The National Association of Hispanic Real Estate Professionals (NAHREP) released the 12^th publication of its annual State of Hispanic Homeownership Report during its National Convention & Housing Policy Summit in Washington D.C. 

In 2021, the Hispanic homeownership rate increased to 48.4 percent, consistent with the trendline of the past seven years—an average increase of nearly one percentage point every two years. This growth came despite a hostile real estate market, particularly harsh for low-wealth first-time homebuyers who rely on low down payment loan products.

“While the homeownership rate for Hispanics continues its upward trajectory, recent market conditions have made it challenging for new homebuyers, particularly those who rely on low down payment products,” NAHREP co-founder and CEO Gary Acosta said in a release. “Housing inventory dipped to record low levels, and rising price points pushed homeownership out of reach for many first-time buyers. A failure to address the housing supply crisis could result in a steep decline in the overall homeownership rate and a devastating impact to the nation’s GDP and economic well-being.”

While Latinos accounted for the majority of homeownership growth between 2011 and 2017, the proportional share of new homeowners attributed to Latinos decreased from its peak of 68 percent in 2015 to 18.1 percent in 2021. This slowdown coincides with the lowest rates of housing inventory in history. Given the relative youth of the Latino community, coupled with population and labor growth projections, the country will increasingly depend on Latinos to carry U.S. homeownership growth, the report stated.

 The report also showed Latinos accounted for 20.6 percent of homeownership growth since 2017, compared to 78.5 percent of homeownership growth between 2011 and 2017. Since 2017, the non-Hispanic white population created a record 2.7 million net new households, accounting for 41.5 percent of new household formations. This is in contrast to earlier in the decade when Latinos made up the largest share of household formation growth.

Other key takeaways were:

• Latinos are twice as likely to use Federal Housing Administration (FHA) financing, yet FHA borrowers faced a competitive disadvantage in last year’s tight housing market. Nearly half (44 percent) of respondents in NAHREP’s 2021 Top Real Estate Practitioners Survey reported working with FHA clients to switch them to conventional and 17 percent reported FHA borrowers gave up on their home search and continued renting. In 2020, Latino homebuyers were 81 percent more likely to be denied for a conventional loan than their non-Hispanic white counterparts.
• In all of the most populous Latino markets, housing underproduction significantly worsened, and an increase in institutional housing acquisitions has exacerbated the entry-level housing shortage. In Q3 of 2021, at least 23 percent of properties in the top 20 most populous Latino counties were purchased by investors and several markets experienced investor purchase shares as high as 38 to 39 percent.
• Between 2019 and 2021, the San Bernardino and Riverside Counties in California, locally known as the Inland Empire, produced the newest Latino homeowners. And, in the midst of a housing inventory and affordability crisis, Texas, Arizona and Tennessee saw the greatest influx of Latinos in 2021, and California saw the greatest decrease in net migration.
• Nearly 41 percent of Latinos aged 45 and younger who don’t already have a mortgage are considered mortgage ready. When accounting for the number and share of mortgage ready Latinos, affordability, and housing stock availability, the McAllen, El Paso and Brownsville, Texas markets offer the greatest opportunity for growth. Additional opportunity markets that topped the list were Las Cruces, N.M. in the Southwest, Memphis in the South and Cleveland in the Midwest.
• Between 2020 and 2040, Latinos are predicted to account for 53.1 percent of household formations, while the number of non-Hispanic white households is predicted to decline. Latinos are predicted to account for 78 percent of net new workers between 2020 and 2030.