The number of Latino homebuyers in the Valley is expected to grow at triple the rate of other buyers through 2020, according to report.
Melissa Trujillo is part of the fastest-growing group of homebuyers in metro Phoenix. a group that is poised to drive the housing market during the next decade.
Not the Millennials, though she’s nearly one at age 38.
And not the boomerang buyers, though she is one of those. She lost a home during the housing crash and had to wait five years to buy again.
But the single mother of three, who bought a $135,000 three-bedroom home in west Phoenix earlier this month, is also Hispanic.
Hispanic homeownership jumped last year and is expected to keep growing, outpacing any other major population group, according to a new study.
The national Hispanic homeownership rate increased during 2015 even as the overall U.S. homeownership rate fell, according to a new State of Hispanic Homeownership Report.
Growth in the number of new households, incomes and education levels is expected to propel Hispanic homebuying in the U.S.to account for 52 percent of all home sales during the next 15 years.
In metro Phoenix, Hispanic homeownership is projected to grow at triple the rate of non-Hispanics until at least 2020, according to a 2015 Datos report on Arizona’s Hispanic market.
But there are some issues that could slow this growing group of homebuyers.
The real-estate and lending industries need to ramp up efforts to help more Hispanic homebuyers by understanding their cultural and financial customs better.
Also, potential new illegal-immigration laws could deter legal Hispanics from buying, like Arizona’s SB 1070 did from 2007 to 2010.
“I really wanted to own again, and my rent was going up,” said Trujillo, who works full time as an administrative assistant for a landscaper, part time designing jewelry and is taking classes at Phoenix College.
“The process was tougher this time around, but thankfully my real-estate agent knew how to get through it,” she added.
Hispanic buyers face hurdles
Language barriers, different saving and spending habits, cash incomes and multigenerational households are all issues for many Latinos trying to qualify for mortgages and buy homes.
A Greater Phoenix chapter of the National Association of Hispanic Real Estate Professionals was recently launched to help educate the industry on Hispanic buyers and dispel some bad myths.
“We are working hard for this market to overcome the typical discrimination and affordable-housing labels of the past,” said Amy Swaney, a board member of the new group and branch manager of Citywide Home Loans in Scottsdale.
“If you are in real estate or lending in Arizona, a big portion of your clients are Hispanics, so you need to understand their culture and economics,” she added.
The National Association of Hispanic Real Estate Professionals worked with the Hispanic Wealth Project to publish the national homeownership report.
Ana Benavides, president of the Phoenix chapter of Hispanic Real Estate Professionals, said the group wants to build awareness of Hispanics’ buying power, and educate both consumers and the real estate industry about creating sustainable homeownership opportunities.
Big issues for Hispanic homebuyers from the report:
- Difficulty getting mortgages. The denial rate for Hispanic mortgage applicants was 18 percent versus 11 percent for White applicants in 2013-14. “One of the biggest myths about Hispanic homebuyers is they don’t have good credit,” said Patricia Duarte Garcia, CEO of the Arizona housing-aid group Trellis.
- A shortage of affordable homes. Most Hispanics purchase with smaller down payments and prefer to take on less debt so they opt for smaller mortgages, even if they can afford pricier homes. Bidding wars are common for many houses priced below $250,000 in the Valley because there are so few of them for sale.
- Problems with credit scoring for mortgages. Many Hispanics have more than one job, multiple wage earners in one household, less-extensive credit histories because they mostly pay cash, have seasonal jobs or own businesses. All this is tied to the denial rate for mortgages because most lenders still require traditional income documentation and credit scores that don’t work for many Hispanics.
- A lack of “culturally competent mortgage and real-estate professionals.” Nationally, 4 percent of mortgage brokers and 7 percent of real-estate agents are Hispanic.
“You need to speak Spanish to work with most Hispanic homebuyers,” said HomeSmart real-estate agent Martha Navarro, who worked with Trujillo on this home sale and the short sale of her last house.
“About 95 percent of my clients speak Spanish, and they want to be understood.”
Group making big economic gains
Hispanics are a growing group who are buying more homes, making more money, getting more college degrees and opening more businesses.
- The U.S. Hispanic homeownership rate surged from 44.5 percent to 46.7 percent in 2015, according to the U.S. Census Bureau.
- Hispanics were the only major group in the U.S. to lower their overall poverty rate and increase incomes between 2013-14, reports the Census.
- The number of Hispanics enrolled in college has tripled since 1993, according to the National Center for Educational Statistics.
- The number of U.S. Hispanic-owned businesses more than doubled from 1.7 million in 2002 to an estimated 4.1 million in 2015. Latinos started more new businesses than any other group in 2015, according to the Kauffman Index of Entrepreneurship.
“Arizona’s Hispanic population is a big economic machine,” said Nate Martinez, owner of Glendale’s Re/Max Professionals. “And if you don’t believe it, just look at how the economy was hurt when so many left Arizona because of SB 1070.”
Martinez grew up in Maryvale and has been a Phoenix real-estate agent for 30 years.He noted that Hispanics are not just buying low-cost housing.
“I started selling homes to first-generation Hispanics, and affordability was an issue for them,” he said. “Now, I am selling to second and third generations Hispanics who are buying luxury homes.”
Impact from immigration law lasting
Arizona’s SB 1070 law likely led to 100,000 legal and undocumented immigrants leaving the state between 2007 and 2010, according to several studies.
Phoenix housing analyst Mike Orr said SB 1070 coincides with the recession so it’s difficult to determine how many foreclosures can be attributed to either of those economic blows.
“It (SB 1070) was clearly a negative factor but when many of the provisions were halted by the courts, the negative effects were quickly abated,” he said.
Still, he and housing advocates say many of Arizona’s Hispanics are wary of future illegal immigration laws.
“The hurt from 1070 has gone away a bit, but it’s still there for many Hispanics,” Navarro said. “Homeownership is the core for Hispanic families, and some still have mixed feelings about buying because of 1070.”
She said buying a home is such an important step for Hispanics that entire families including grandparents, aunts and uncles will go out and help young families look for their first house. And then the family has a big party to celebrate when the sale closes.
Trujillo had been renting a downtown Phoenix condominium with her children, but they ran out of space. She began looking for a home to buy in October, knowing she should be eligible for a mortgage again.
“It took several months and was harder than I expected to find a home we could afford in the area where we wanted to live,” said Trujillo, who moved in during the first week of June.
The effort was worth it, she said.
“We celebrated moving in, even with the record heat. We are happy and home now.”