December 2, 2021

Hispanic buyers poised to drive U.S. housing market

A new study by the Urban Institute forecasts Hispanic buyers will become the primary driver of the U.S. housing market over the next two decades - making up nearly 70% of new homeowners between 2020 - 2040.

According to the U.S. Census, more than half of homeownership growth over the past decade has come from the Latino population. In fact, Hispanic-Americans are the only national demographic to record an increase in homeownership rates in each of the past six years, including 2020.

Studies show the Hispanic homeownership rate rose from 47.5% to 49% during the Covid-19 pandemic, despite disproportionate job losses in the community, record low housing inventory, and a restrictive credit environment.

Data collected in 2020 under the Home Mortgage Disclosure Act (HDMA) shows more than 600,000 Latino families and individuals took out purchase loans during the year, an increase of 13% from 2019.

And Hispanics accounted for 12.1% of overall homeownership in 2020-2021, up from 11.1% in 2017-2018, according to the “State of Hispanic Homeownership Report,” published annually by the National Association of Hispanic Real Estate Professionals (NAHREP).

Recent surveys by the real estate website found Hispanic homebuyers are trending younger. More than half (55%) are under the age of 35 - compared with 37% of buyers overall. Only 47%, are married, and an additional 9% live with their partners. More than half (51%) of prospective Hispanic buyers are buying their first home.

In terms of overall demographics, Hispanics account for one in every four millennials, and nearly one-in-three Hispanics is currently in the prime homebuying age of 25-44.

Younger home seekers typically have more credit challenges, so recent upgrades to underwriting by home loan giant Fannie Mae are significant.

Since Sept. 18, lenders may determine eligibility for many Fannie-backed loans by averaging median credit scores of all borrowers on a loan transaction, rather than the previous method of using only the lowest median score.

Other recent Fannie Mae credit access enhancements include allowing lenders to consider borrowers’ on-time rent payment as credit history. Additionally, by 2022, Fannie says third-party entities may provide home education services for most of its affordable mortgage programs.

According to the 2020 Census, 18.7% of the U.S. population is Hispanic, but accounted for 51.1% percent of total population growth between 2010 and 2020.

Homeownership is the bedrock of the American Dream; a milestone on the path to building family, community, and wealth.