Hispanics will be a big driver of home sales in the next decade, as they are expected to account for 7 million of the 17 million new households formed between 2010 and 2025, according to the National Association of Hispanic Real Estate Professionals’ 2014 State of Hispanic Homeownership Report.
Last year, there were 320,000 new Hispanic households formed in the U.S., representing 40 percent of the total U.S. household growth, according to the report. What’s more, a recent Wall Street Journal report says that Hispanics are the fastest-growing segment of first-time and luxury home buyers.
But they continue to face mortgage credit challenges due to the tight underwriting standards that have been in place since the housing crisis. In 2014, Hispanics were turned down for loans at twice the rate of white borrowers and were more likely to pay more for their loans, says NAHREP President Teresa Palacios Smith.
“Latinos in general have different underwriting needs, as there may be several family members living together and several wage-earners contributing to household income,” Smith says. “Sometimes, we’re not trusting of banks and want to pay for our purchases with cash, and so we don’t have credit established like other Americans. It’s important to teach your Hispanic clients that it’s good to establish a credit line.”
NAHREP recently launched a Hispanic Wealth Project Initiative that sets the goal to triple the wealth in Latinos in the country within the next 10 years.
“In the last crisis of the real estate downturn, two-thirds of Latino wealth was lost because a lot was enveloped into housing,” Smith says. “So as equity fell, wealth fell.”
NAHREP has laid out the following three major goals with its initiative to increase the wealth of Latinos:
• To achieve a 50 percent or greater rate of U.S. Hispanic home ownership; • To increase by 50 percent the first-year success rate of Hispanic-owned small businesses; • To increase by 25 percent the number of Hispanic households owning non-cash financial assets.