The era of the Hispanic homebuyer is upon us, according to the 2011 State of Hispanic Homeownership Report released this week by the National Association of Hispanic Real Estate Professionals (NAHREP).
The 36-page document offers an analysis of data on the Hispanic homebuyer market and points to youth, birth rates, household formation, rising purchasing power, labor trends, educational achievements and desire as key indicators that will make Latinos a major purchase force in the first-time homebuyer market. A digital copy of the report is available for download here.
“Despite recent losses suffered by Hispanics during the housing crisis, young Latino families that were unaffected by foreclosure or lost home values, are ready to enter the market,” says Carmen Mercado, president of the 20,000-member group. “When they do, they will have an exponential impact on housing sales.”
According to the report, demographic forces are aligning with Latinos poised to take center stage as a mega force in housing. Latinos filled 1.4 million or 60 percent of the 2.3 million jobs added to the economy in 2011, are expected to account for 40 percent of the estimated 12 million new households over the next 10 years, and their collective purchasing power is expected to jump 50 percent by 2016—just four short years from now.
Hispanic homeownership grew by 288,000 units in the third quarter of 2011, accounting for more than half the total growth in owner-occupant homeownership in the United States. Hispanic real estate leaders maintain that while this is just a short-term indicator it is an example of what’s to come as Latino echo boomers move from renting to homeownership. They also predict as Latinos start to buy en masse that total owner-occupant housing units purchased—not homeownership rate—will be the most outstanding metric of the group.
“In recent years, the headlines have focused on foreclosure and wealth losses in the Hispanic community. But the untold story is the growth, labor force participation, higher educational achievements and attitudes toward homeownership that are crystallizing into a trend with Latinos taking center stage as a mega force in housing,” adds Mercado.
The report, which was written by former Housing Fellow, Researcher, Author & Watchdog Alejandro Becerra, asserts that due to a combination of forces Hispanics are poised to become a mega consumer force in housing:
• 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. Hispanics were responsible for most of the overall population growth in the country over the past decade.
• 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: Latinos filled 1.4 million or 60 percent of the 2.3 million jobs added to the economy in 2011. Hispanics are expected to account for 74 percent of the growth in the nation’s labor force from 2010 to 2020.
• Mobility: Hispanics are mobile and willing to relocate where employment is available. 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.
• 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 among 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.
National housing surveys continue to demonstrate that Hispanics strongly aspire to become homeowners in spite of uncertainty over jobs and the general economy. In particular, surveys also show that almost two in three Hispanic renters maintain high aspirations for owning a home.
Hispanic real estate leaders assert that changes in the nation’s housing finance system must be made to accommodate the mega force of first-time homebuyers entering the market between now and 2020. This includes creating access to affordable, safe mortgage products and low-priced bank owned properties that meet financing standards, among other measures.
“New household growth will be substantially greater for Hispanics than for any other demographic group in the country,” says David Stevens, president of the Mortgage Banker’s Association. “The need to recognize the most critical variables in housing type, price range, affordability, and mortgage product terms will be critical for all housing stakeholders—from lenders and realtors to policy makers — in order to ensure that the homeownership needs of Hispanics and other Americans are met.”
The 2011 State of Hispanic Homeownership Report includes policy recommendations from Hispanic real estate leaders that are needed to accommodate new buyers. This includes: Improved access to affordable mortgage financing, no new taxes or increased fees on mortgages, increased supplier diversity, improved access to REO listings for owner-occupant buyers, sensible immigration reforms and continued financial education for mortgagees.
For more information, visit www.nahrep.org.