Between now and 2020, roughly four out of every 10 new households that form in the U.S. will be headed by someone of Hispanic descent—more than any other single racial or ethnic group. The Hispanic demographic will be a key driver of home rental and purchasing activity in the next several years, and this will have important implications for the housing sector. Hispanics aspire to homeownership, and the majority of Hispanic movers want to purchase when they move. But a new report from The Demand Institute finds that there is significant business opportunity in meeting the housing and community demand of Hispanic households in the next five years.
Hispanics & Home Ownership: Closing the Gap is the latest publication from The Demand Institute, a non-advocacy, non-profit think tank jointly operated by The Conference Board and Nielsen. The report finds that nearly four million Hispanics would like to purchase a home when they move, but only 1.5 million are financially prepared to do so—a gap of 2.5 million households that will struggle to attain the goal of homeownership because they lack the down payment, income or credit to follow through on their plans.
“Hispanics were hit especially hard by the financial crisis and housing crash, and the outlook for homeownership is uncertain,” says Louise Keely, president of The Demand Institute. “The homeownership rate among Hispanic households now stands at 44 percent and continues to decline. Still, Hispanics are a large and fast growing segment of the housing market, and their distinct demand for communities and housing could stimulate innovation for a wide range of businesses, including financial services.”
In 2007, the Hispanic homeownership rate peaked at nearly 50 percent but has been in decline ever since. “Hispanics are one of the fastest-growing demographics, and their prospects for homeownership and what they will seek from communities in a lot of ways reflect the outlook for the entire country,” continued Keely.
The report also finds that more Hispanics are moving to the suburbs, even though Hispanics are still more likely than non-Hispanics to live in urban areas. “Hispanic households are still most likely to be family households,” says Jeremy Burbank, who is a vice president at The Demand Institute and leads the American Communities Demand Shifts Program. “Hispanics are moving to the suburbs for more space, better schools and more affordable housing – they’re looking for places to raise their families,” says Burbank.
Hispanics & Home Ownership: Closing the Gap is the first report from The Demand Institute’s American Communities Demand Shifts Program, which provides insight on the future of American communities, including the ever-evolving housing sector. The program is an extension of more than four years of in-depth research conducted by The Demand Institute, and will help business leaders and policymakers better anticipate and address the needs of consumers and citizens.
For more information, visit http://demandinstitute.org/projects/american-communities/.