Written by The Business Journal Staff
While the percentage of Americans who own their own home has declined for more than a decade, according to a new report, Hispanic homeownership rates are soaring, especially in traditional Hispanic population centers like the Central Valley.
With 15 million Hispanic residents, California has the country’s largest Latino population. The Hispanic Wealth Project, in collaboration with the National Association of Hispanic Real Estate Professionals (NAHREP), released fresh data this month showing a marked increase in Hispanic homeownership rates — both in California and across the U.S.
Since 2000, according to NAHREP’s latest State of Hispanic Homeownership Report, “Hispanics have accounted for 52 percent of the growth in U.S. homeownership.”
And the momentum is clearly building. In 2015, Hispanic homeownership across the U.S. registered the largest one-year spike in more than a decade.
Scott Reba, a Fresno-area mortgage broker who works for Elite Mortgage, credited nonprofit organizations like NAHREP with helping Hispanics to enter the local housing market. With more than 20,000 members in 48 states, NAHREP has emerged as one of the driving forces behind the surge in sustainable homeownership among Latinos.
“I’ve been a part of NAHREP,” Reba said. “These people work very hard, without pay, to ensure Hispanic and Latino members of our community have access to home ownership education and counseling.”
Although he believes issues like wage inequity and lack of employment opportunities, education and training continue to be among the biggest obstacles preventing more Hispanics from owning homes across the Valley, Reba said a number of loan officers he knows, including ones from major banks like Wells Fargo, volunteer their time at places like the Community Housing Council of Fresno educating members of the Hispanic community about home ownership.
Eric Becerra, another NAHREP member who has served on the organization’s national board, is a division manager for Alterra Home Loans, a Las Vegas-based company that recently expanded into the Central Valley, in part, to service the area’s booming Hispanic market.
“We don’t target a specific demographic but have definitely seen a larger and larger number of Hispanics coming to us for home loans,” Becerra said, adding that so-called Millennials — the generation that became adults around the year 2000 — are also now flooding his office with loan requests. (According to U.S. Census figures, about 38 percent of California’s Hispanic population is Millennials.)
At Becerra’s office, recent interest from Hispanics and Millennials has been so strong, in fact, he joked that his staff has actually “concocted” a new term for the potential clients. “We call them Hispan-ials,” he said.
One major factor fueling the rise in Hispanic homeownership is the number of new programs offering down payment assistance for first-time homebuyers.
“We’re seeing more first-time Hispanic homebuyers with better credit taking part in these programs that allow them to come in with little to no money down,” Becerra said. “Up to now, coming up with a down payment has usually been the biggest barrier for this segment of the market.”
The State of Hispanic Homeownership Report revealed that another factor fueling Hispanic homeownership has been the fact that Latinos also lead the nation in workforce participation and household formation growth, which, the report concluded, “indicates Hispanic homeowners will likely be the primary driver of new mortgage activity for the next decade and beyond.”
Mortgage industry officials are quickly recognizing the significance of Hispanic homebuyers to the nation’s economy.
“The State of Hispanic Homeownership Report should be required reading by everyone in housing, especially lenders and Realtors,” said David Stevens, president and CEO of the Washington, D.C.-based Mortgage Bankers Association. “The Latino community is massive, it’s ready to own, and it’s now.”
The State of Hispanic Homeownership Report uses data gathered between 2000 and 2015 to analyze the demographic and economic trends that are shaping the homeownership market, including the cultural nuances and purchasing habits of Latino homebuyers.
The report also identifies ongoing barriers to Latino homeownership, such as “the need for improved access to affordable mortgage credit, the need to substantially increase the number of culturally competent professionals in the industry and policies that address the shortage of housing inventory in many major markets.”
The report also showed that current mortgage underwriting criteria often excludes well-qualified Latino households because they have “minimum” or no credit history or are self-employed.
The report found that “lack of alternative credit scoring and appropriate underwriting” standards still block many would-be Hispanic homeowners from entering the mortgage market.
The report also referenced a 2015 study by the Consumer Financial Protection Bureau that found that because they “traditionally pay in cash for most purchases,” about 15 percent of Hispanic consumers are so-called “credit invisible,” meaning they do not have a credit report generated by the three major credit reporting agencies. And another 12 percent of Hispanic consumers have “unscorable” records under the FICO model of credit scoring.
Nonetheless, the report concludes, “Despite considerable challenges in credit access and a limited availability of affordable homes for sale, in 2015, Hispanics achieved the strongest homeownership gains in a decade and seemed to break away from the pack.”
George Lurie | Reporter can be reached at: 490-3464 or e-mail firstname.lastname@example.org