The National Association of Hispanic Real Estate Professionals released the 2022 State of Hispanic Homeownership Report recently, which examines the progress made in the last year toward the organization’s mission of increasing sustainable Hispanic homeownership.
In 2022, the Hispanic homeownership rate increased to 48.6%, consistent with the trendline of the past eight years. These homeownership gains came despite a tight housing market and affordability challenges that impacted first-time homebuyers. Home price appreciation hit a record high of 20.1%, and interest rates escalated to over 7%. However, Latinos still managed to add 349,000 homeowner households, one of this demographic’s most significant single-year gains over the last 10 years.
“Latinos continue on an 8-year homeownership growth trajectory despite home price appreciation and soaring interest rates once again demonstrating a resilience that will help fuel economic growth and prosperity for an increasing number of American households,” said Gary Acosta, NAHREP Co-Founder & CEO.
“The vibrance and momentum of Latino homeownership growth will continue with the increasing number of new Latino households, the entrance of younger homebuyers, and more lenders bringing SPCPs to market to the mortgage-ready Latino homebuyer,” said Nuria Rivera, NAHREP 2023 National President.
Report Highlights
- Latinos are the only demographic with nearly a decade of consistent homeownership growth. The Hispanic homeownership rate reached 48.6 percent in 2022, marking 8 years of steady homeownership growth.
- Despite record-breaking affordability challenges, Latinos continue to increase their homeownership rate. In 2022, Latinos added a net total of 349,000 homeowner households, one of the largest single-year gains for Latinos in the last ten years.
- Latinos are forming new households rapidly, a pivotal precursor to homeownership. In 2022, Latinos formed 628,000 new households, the largest single-year gain in over a decade, the largest of any demographic group, and more than double that of non-Hispanic White households.
- Latinos are young and buying houses younger. With a median age of 30, Latinos are eight years younger than the general population. They also trend younger as homeowners. Latinos have the highest share of homebuyers under 25, and 70.6% of Latinos who purchased a home with a mortgage in 2021 were under 45.
- Homeownership is the least affordable it’s ever been. In April 2022, home price appreciation hit a new record high of 20.1%. At the same time, interest rates on the average 30-year fixed-rate mortgage started to climb, reaching over 7% in October of 2022, the highest in 20 years.
- Latinos are more mortgage-ready than ever before. In 2022, there were 7.9 million Latinos aged 45 or under with the credit characteristics to qualify for a mortgage and 2.8 million near mortgage-ready. Latinos have the largest share of the near mortgage-ready population of any racial or ethnic group.
- Despite affordability challenges, the rise in interest rates may benefit some first-time homebuyers. While the increase in interest rates compounded affordability issues, it also cooled the market, significantly reducing competition. Nearly half, 11 out of 25 participants in the NAHREP Top Real Estate Practitioners Survey, said their first-time buyers had a more challenging time getting their offers accepted in the first half of the 2022 market than in the second half.
- Latinos will get creative to overcome affordability challenges, including living in multigenerational households and co-borrowing among families. Latinos are among the most likely demographic to live in a multigenerational household at 31.%. In 2022, 7 out of 25 participants in NAHREP’s Top Real Estate Practitioners Study saw an increase in multigenerational buyers last year, while 19 out of 25 reported a rise in co-borrowing, particularly among family members.
- The state of Texas offers the most significant opportunity for Latino homeownership. Between 2020 and 2022, Texas saw a net gain of nearly 150,000 Latino residents. McAllen, Brownsville, and El Paso, Texas, also made up the top three opportunity markets for Latinos, based on the number of mortgage-ready Latinos and affordability. Houston, Texas, was the third highest-ranking market that added the greatest number of new Latino homeowners, adding a net total of nearly 60,000 homeowner households in the last two years.
- The increase in Special Purpose Credit Programs (SPCPs) could play a promising role in closing the non-Hispanic White and Latino homeownership gap. Recent legal clarity by the Department of Housing and Urban Development (HUD) has encouraged more lenders to bring SPCPs to market, opening the door for new programs that could address common underwriting issues, such as debt-to-income ratios and non-W2 incomes, two factors that disproportionately impact the Latino community.
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