Wave of Hispanic Buyers Boosts U.S. Housing Market (#GotBitcoin?)
Homeownership rate for Hispanics has increased more in recent years than any ethnic group. Wave of Hispanic Buyers Boosts U.S. Housing Market (#GotBitcoin?)
Hispanics are experiencing the largest homeownership gains of any ethnic group in the U.S., a turnaround for the population hardest hit by the housing bust that could help buoy the market for years.
The homeownership rate for Hispanics has increased more during the past several years than any race or ethnic group, including whites. The rate, which hit a 50-year low in 2015, has risen 3.3 percentage points since then, according to U.S. Census Bureau data. The overall U.S. homeownership rate bottomed in the second quarter of 2016 and has grown 1.3 percentage points since then.
While Hispanics comprise only 18% of the U.S. population, the group accounted for nearly 63% of new U.S. homeowner gains over the past decade, according to the National Association of Hispanic Real Estate Professionals. New homeowners include people buying first homes and those coming back into the market after a foreclosure.
The group’s homeownership has risen alongside gains in income and education and a growing familiarity with the U.S. mortgage market. The Latin community also has a large millennial population entering the age of homeownership.
Hispanic home buying stretched from towns in southern California to rural Texas and suburban Minneapolis.
“The housing market would look very different today if it weren’t for a tidal wave of Latino home buyers,” said Gary Acosta, NAHREP’s co-founder and chief executive.
Minorities bore the brunt of the 2008 housing bust and their return to homeownership has been mixed. African-American homeownership tumbled to its lowest level on record in the first quarter of this year.
Now, a growing population of young Latinos increasingly eager to buy homes offers fresh hope to a slowing housing market, where sales of existing homes have fallen on an annual basis for the past year.
That slowdown has been driven, however, by a lack of starter homes and prices that have risen out of reach of many young buyers in major cities—challenges that have hit the Hispanic community, which is concentrated in many of these places.
Down payments can also be a barrier to minority communities. A recent study by the Urban Institute found that 4.6 million Hispanic millennials earn enough to afford a home in their area but are blocked by a lack of down payment and inventory for sale. The Hispanic homeownership rate remains at 47.4%, well below the rate for non-Hispanic whites, which was over 73% in the first quarter.
Local and national lenders have courted a Hispanic clientele, who represent an appealing growth market as overall loan volume has slowed. Lenders have added Spanish-speaking loan officers and devoted additional resources to underwriting loans to borrowers who are self-employed or where multiple generations in a family are buying a home together.
NAHREP also said the median age in the Hispanic community is just under 29, compared with the median age for the U.S. overall of nearly 39 years old. That means Latinos are more weighted toward the age of first-time home buyers, who historically in the US. have been in their early 30s.
Jason Madiedo, chief executive of Las Vegas-based Alterra Home Loans, said 80% of his company’s loans are to Hispanic buyers and 70% are to first-time buyers who are fearful that if they don’t buy a home now they won’t ever be able to afford one.
“The FOMO—the fear of missing out—has sort of set in,” he said.
Eyra Colindres, a 30-year-old Starbucks manager, began looking for a home last year after her mother was diagnosed with breast cancer. Ms. Colindres, who came to the Los Angeles area from Mexico when she was five years old, wanted to care for her parents by purchasing a home where they could live together.
“Her biggest stress factor was how is she going to stay here,” Ms. Colindres said of her mother.
Through a friend, Ms. Colindres met a loan officer at mortgage lender New American Funding. The loan officer helped her repair her credit so that she could get approved for a mortgage.
In September last year, she closed on a $235,000 two-bedroom in San Bernardino, Calif. She surprised her mother with the purchase and they all moved in together. “It took her about a week to stop crying,” Ms. Colindres said.
Hispanics and blacks saw significant gains in homeownership during the housing bubble, aided by lenders that targeted minority buyers with risky loans that eventually led to wide-scale foreclosures. The Hispanic homeownership rate hit a high of more than 50%, before plummeting 6 percentage points over the next eight years, according to census data.
Houses in Hispanic communities were 2.5 times more likely to be foreclosed upon than homes in white communities between 2007 and 2015 while homes in black communities were twice as likely to be foreclosed on, according to an analysis by Zillow.
Artemisa Boston, a realtor in Minneapolis, often has to reassure buyers that most mortgages nowadays have payments that are fixed for 30 years.
Many come from countries where credit and mortgages aren’t available so they are used to buying homes in cash. Ms. Boston will sometimes tell buyers to come back when they have been in the same job for two years so they can qualify for a mortgage.
Lenders are also targeting Hispanics. These borrowers took out 9.4% of mortgages in the U.S. last year, versus 5.8% at their recent low point in 2010, according to ComplianceTech’s LendingPatterns.com.
Eva Angelina Romero, a real-estate agent in Nashville, said that more small lenders are offering programs geared to Hispanic buyers. One uses a tax identification number instead of a social security number, which a buyer wouldn’t have if undocumented. She said that while most of her clients used to be non-Hispanic, now 80% are Latino.
“Mortgage companies are looking at that segment even more so now than before because refinances are not as plentiful [and saying] this is an opportunity we can no longer wait on,” said Alterra Home Loans’ Mr. Madiedo.
Black Homeownership Drops to All-Time Low
The black homeownership rate has fallen 8.6 percentage points, according to census data.
While Hispanic homeownership rate is on the rise, the black homeownership rate has fallen 8.6 percentage points since its peak in 2004, hitting its lowest level on record in the first quarter of this year, according to census data.
This divergence marks the first time in more than two decades that Hispanics and blacks, the two largest racial or ethnic minorities in the U.S., are no longer following the same path when it comes to owning homes.
Analysts say black communities have struggled to recover financially since the housing crisis, which has kept homeownership out of reach. A decadeslong legacy of housing segregation has also made many would-be black buyers wary of returning to the market after losing their homes.
“We can see that discrimination is still there, although it has changed its form,” said Michela Zonta, a senior policy analyst at the Center for American Progress.
A study by Ms. Zonta to be released on Monday also found that higher-income black homeowners are more likely to buy homes in heavily minority neighborhoods that have failed to benefit from the rise in home prices since the foreclosure crisis.
Homes in neighborhoods with a high concentration of white borrowers on average have seen their homes appreciate 3% from 2006 through 2017, according to the study. However, homes in neighborhoods with a concentration of black borrowers on average are worth 6% less than they were in 2006. High-income black borrowers have concentrated in neighborhoods where homes have lost 2% of their value, compared with white borrowers, who have concentrated in neighborhoods where homes have appreciated 5%.
Ms. Zonta said the findings underscore the need to step up enforcement of the Fair Housing Act, which prevents mortgage brokers and realtors from steering clients to predominantly minority areas. Wave of Hispanic Buyers, Wave of Hispanic Buyers, Wave of Hispanic Buyers,Wave of Hispanic Buyers, Wave of Hispanic Buyers, Wave of Hispanic Buyers
Homeownership Rate Slipped In Second Quarter
Soft ownership numbers signal that low mortgage rates and low unemployment are failing to lure enough buyers to market.
The U.S. homeownership rate fell for a second straight quarter, as high prices and limited starter-home inventory are steering more households toward renting.
The rate stood at 64.1% for months April to June, a slight decline from 64.2% in the first quarter and down from 64.3% one year ago, according to data from the U.S. Census Bureau. The second quarter marked the first time the homeownership rate fell on an annual basis since 2016.
Before this year, homeownership had been ticking higher since the start of 2017 and was approaching its historic average of around 65%.
There were 585,000 new homeowners in the quarter, compared with the nearly 600,000 new rental households during the period. The vacancy rate for rental apartments fell to 6.8% from 7%.
“The short-term struggle is that to increase the homeownership rate, you typically need to move someone from renter to owner,” said Mark Fleming, chief economist at First American Financial Corporation. “But is there something they can afford to buy?”
The soft homeownership numbers are the latest sign that low mortgage rates and low unemployment are failing to lure enough buyers to the market. It is a phenomenon that has puzzled economists, and some think that it is only a matter of time until cheap borrowing costs boost homeownership and sales.
One recent bright spot was new-home sales in June, which increased 7% from the prior month. But previously-owned homes account for the vast majority of sales, and weaker sales of existing homes last month brought a slow spring selling season to a disappointing end.
Homeowners are staying in their homes much longer than they were in the past, according to a First American Financial Corporation data analysis—another factor in the lack of inventory available to first-time home buyers. As of May, the average homeowner tenure was 11.3 years. Five years ago, that average was about 9 years.
Even though mortgage interest rates are relatively low, they have been even lower at various points during the last five years, making those buyers who are locked into lower rates less willing to consider moving elsewhere, Mr. Fleming said.
Mr. Fleming and other analysts say low inventory of homes affordable to first-time buyers is keeping the homeownership in check.
“Historically the ratio has been 2—to-1 homeowners to renters in household formation,” said Lawrence Yun, chief economist at the National Association of Realtors.
Quarterly homeownership data is volatile and several quarters of consistent movement are typically needed to indicate trends. For example, although millennials have a lower rate of ownership than other generations, the rate of ownership for people under 35 actually rose 1% last quarter, though it has remained between 34% and 37% for the last five years.
The fall in homeownership rate last quarter was more pronounced for black and Latino Americans than it was for whites, census data show. At 40.6%, the black homeownership rate is now 0.5% lower than it was last quarter, when it was the lowest rate ever recorded.
The West posted the lowest regional homeownership rate since 2017, at 59.3%. The highest ownership rate was found in the Midwest, at 68%.