Latinos Turn to Home Ownership as Renting Costs Soar Nationwide

More U.S. Latinos are considering home ownership as the cost of renting soars across the nation, according to a renter survey conducted by the banking institution TD Bank. In fact, the new report says within the next two years, Latinos are nine percent more likely than the general market to purchase a home (42 percent compared to 31 percent).

The data published Oct. 21 found that Hispanics' top motivators for home ownership includes increasing rental costs (47 percent) and a desire to build equity (40 percent). Also, 22 percent stated they wanted to start or they've started a new job, and 12 percent want to start a family, or they've started a family. Hispanic respondents were more likely than the general market (17 percent versus 10 pecent) to state they experienced a rent increase between $100 and $150 within a two year period, the average increase of $291 per renter. Approximately half of respondents live alone, while the other half pay live with another.

Although Latinos anticipate home ownership, it's expected that they'll hit a rent threshold before they're able to switch to home ownership. Latinos respondents said they're willing to pay a maximum of $1,285 each month for rent before opting to purchase a home because it would make more financial sense. Comparably, respondents from the general market said they were only willing to pay $1,118 each month in rent before choosing home ownership.

Interestingly, the survey said Hispanics considering home ownership were more likely than the general market to have saved between $25,000 and $50,000 for the purchase of a future home (27 percent compared to 15 percent). The report also established that more than 70 percent of Hispanics value home ownership, compared to just 59 percent of the general market.

A greater value placed on home ownership in addition to climbing rent costs has encouraged Latinos to become homebuyers. Nonetheless, many Latinos believe there are concerns keeping them out of the housing market. More than 60 percent cited money as an obstacle, compared to just 51 percent of the general market. Nearly all (81 percent) Hispanic respondents expressed concerned over the affordability costs, including the costs of home maintenance, monthly mortgage payments, and utilities/bills. Also, many respondents cited instable employment and flexiblity of renting as barriers. Also, some are fearful that they have to move to a less convient location to own a home. A majority of Hispanic respondents (61 percent) said they weren't really to compromise location or neighborhood in order to purchase a home.

"Hispanics should work with a trusted mortgage professional who can guide them through the home buying process, and help dispel the fears that many Hispanics have when it comes to owning a home," Scott Haymore, Head of Pricing and Secondary Markets, said in a press release. "In today's market, buyers can leverage state and government affordability programs, which offer options outside of the standard 20 percent down payment, allowing them to pursue home ownership, build equity, and feel comfortable with their monthly payment."

According to the Mortgage Bankers Association, there will be an increase of 5.7 million Hispanic households over the next decade; while there will be an added 5 million non-Hispanic White households during the same period. The MBA report also said the number of new multicultural-owned households will one third higher than the number of new non-Hispanic white households. Additionally, home ownership rates among Hispanics ages 40 and older will be 46 percent higher than the general market. The aging of the young U.S. Hispanic population will signal an increased interest in home ownership. For four decades, the Hispanic headship rate has dipped, but that downward trend has started to level off as household formations have begun to change for Hispanic families.