Hispanics and Homeownership
Hispanics constitute a major percentage of the echo boomer first-time buyer market, by virtue of age, household formation and desire to own a home. National housing surveys affirm that Latinos aspire to become homeowners in spite of uncertainty over jobs and the general economy. Polls also show that Latinos are more motivated than the general population to buy a home for both emotional and financial reasons. In fact, almost two in three Hispanic renters have high aspirations for owning a home. An unrelenting drive to succeed combined with strong family values and larger family sizes fuel their yearning for a place to call home.
Since the first-time homebuyer market mainly depends on the age profile of the population, over the next several decades Latino and Asian homebuyers will make up a big segment of the housing market. Hispanics are expected to account for 40 percent, or 4.8 million, of the estimated 12 million net new households within the next 10 years. Both groups are expected to propel the demand for condominiums, smaller starter homes and first trade-up homes over the next 15 years.
As the job market improves and the housing market stabilizes, many young Hispanics will venture away from their parents' homes and set up households in rental units or homes of their own. By then, homes that were converted to rentals during the housing crisis may quickly revert to the for-sale market.
- In 2011, Hispanic purchasing power was estimated to be $1.1 trillion, and is continuing to escalate steeply, far outstripping the buying power growth of the general population. It is expected to grow by nearly 50 percent to $1.6 trillion in 2016.
- Population Driver: The Hispanic population expanded 3.5 times between 1980 and 2010. Since 1980, more than two in five (44 percent) persons added to the U.S. population have been Hispanic. From 2000 to 2009, Whites experienced 1.1 births for every 1.0 death, while Hispanics experienced 8.9 births for every death, implying a sizeable widening of the growth rates between the two major population groups. Because of such population increase, Hispanics were responsible for most of the overall population growth in the country over the past decade. This continued population trend is expected to provide a strong labor pool, a driving force in the economy, and an increasingly key market for homeownership.
- Education: From 2009 to 2010, the number of Hispanic young adults enrolled in college grew by 349,000 (a remarkable increase of 24 percent), compared with a decrease of 320,000 young non-Hispanic Whites. In 2010, 73 percent of young Hispanics completed high school, up from 60 percent in 2000, and 32 percent of young Hispanics were enrolled in college, up from 22 percent in 2000.
- Homeownership: The U.S. homeownership rate rose to 66.3 percent in the third quarter of 2011 (from 65.9 percent in the second quarter) due mainly to a surge in minority homeownership. Hispanic homeownership alone grew by 288,000 units, accounting for more than half the total growth in homeownership in the United States. Over the past eleven years, the number of Hispanic owner-occupied housing units grew by nearly 50 percent, increasing from 4.25 million units in 2000 to 6.3 million units in 2011. Over this time period, Hispanics accounted for 36 percent of all additional owner-occupied units in the U.S.
- Mobility: Hispanics are mobile and willing to relocate where employment is available. Consequently, they are having a positive economic impact on regions where they settle. Over the past decade, many of the largest cities in the U.S. would have declined economically without the influx of Hispanics. Hispanics alone drove the population growth of Philadelphia, Phoenix, Indianapolis, Omaha, and Atlanta, and comprised the greatest component of population increases in San Antonio, Fort Worth, and El Paso, and Raleigh and Charlotte, North Carolina.
- Desire for Homeownership: National housing surveys continue to demonstrate that Hispanics strongly aspire to become homeowners in spite of uncertainty over jobs and the general economy. The surveys show that Latinos are more motivated than the general population to buy a home for both emotional and financial reasons. The surveys also show that almost two in three Hispanic renters maintain high aspirations for owning a home.
- Consumerism: The Hispanic market made up over 50 percent of real growth in the U.S. consumer economy from 2005 to 2008. During that time span, the $52 billion in new Hispanic spending outpaced the $40 billion in new spending by non-Hispanics, with Hispanic consumer spending increasing by 6.4 percent while non-Hispanic spending increased by only 2.9 percent.
- Labor Force: For well over a decade, Hispanics have also had the highest labor force participation in the country. Currently, 66.7 percent of all working-age Latinos are employed, nearly three percentage points higher than the rest of the U.S. population. Of the 2.3 million jobs added to the economy in 2011, 1.4 million, or 60 percent, were filled by Latinos. By 2025, Hispanics are expected to make up 50 percent of all entrants into the labor market.
The era of the Hispanic homebuyer is upon us. Thanks to youth, rapid population growth, rate of household formation, income and education gains and high desire, Latinos are poised to have an exponential impact on housing and the U.S. marketplace. Accommodating this mega segment of new buyers will benefit the U.S. economy, provide local economic stimulus in areas that have been broadly impacted by the foreclosure crisis and create new jobs. Creating an environment that welcomes first-time homebuyers will set the nation on an upward trajectory that revitalizes the market.
The National Association of Hispanic Real Estate Professionals provides an analysis of current data on the Hispanic consumer segment, the housing market, public policy and other forces that affect first-time homebuyers. NAHREP's assessment includes policy recommendations and anecdotal insights and observations from its 20,000 members that come from tracking this minority segment since the association's inception in 1999. You can view the full report below: