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Bloomberg Línea — In recent years there has been a significant increase in the availability of mortgage credit for Latinos in the US, which has allowed greater access to homeownership for that community in the country.
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If the average rate of increase of nearly one percentage point every two years for the past 14 years continues, by 2025 the homeownership rate among Latinos will have reached 50%, according to a 2021 State of Hispanic Homeownership Report from the National Association of Hispanic Real Estate Professionals (NAHREP).
In 2022, the Hispanic homeownership rate increased to 48.6%, marking eight years of steady growth. These gains occurred despite challenges such as home price appreciation and interest rates that continued to rise.
According to NAHREP Latinos added a net total of 349,000 homeowners and created 628,000 new households, both among the largest annual gains for Latinos in the last 10 years. Today, Latinos are more mortgage-ready than ever, and NAHREP continues to highlight the resilience of Hispanic homebuyers, with Hispanic homeownership continuing to increase in the United States.
According to the US Census Bureau’s 2020 Analysis of Household Wealth, Asset Ownership and Debt, homeownership accounts for 67% of Hispanic wealth. This figure shows that this community places primary importance on homeownership, not only as a store of wealth but also as a stepping stone to upward mobility.
“For many Hispanic-Latino families, financial stability means passing on assets to their children to provide a sense of security for the next generation to achieve their goals,” according to Joe Velazquez, senior vice president and production manager at Bank of America.
In addition to the financial and personal stability that a home can provide, with the fixed monthly mortgage payments that protect against rising rent prices and allow for steady savings, the appreciation of that real estate asset over time increases the family’s equity.
According to Bank of America, homeownership is associated with increased civic engagement, higher levels of education, improved health, building a strong community and putting down long-term roots.
“Latino households are poised to drive the largest share of net new homeownership in the United States through at least 2040,” Janneke Ratcliffe, vice president of the Urban Institute’s Housing Finance Policy Center, said in a statement.
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The housing price race
Since the onset of the pandemic, house-price appreciation has reached unprecedented levels. According to CoreLogic’s national report, price appreciation reached a new high of 20.1% in April 2022, the largest price increase in decades.
Rapidly rising home prices made it difficult for low- and middle-income families to afford a home, according to NAHREP. In the third quarter of 2022, home prices rose year-over-year by 98% nationwide. In addition, an Urban Institute analysis corroborates that 80% of properties on the market today are unaffordable for families earning median household incomes or less.
Among the most affordable markets for the Latino community are the Midwest and east coast states. Columbia, South Carolina was considered the most affordable, where the median Hispanic household income was more than $30,000 higher than the income needed to afford median-priced housing in that market. In contrast, California, the state with the largest Latino population, is among the least affordable.
Fomenting housebuying
Several financial institutions offer programs and resources to help low and middle-income families achieve homeownership, recognizing the value this community places on property ownership.
Some of those that are spearheading the provision of credit are:
UnidosUS, a civil non-profit organization, launched (Home Ownership Means Equity). Wells Fargo, which is the first funder of this initiative, earmarked a $25 million philanthropic investment in programs focused on promoting Latino homeownership. Of this funding, $10 million will support the development of the HOME initiative, matching a $10 million investment by UnidosUS. It also launched a $100 million fundraising effort to support the program’s goals over the next seven years.
The first batch of the HOME initiative includes Chicago, Illinois; Phoenix, Arizona; Stockton, California; Orlando, Florida; and Houston, Texas, communities with large Latino populations and housing opportunities for prospective Latino homebuyers and builders.
Bank of America’s Community Homeownership Commitment has a $15 billion fund aimed at assisting low- and moderate-income homebuyers. It comprises up to $17,500 in combined grants for down payment and closing costs.
America’s Home Grant program offers a credit of up to $7,500 that eligible buyers can use to pay non-recurring closing costs, such as title insurance and recording fees, or to permanently reduce the interest rate. The funds do not require repayment and can be combined with funds from the down payment grant program.
For its part, JPMorgan Chase is seeking to allow residents of an additional 3,000 black- and Hispanic-majority census tracts in 16 US markets to be eligible to receive up to $5,000 in grants designed to help with down payments and closing costs.
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