As a Realtor in Northern California, it’s my job to understand not only current market conditions but rising demographic and economic trends that will affect our housing market long-term.
So, today I wanted to talk about the rise of Hispanic and Latino homeowners and how that trend will continue to evolve in Sacramento, NorCal, and the nation.
While the Hispanic and Latino population is growing rapidly, their interest in homeownership is growing even faster. In fact, according to the National Association of Hispanic Real Estate Professionals (NAHREP), Hispanic homeownership rates have been rising faster than any other demographic group over the last decade.
In 2022 alone, 349,000 homes were purchased by Hispanic owners, which increased their homeownership rate to a record-high 48.6 percent, benefiting from eight straight years of growth.
Latinos are also utilizing FHA loans and traditional mortgages more than ever, fully embracing all of the lending options available to them. In fact, Latino use of mortgages when buying a home has increased by 42 percent since just 2018.
One of the primary reasons for this trend is that Latinos place a high value on homeownership as a means of building wealth and establishing roots in their communities. In a recent survey by NAHREP, 87% of Hispanic respondents said that owning a home is a good way to build wealth, and 91% said that homeownership is part of achieving the American Dream.
Owning a home provides a sense of stability, community, and putting down roots. That’s particularly important for Hispanics, who are more likely to live in multigenerational households and place a high value on family and community participation. In fact, Hispanic buyers purchase multi-unit properties (like duplexes, etc.) at a higher pace than other buyers.
There’s also huge buying power among the Hispanic population in the U.S., with higher participation in the workforce than any other racial or ethnic group and an emphasis on upward mobility. In fact, one in five Latinos is currently now in college, university, or trade school, a fact that empowers homeownership.
According to the Federal Reserve, the median net worth of Hispanic homeowners is almost six times higher than that of Hispanic renters. This is because homeownership provides an opportunity to build equity, which can be used to pay for education, start a business, or retire comfortably.
Latino and Hispanic homeownership also favors younger buyers. Data points to the trend of younger homeowners from that demographic as compared to all racial groups.
According to the Urban Institute, Hispanic homeownership rates are projected to continue to grow over the next decade, with the greatest homeownership increases expected among younger generations of Latinos. Between 2020 and 2040, 70 percent of the homeownership growth from minority households is expected to come from Latinos homeowners, a vast majority.
But there are still obstacles and challenges to homeownership among that demographic.
One of the biggest obstacles is access to credit. Hispanics are more likely to have lower credit scores and be turned down for mortgages compared to other groups.
Another obstacle is the lack of affordable housing options in many areas. Hispanic households are more likely to be cost-burdened, meaning that they spend more than 30% of their income on housing expenses. This can make it difficult to save for a down payment and qualify for a mortgage.
Finally, there is a lack of education and outreach on the part of real estate professionals and lenders when it comes to serving Hispanic clients. Many Hispanics may not be familiar with the home-buying process or the available financing options, which can make it difficult to navigate the system.
Yet despite these challenges, unprecedented opportunities for growth and wealth generation abound among U.S. Latinos and Hispanics, which will continue to strengthen their contributions to the very fabric of America.
As a Latino myself, I’m passionate about helping others achieve the dream of homeownership as well as making wise financial decisions when selling. So, contact me if you have any questions about buying or selling in Sacramento or just need more advice.
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