that,” says Garcia, 30, who immigrated to the United States from Mexico 16 years ago and works for a cell phone company in Dallas. “To be honest we were a bit nervous so she really made the difference for us.”

Stricter credit standards and poor English skills can also complicate the process, says Sara Rodriguez, general manager of Titan Title in Annandale, Virginia, which serves Virginia, Maryland and Washington, DC. And because some customers don’t have permanent legal status, it’s shrinking the number of lenders they can use, she said.

“The Hispanic buyer market is here and growing,” said Rodriguez, past president of NAHREP Northern Virginia. “The key for us as an industry is to connect and help them with every aspect of the process.”

Hispanic homeowners are also seeing their homes appreciate in value more than other ethnic groups, according to a Redfin report.

Using racial data for owner-occupied households from the Census, the brokerage firm found that Hispanics saw a 19 percent increase in the value of their homes year over year. This compares to an 18 percent increase for blacks and 17 percent for whites.

For Luiz Araujo, the opportunity to have an apartment in New York near his two 20-something children fueled his decision to buy an apartment in Manhattan last year. But he also viewed owning real estate in the city as a sound investment.

Born in Brazil, he moved to the United States in 1998 and now works for a chemical company in Schenectady, NY. But he and his wife Selma wanted a place in town where they could visit their children more often.

The couple eventually worked with Kegan Burgess, a real estate salesman at Serhant Brokerage, and closed for $835,000 on a two-bedroom apartment in Huxley, a Wonder Works Construction newbuild on Manhattan’s Upper East Side.

“We understood that buying real estate in a city like New York is an important investment for us,” says Araujo, 63. “But it was also a way for our family to get together a lot more.”

Fernando Gomez says there was more to buying his new home in Stafford, Virginia than just making more space. He also sees the purchase as a way to build generational wealth, a critical pillar of advancement for many Hispanic families, he says.

“My parents bought our first house when I was a teenager, so I was fortunate to understand the financial benefits of homeownership early on,” says Gomez, a native of Northern Virginia whose parents emigrated from Chile in the 1980s. “That’s really the lesson that I carried with me as an adult and that I want to pass on to my son.”

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