In the housing market, demographics drive demand.
For example, there is currently a massive wave of millennials aging into their early 30’s and getting the instinctual tingle to buy homes, mow the lawn in New Balance sneakers, and keep their breakfast cereal in clear plastic containers they bought at Target instead of the box it came in.
Another major and often overlooked demographic is the rapidly growing Hispanic population. This group grew 23% in the decade following 2010, reaching 62.1 million people by the 2020 census.
According to the annual Hispanic Real Estate Survey by Realtor.com and HarrisX, 39% of Hispanic adults were in the market for a home in January 2022.
Let’s do the math:
Roughly 78% of the US population is 18 and older.
78% of 62.1 million Hispanic population = 48.4 million Hispanic adults
39% of 48.4 million Hispanic adults = 18.9 million Hispanic adults in the market to buy a home.
This homebuying group alone represents roughly 5% of the US population and more than overwhelms the 408,922 active townhome, condo, and single-family home listings recorded in January 2022.
Hispanic homebuyers are clearly a major driver of demand with the potential to shape how homes are bought and sold. Here are 5 takeaways from the 2022 Hispanic Real Estate Survey.
1. Safety and affordability are top priorities
Everybody has a wish list for where they want to live. For Hispanic homebuyers – across all generations – safety of the neighborhood ranked number one, followed by overall affordability of the home.
Here are the top 5 neighborhood considerations:
- Safety of the neighborhood – 63%
- Overall affordability of home – 51%
- Commute time to/from work – 38%
- Proximity to shopping/entertainment/leisure activities – 35%
- Quality of school district – 33%
The following considerations were priorities for less than 30% of respondents:
- Proximity to parks, trails, etc.
- Proximity to health facilities
- Risk of natural disasters
2. Family plays a major role in homebuying decisions
There’s an interesting dynamic among Hispanic homebuyers when it comes to family. It seems current and future homebuyers are more focused on building generational wealth through homeownership than previous generations.
Twenty-three percent of survey respondents were first-generation homebuyers and just 29% inherited a family home.
However, nearly three-quarters (73%) of Hispanic adults plan to pass their home on to the next generation. And it’s the younger generations driving this trend.
Millennial (80%) and Gen Z (86%) Hispanics were most likely to say they’ll pass on a home, while baby boomers (52%) were least likely to say the same.
Millennials and Gen Zers were also more likely to live in multigenerational homes than baby boomer and Gen Xers. It’s unclear whether that’s by choice or a symptom of today’s tough market.
And when it comes to buying a home, Hispanic homebuyers tend to keep family front-of-mind. Two-thirds of adults consider extended family in homebuying decision.
- 27% would like to buy near extended family
- 22% want accommodations for family visiting or staying part-time
- 17% want to offer enough room for family living with them full-time
Just 9% of baby boomers want to offer enough room for family to live with them full time compared to 26% of Gen Zers.
3. Hispanic homebuyers are unsure about down payment assistance
Down payment assistance (DPA) programs can give homebuyers the extra push they need to get into homeownership.
Fifty-eight percent of Hispanic adults had heard of DPA programs while just 22% had used one. Younger generations (Gen Z and millennials) were more likely to have heard of and used DPA programs.
However, these younger generations were also more likely to believe that DPA programs would negatively impact their home offer.
Forty-six percent of Gen Zers and 40% of millennials said DPA programs would negatively impact their offer compared to 27% of Gen Xers and 13% of baby boomers.
This may be a result of younger Hispanic homebuyers facing a much more competitive market than their older counterparts. Earlier this year, Redfin reported that nearly 70% of homes face bidding wars, which tend to favor all-cash buyers. Losing out to cash-buyers may foster a sense that DPA programs are negatively impacting their offers.
When it comes to learning about DPA programs, Hispanic homebuyers tend to trust professionals like bankers and real estate agents over online content.
Most trusted sources of information for DPA programs:
- My bank
- My real estate agent
- Government websites
- Online real estate sites
- Social media
- Watch online videos
- Online news sites
Most homebuyers face obstacles – especially in today’s low-inventory and high-cost market. For Hispanic homebuyers, finding affordable homes and building credit are the two most common obstacles.
|Obstacle||Total % of population affected||Most affected generation (%)|
|Home prices/finding a home in my price range||25%||Baby boomers (34%)|
|Credit history or credit score||22%||Millennials (24%)|
|Finding the right home||17%||Gen Z (21%)|
|Saved money or finances||14%||Millennials (16%)|
|Deciding where i want to settle down||11%||Baby boomers (13%)|
|Getting an offer accepted||10%||Gen X (12%)|
Down payment is often the largest hurdle for homebuyers. Around 66% of Hispanic homebuyers put 20% or less down when buying a home and nearly 1-in-10 put 0% down, presumably using a VA or USDA loan*.
It’s most common for people in this demographic to put between 3.6% and 10% down.
As far as where down payment funds come from, Hispanic homebuyers predominantly rely on savings and cutting back on daily spending. Nearly 40% of all Hispanic homebuyers said they save a set amount each month while less than 15% said down payment funds come as a gift from family.
Down payment sources:
|Down payment source||Share of respondents|
|Saving a set amount each month||40%|
|Saving one-off sums (tax returns, bonuses)||27%|
|Cutting back on daily spending||22%|
|DPA programs||Less than 20%|
|Gift from family||Less than 15%|
|Selling investments||Less than 15%|
|Borrowing from 401K||Less than 15%|
Hispanic homebuyers are a substantial force of demand in today’s housing market and, as such, will influence buying patterns.
Many Hispanic buyers are first-time and/or first-generation buyers that can’t rely on generational wealth to buy their first home. However, family still plays a significant role in housing decisions for this demographic.
*A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits. USDA Guaranteed Rural Housing loans subject to USDA-specific requirements and applicable state income and property limits. Fairway is not affiliated with any government agencies.