Policymakers must act to expand Latino homeownership opportunities

Nearly every election poll finds that inflation and the economy are topofmind for voters this fall. Like other Americans, Latinos are no exception. In a recent UnidosUS and Mi Familia Vota poll, it is clear that economic and “kitchen table” financial issues are top priorities for Latino voters.

By Sam Kenney
Senior Policy Analyst, Economic Policy Project, UnidosUS 

This should be no surprise. According to the Bureau of Labor Statistics, housing is the largest single category of household expenditures, and the steep increases in rent and mortgage payments are now driving up overall household costs. And for new and prospective homeowners, interest rates have sharply increased: the average 30-year fixed-rate mortgage interest rate has more than doubled in less than a year. In addition, home prices jumped 20% nationally from March 2021 to March 2022:  the greatest price increase in 35 years. In combination, it’s clear that these factors are piling on costs for home purchasers, causing housing affordability to plummet 

Rising home prices and mortgage rates are untenable and disproportionately hurt Latinos, particularly in battleground communities. For example, prices in Tampa, Miami, and Phoenix—areas of the country with high Latino populations—all saw price increases above average, with many markets seeing increases over 30%. These factors dramatically impact Latino households wishing to become homeowners and reap the benefits of homeownership, even though millions of Latinos are mortgage-ready 

Data from another recent poll conducted by UnidosUS and sponsored by Oportun, which looked at the overall financial health of Latinos in AZ, CA, and TX, also helped identify some of the reasons why Latinos have lower homeownership rates than whites. Survey respondents cited high home prices, high-interest rates, and low credit scores as the top reasons for not buying a home. For those who indicated they were ready to buy a home but had not done so, 6 out of 10 indicated home prices were too expensive, 4 out of 10 said interest rates were too high, and over one-third reported that their credit scores were too low. Furthermore, existing debt burdens impact Latinos’ ability to save and cover important expenses. Forty-nine percent indicated that debt has affected their decision to buy a home.  

The data support their views: rent prices for single-family homes swelled by over 13 percent during the first half of 2022, compared to the same period in 2021, according to a new report. This makes it difficult for future Latino homeowners to save for a down payment, a key barrier for the prospective Hispanic homebuyer and the overall housing market.  

The poll and data paint a sobering picture: too many Latinos live on the financial edge and are forced to borrow money in ways that saddle them with debt and limit their potential to save. The low savings and high debt are boxing Latinos out of being able to prepare for homeownership or other wealth-building opportunities that could unleash their economic potential. 

Despite these challenges, Latinos want to be homeowners and are strongly motivated to buy. This desire is seen in new evidence from the Urban Institute that shows the Latino-to-white homeownership gap has slightly declined over the last two years. While the homeownership gap is still too large, this reduction is a move in the right direction to overcome entrenched inequity.  

Furthermore, projections by the Urban Institute show that Latinos will drive homeowner growth across the country for the foreseeable future. One reason for the increase in the Latino homeownership rate is age; many Latino residents are in their prime homebuying years.   

Homeownership is a critical measure of how well the country’s socioeconomic system supports the typical American family. But demographics are not destiny, and the current housing market conditions jeopardize Latino homebuyers’ potential. With attention and engagement from political leaders and policymakers, Latinos can contribute even more to strengthening our housing market and economy.   

This means advancing innovative and bold housing policies to unlock the full economic potential of Hispanic homeownership and empower families throughout the housing lifecycle such as: 

  • First-time homebuyer down payment assistance. 
  • Housing counseling programs and services.  
  • Increasing the availability of Individual Taxpayer Identification Number (ITIN) mortgages and supporting households with high debt-to-income ratios.  
  • Policies and programs to boost market rate and affordable housing supply.  

Congress and the Administration have taken some important steps to save our economy during the pandemic, and Latino workers have contributed greatly to keeping the economy afloat. However, more is needed to address rising housing costs that hinder Latinos from reaching their full potential. Political leaders should recognize this and commit to doing more in the next Congress.

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