Latinos Drove the Vast Majority of Homeownership Growth in 2015
Latinos are driving growth in homeownership in the U.S., becoming an outlier in the homeownership trend, which decreased overall in 2015.
In fact, despite the general downturn in homeownership in the U.S. through 2015, Latino homeownership accounted for an incredible 69 percent of the total net growth, according to a new report by the Hispanic Wealth Project and the National Association of Hispanic Real Estate Professionals.
Outstanding Growth for Latinos
The study, dubbed the "2015 State of Hispanic Homeownership Report," found that Hispanics were the only major demographic last year to increase in the rate of homeownership.
According to the report, in 2015 there was an increase of about 245,000 Latinos owning households, the first time in 10 years that the Latino homeownership rate increased noticeably while overall rates in the U.S. continued a downward trend.
By the end of 2015, there were significantly more than seven million Hispanic homeowners, an increase of over five million Latino homeowners since 2000, according to U.S. Census data from that time. In fact, in the fourth quarter of 2015 alone, it's estimated that approximately an additional 250,000 Latinos began settling into homes they bought.
In stark contrast, in 2015, all homeownership throughout the country grew by less than a percentage point compared to the previous year, from 45.4 percent to 45.6 percent. And the homeownership rate for every other major demographic group decreased by at least one percent over 2015, while Latinos surged by over two percent.
What's Behind the Spike?
The report points to one huge driver in the total number of Latino homeowners, as well as the growth rate of homeownership in the Hispanic community: population growth. In 2015, for example, the Hispanic population in the U.S. reached a new high of 57 million, or about 18 percent of the total population, representing an increase of about 1.6 million from 2014.
The relative youth of the growing Latino population also contributed to the community's outstanding homeownership growth. About 21 percent of the country's 72.2 million millennials (ages 18 to 34, as the report measured it) were Latinos.
More young Latinos heading into adulthood each year, and one common goal and measure of adulthood is family formation and purchasing a home. For young Latinos, according to the study, that goal is palpably important, with approximately 50 percent of all second-generation Latinos in the U.S. already attaining that part of the American Dream.
Finally, the economic situation of Latinos, and especially millennials, is becoming more advantageous to investing in a home. In the past five years, the purchasing power of Latinos has grown by 50 percent to 1.5 trillion overall, as the annual median income of Latino households spiked by 7.3 percent in the past three years.
Barriers and Progress
There are still barriers to Latinos investing in owning a home, and the biggest one is getting an affordable mortgage, especially to those with little or no credit.
This is illustrated by one significant factor found in the data by the survey, which was a sharp dip in first-time home buying across all demographic groups. The share of homeownership by first-time buyers dipped to 30 percent, from 38 just two years ago, putting it 10 percent below the overall average share (40 percent) of first-time buyers before the housing crisis.
The data points to barriers for any aspiring homeowner that may not have the credit or experience in acquiring a mortgage, but that barrier affects Latinos even more, since more than 50 percent of Hispanic homebuyers are doing it for the first time.
While challenges remain for Latinos looking for a permanent housing solution, the growth is a positive sign, and represents much higher growth, compared to the Latino homeownership trends in 2014, the details of which Latin Post reported last year.
According to last year's report, homeownership among Hispanics fell from 46.1 percent in 2013 to 45.4 percent in 2014, with an overall slowing in the trend of new net homeownership over the previous three years.
Still, that report found that a stronger economy could lead to a spike in Latino homeownership, and it certainly appears that a strong 2015 did just that.