In the face of COVID-related challenges and extreme competition over low inventory, the Hispanic homeownership rate not only increased, but accelerated, in 2020.
In fact, the Hispanic Americans have increased their homeownership rate in each of the last six years, and have been the only demographic to do so.
That’s not to say buying a home has been any easier for Hispanic Americans than other ethnic groups. However, financial support from family members and multi-generational living have emerged as keys to success for Hispanic homebuyers.
And this is likely just the beginning of a larger trend. Hispanic Americans are a young and fast-growing demographic in the U.S., which positions it to become a dominant homebuying force. With continued population growth and homebuying success, this demographic may have the potential to reshape the housing landscape.
The keys to rising Hispanic homeownership
Hispanic homeownership has been on a steady rise since 2014 and actually made it’s largest jump from 2019 to 2020 with an estimated 725,000 increase in households.
This comes despite having less access to credit and higher debt compared to other ethnic groups, according to Redfin economist Sebastian Sandoval-Olascoaga.
There are several factors in play, including higher rates of direct or indirect financial assistance from family members compared to Black and white homeowners.
According to a recent survey by Redfin, Hispanic homeowners were most likely to:
- Live with family or friends without paying rent
- Receive direct help paying rent or mortgage from friends or romantic partners
- Have parents directly help pay rent/mortgage
- Have other family members directly help pay rent/mortgage
- Receive financial assistance from parents or other family members that indirectly helped afford house payments
Hispanic homebuyers also lead the way in multi-generational living. Forty-four percent reported having adult relatives living in the home with them compared to 35% of Black homeowners and 25% of white homeowners.
Another key to Hispanic homebuying success is the willingness to make sacrifices to buy a home.
|Sacrifice||Hispanic homeowners||White homeowners||Black homeowners|
|Worked long hours at job||44%||37%||39%|
|Drove an older vehicle for extended period of time||38%||36%||27%|
|Took an extra job||39%||22%||30%|
|Moved to a less expensive area||27%||20%||24%|
While it’s not the easiest route, Hispanic Americans have both the formula and the determination to achieve homeownership, even in tough housing markets.
Tip of the iceberg
While impressive, demographic data suggests the six-year streak of increasing Hispanic homeownership rate is merely the beginning of a larger movement.
According to the 2020 State of the Hispanic Homeownership Report, the median age of Latinos (a term used interchangeably with Hispanic in the report) is 29.8 years old — 14 years younger than that of the non-Hispanic White population. And nearly 1 in 3 Latinos are in the prime homebuying age range of 24-44.
The report also cites the following projection from the Urban Institute:
“All future homeownership growth will come from non-White households, with Latinos accounting for 70 percent of homeownership growth over the next 20 years.”
That amounts to 4.8 million additional homeowners between 2020 and 2040. While that’s likely to increase generational wealth among Hispanic Americans, it certainly won’t happen overnight. This demographic will still face barriers to homeownership, including high debt relative to income, smaller down payments, and more vulnerable incomes.
Until that generational wealth builds, Hispanics homebuyers will likely continue to rely on friends, family, and financial sacrifices in order to achieve homeownership.
And as a rising homebuying force, their needs will likely alter the national housing landscape. Their purchase habits may increase the need for multi-generational-friendly homes, dictate which metros have the hottest housing markets, or change the mortgage process itself.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.