After more than 10 years of saving, Joanna Flores finally had enough to make a down payment on her first home. Flores, a 35-year-old computer scientist and single mother of two in Fresno, Calif., Said living with her parents allowed her to set aside a few hundred dollars whenever she could.
âThere were a lot of times I just wanted to give up,â she told NBC News. “Just knowing in the long run that I was saving money kind of pushed me to keep going.”
While Flores helped with household expenses and her parents’ mortgage, her main focus was on saving and building credit. Last year, she won an offer for a three bedroom home for $ 245,000 and got a loan to buy a first home. She used her $ 3,000 in savings and $ 3,000 from her pandemic stimulus plan to make the down payment.
“Latinos are going to play a vital role in the growth of homeownership over the next few decades.”
âIt’s just something I wanted for my kids,â she said. “I wanted them to have a place of their own and a place they could call home.”
After lose 66% of their household wealth during the Great Recession, Latino homeowners like Flores are now showing record growth.
Latinos have increased their homeownership rate for six consecutive years, according to to a 2020 report from the National Association of Hispanic Real Estate Professionals, a professional group. Latinos are the only demographic in the United States to increase their homeownership rate, which is expected to rise from 49% to 51% from 2020 to 2040, according to the nonprofit public policy research organization Urban Institute. reported This year. All other racial groups, including whites, should lower their homeownership rates, he said.
âLatinos have an additional propensity for real estate as a means of building assets,â said Noerena LimÃ³n, executive vice president of public policy at the National Association of Hispanic Real Estate Professionals, or NAHREP. âSince homeownership accounts for such a large percentage of wealth, Latinos are going to play a pivotal role in the growth of homeownership over the next several decades. “
The Latin American homeownership boom is helping to boost the growth of the global economy. National Association of Home Builders estimates that housing accounts for 15 to 18 percent of the gross domestic product of the United States. In 2019, Latinos contributed $ 423 billion to GDP through the housing market alone, according to at NAHREP. The total GDP of Latin Americans was $ 2.7 trillion in 2019, which is higher than the GDP of countries like Italy, Brazil and Canada, according to a report released on Wednesday by the data research organization. nonprofit Latino Donor Collaborative.
LimÃ³n said there would be “a seismic increase in wealth because Latinos play such an important role in wealth creation, given the appreciation in house prices last year and how people build equity in their homes.
Home prices nationwide have risen during the pandemic, with the average price now rising a record 19.7% in July compared to the same period last year, according to to the latest data from the S&P CoreLogic Case-Shiller US National Home Price NSA Index.
Latin Americans are much younger than other ethnic demographic groups, which means there is a larger segment of people in their early years of home buying, said Jun Zhu, visiting assistant professor in the department. of Finance at Indiana-Bloomington University and a non-resident member of the Urban Institute. . Almost one in three Latinos is between 25 and 44, the age at which people traditionally buy a home, according to at the US Census Bureau. They also buy homes at rates similar to previous generations, Zhu said.
But at the same time, Latinos face structural challenges in buying a home, compared to their white and Asian counterparts, including lower parental wealth, lower credit scores, high debt-to-income ratios, and a higher proportion. high number of self-employed workers, which slows the rate of homeownership, Zhu said.
These barriers have only grown stronger during the pandemic, creating the most restrictive climate for access to credit in six years, according to Mortgage Bankers Association Mortgage Availability Index. Access to credit has tightened over the past two years as lenders manage an onslaught of new borrowers, prioritizing prime applicants while default rates Carry on be higher than pre-pandemic levels, according to the NAHREP.
The total GDP of Latinos in 2019 was higher than that of countries like Italy, Brazil or Canada.
Many Latinos are excluded from the home buying process early on, said Luis Paredes, real estate agent at Century 21 Simpson & Associates in Lexington, Ky. Many of his Latino clients come to see him ready to buy a house, but have low credit scores and high debt. Some clients without a Social Security number give up early because they don’t know they can apply for a home loan with an individual taxpayer identification number, he said.
âI tell them that just because you get turned down for a loan now, in a year or two, when you get credit and you have enough for a down payment, you can’t try again, I tell them. -he declares. âAs for the others, they get stuck on the first part and they stop interacting with me.
U.S. homeowners with mortgages have seen their net worth increase by nearly $ 2.9 trillion since the second quarter of 2020, an increase of 29% year-over-year. according to to a CoreLogic Homeowner Equity Insights report released this month. With Latinos making up a significant portion of that equity, Latinos are well positioned to help move the country forward, LimÃ³n said.
At the same time, black and Latino homebuyers still face higher mortgage rejection rates and higher interest rates than their White and Asian counterparts, according to to an analysis of mortgage data by the Consumer Financial Protection Bureau.
“It is clear from this data that our economic recovery from the Covid-19 pandemic will not be strong if it remains uneven for mortgage borrowers of color,” acting director of the office, Dave Uejio, said in a statement.
Flores said she made an offer on multiple homes before finding her three-bedroom home in downtown Fresno and even paused a few times from house hunting out of exhaustion and frustration. But now her 16-year-old son and 8-year-old daughter each have their own bedroom and a back and front yard to play.
âThis house doesn’t have much to claim, but it’s just big enough to occupy me,â she said. “I would tell homebuyers to be very patient and not to give up – just go ahead and keep trying.”