Latinos a growing force in the housing market

Close up happy woman hugging man, holding keys from new first house, young family celebrating moving day, satisfied customers couple purchase real estate, mortgage and relocation concept (fizkes via Getty Images)

More than a year into the pandemic, Fernando Gomez and his wife, Amber, began looking for a larger home. Though remote work made commuting to their jobs in Washington, D.C., a thing of the past, it also meant they were spending their days working from a small townhouse they shared with their 10-year-old son in Stafford, Va., about 45 miles south of the District.

So the couple decided to upgrade, and last August purchased a four-bedroom, 4,000-square-foot house with a large garage and finished basement in the same town for $435,000. They now have space for separate home offices, a guest bedroom and enough yard space for their young son to roam.

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"During covid, we were blessed that it didn't impact our employment," says Gomez, 38, who works for a mortgage lender. "But we were spending a lot more time at home so it became clear we needed more space," he says.

Across the United States, Latino homeownership is expanding at a record pace, with younger buyers fueling much of the increase, data show. The rise is altering the real estate landscape in many pockets of the country and making this demographic a growing force in the sharply rising housing market.

According to data to be released Wednesday by the National Association of Hispanic Real Estate Professionals (NAHREP), the Latino homeownership rate increased to 48.4% in 2021, up from 47.5% in 2019, the highest level since the mid-2000s. (The Black homeownership rate reached 45.3% in 2020, up from 42.1% in 2019, census data show.)

"They're coming in at the fastest rate of any group we're seeing," says Tatiana Busch, a real estate broker for Re/Max Gateway in Chantilly, Va., who assisted the Gomez family in finding their new property. "We've seen increases in Latino buyers for the past couple of years, but it accelerated during the pandemic and even in a tight market it hasn't really slowed down."

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NAHREP, which is hosting its National Convention and Housing Policy Summit in Washington this week, used Census Bureau data to compile its annual State of Hispanic Homeownership Report. It shows that Latinos added a total of 657,000 new owner households between 2019 and 2021, with the number of Hispanic homeowners reaching 8.8 million.

The housing markets of Riverside/San Bernardino, Calif.; Greater New York City; and Orlando saw the greatest increase in Hispanic homeowners in 2021, collectively adding more than 230,000 new Hispanic owner households, according to the NAHREP.

Despite the rising numbers, the trade group says market conditions were tough for Latinos, especially for first-time home buyers in areas with housing inventory and affordability challenges such as Arizona, Florida and Texas.

The NAHREP report highlights several places where a rising population of younger, mortgage-ready Latinos could push homeownership growth higher this year, including Las Cruces, N.M.; Memphis; Cleveland; and several southern Texas cities.

"Many Latinos were already considering homeownership before the pandemic," says Gary Acosta, NAHREP's chief executive. He points to NAHREP data showing that since 2014 Latinos have added a total of 1.9 million net new owner households.

"The numbers suggest the wheels were already in motion for this kind of growth, but it's simply expanding now," Acosta says.

And that expansion is set to continue.

The Urban Institute projects that by 2040, 70% of the net new homeowner households in the United States will be Latino. The group projects that Black and White homeownership rates will decline during that same period. And while Hispanics make up about 18% of the country's population, they accounted for more than half of the country's homeownership growth in the decade leading up to the pandemic, Urban Institute research shows.

Latino buying power will likely only grow because their population skews much younger than other racial and ethnic groups, says Jun Zhu, a visiting assistant professor in the finance department at Indiana University-Bloomington and a nonresident fellow with the Urban Institute.

Hispanics in the United States had a median age of 30 in 2019, roughly 15 years younger than the median age for non-Hispanic White Americans, according to Pew Research.

"This demographic is entering their early 30s now and that's the most typical years for many first-time home buyers," Zhu says. "So we should expect Hispanics to continue being a strong influence on the housing market for years to come."

The expanding reach of Hispanic home buyers comes amid one of the sharpest rises in homeownership rates in decades.

Home sales surged to a 15-year high in 2021, as low interest rates and a protracted pandemic helped fuel higher demand, according to data from the National Association of Realtors. Home prices also grew at a record pace across the country last year as buyers in many markets contended with dwindling inventory and a faster pace of sales. The median existing-home price in January reached $350,000, up 15.4% from the same 2020 period, according to the realty group.

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Redfin broker Liliana Perez spent years in the Dallas market before recently relocating to Birmingham, Ala. She catered to the expanding Latino populations in both locations by offering clients bilingual services and walking first-time home buyers through every aspect of the purchasing process, from applying for a mortgage to financial advice on saving for a down payment.

"Navigating the language barrier is really just the start," says Perez, who estimated that 2021 was among her busiest years ever working with Hispanic clients. "Some of them come to me a little nervous about the process because it's their first time buying," Perez says. "So I try to help them understand every step of the process so they feel more comfortable about it and see home buying as an investment."

Carlos Garcia worked with Perez when he and his wife, Alama, began searching for a home in Dallas last summer. He says she guided him through the entire process, helping him understand the fine print of the loan application process and credit checks. And because his wife didn't speak much English, Perez helped navigate the open houses and home viewings with her in Spanish.

The couple purchased a three-bedroom home in the Green Meadows neighborhood of Irving, Tex., listed for $250,000 last August.

"She really understood where we needed help in the process," says Garcia, 30, who emigrated to the United States from Mexico 16 years ago and works for a cell phone company in Dallas. "We were a little nervous about it all, to be honest, so she really made the difference for us."

Tightening credit standards and poor English skills can also make the process more complicated, says Sara Rodriguez, chief executive at Titan Title in Annandale, Va., which services Virginia, Maryland and Washington, D.C. And because some customers lack permanent legal status, it shrinks the number of lenders they can use, she said.

"The market for Hispanic buyers is there and it's growing," says Rodriguez, a former president of NAHREP Northern Virginia. "The key for us as an industry is making a connection and helping them with every aspect of the process."

Hispanic homeowners are also seeing the value of their properties rising at a greater rate than other ethnic groups, according to a Redfin report.

Using owner-occupied household race data from the census, the brokerage found that Hispanics saw a year-over-year increase of 19% in the value of their homes. That's compared with an 18% rise for Blacks and 17% for Whites.

For Luiz Araujo, the opportunity to have a place near his two twenty-something kids in New York fueled his decision to buy a Manhattan apartment last year. But he also viewed owning property in the city as a solid investment.

A native of Brazil, he moved to the United States in 1998 and now works for a chemical company in Schenectady, N.Y. But he and his wife, Selma, wanted a place in the city that would allow them to visit their kids more often.

The couple eventually worked with Kegan Burgess , a real estate salesperson at Serhant brokerage, and closed on a two-bedroom apartment for $835,000 at Huxley, a new development by Wonder Works Construction on Manhattan's Upper East Side.

"We understood that buying real estate in a city like New York was an important investment for us," says Araujo, 63. "But it was also a way to have our family come together a lot more often."

Fernando Gomez says buying his new home in Stafford, Va., was about more than just acquiring more space. He also views the purchase as a way to build generational wealth, a crucial pillar of advancement for many Hispanic families, he says.

"My parents bought our first home when I was a teenager so I was fortunate to understand from an early age the financial benefits of homeownership," says Gomez, a Northern Virginia native whose parents emigrated from Chile in the 1980s. "That's really the lesson I've carried with me as an adult and I want to pass onto my son."

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