A new report from Freddie Mac shows that the sustained spread and success of Hispanic homeownership in the U.S. continues to outpace the rest of the market.
Hispanics have accounted for 62.7% of net U.S. homeownership gains over the past decade. Approximately 485,000 new households were formed by Hispanics in 2018, accounting for more than a third of total U.S. household formations.
New Mexico and Texas had the highest rates of homeownership, but in every other state (besides California) where more than 30% of the population is Hispanic, their rate of homeownership is above 50%. It is projected that 56% of all new homeowners will be Hispanic by 2030 as household formation, income trends, age, and consumer sentiment will continue to drive the rate of homeownership, according to the report.
Despite the growth, the rate of homeownership among Hispanics (45%) is 26 percentage points below the rate for whites (71%) based on 2015 data. The Hispanic population is on average 11 years younger than the white population, meaning they are only now entering their prime home-buying age. As with the population as a whole, a lack of housing opportunities due to a shortage of skilled construction labor, a dearth of affordable housing in many areas and credit-related challenges have prevented some Hispanics from getting a mortgage. Low down payment programs and alternative credit scoring could help many borrowers achieve homeownership.
However, according to the report, the gap for longer-term residents (as opposed to new immigrants) is projected to narrow to 16 percentage points in 2025, and narrow further to 9 percentage points in 2035.
For Hispanics overall, the gap is expected to narrow to 23 percentage points by 2025, and narrow further to 21 percentage points by 2035.
Freddie Mac offers access other key findings, as well as educational tools and more information on ways lenders and other mortgage professionals can help borrowers achieve homeownership.