Down Payment Help for Our Community Heroes
There’s been much focus on millennials and their importance on the housing market, but when we look at where homeownership growth has been the strongest, it’s among Hispanics, including Hispanic millennials.
In fact, 2015 marked the fifth consecutive year that Hispanic homeownership has been on the rise, according to the recently released State of Hispanic Homeownership Report. Since 2000, Hispanics have accounted for 52 percent of the growth in U.S. homeownership. And, the Urban Institute predicts Hispanics will account for more than half of new homeowners by 2030.
Over the past 15 years, Hispanics achieved a net gain of 2.8 million homeowners— a growth rate of 67 percent. Conversely, among non-Hispanic White homeowners we find that there are now 85,000 fewer than in 2000. The demand for homeownership remains strong as well, with 67 percent of Hispanics preferring homeownership to renting.
“The State of Hispanic Homeownership Report highlights how important the Hispanic population has become in driving overall housing demand in the US, and how this influence will only continue to grow as their share of the population increases,” said Chris Herbert, managing director Harvard Joint Center for Housing Studies.
While Hispanic millennials are well positioned to buy sooner than expected because of their higher incomes and levels of education, the report also highlights barriers to homeownership for Hispanics, including access to affordable mortgage credit and saving for a down payment. In fact, 27 percent of the Hispanic consumer population are not accurately rated by the predominant credit scoring mechanisms used in the U.S. today. Alternative credit scoring models may be key to serving this growing, and largely untapped, market.
Hispanic homebuyers are also more likely to make smaller down payments. Of the roughly 6.5 million Hispanic homeowners that owned their home as of 2012, more than 2.5 million (39 percent), purchased their home with a down payment of less than 5 percent, compared to 29 percent for all U.S. households. It will be important for Hispanic homebuyers to investigate available homeownership programs and homeownership counseling.