Real estate markets have experienced an unprecedented period over the past couple of years, as the world grappled with the Covid pandemic. We saw sharp declines in sales during the 2020 quarantines, followed by an energetic rebound in the second half of the year, spurred by shifting housing preferences, health concerns, social distancing, and remote work. Markets reached an overheated pace during the first six months of 2021, fueled by record-low interest rates and very tight inventory of homes for sale. Adding to headwinds, we started 2022 with a significant shortage of 5.8 million homes, the result of a decade of under-building. Not surprisingly, prices reached a new record high in February of this year, a clear sign that housing remains unseasonably active this year.
As I noted in Realtor.com®’s 2021 Hispanic Homebuyer Profile, the Hispanic population reached in 2020, a 23% increase from the 2010 Census. Importantly, Hispanic households are expected to be a driving force in housing markets over the next decade, adding to economic vitality and diversity in communities across the country.
In this context, Realtor.com® and HarrisX surveyed 1,002 Hispanic Americans online in Jan. 2022 to learn about their views on home buying and homeownership.
41% of Hispanic Respondents Own Their Homes
The survey data highlight the fact that over four-in-ten Hispanic respondents own the home they live in, with another 6% indicating that they own a home which they do not live in, likely an investment or vacation property. The survey figures echo the homeownership data from the Census Bureau, which show that the homeownership rate for Hispanics in the . Looking across generations, it is not surprising that older Latinos have higher homeownership rates, led by the Silent and Baby Boom generations, at 54% each. Gen X and millennials display slightly lower homeownership rates, at 39% and 40%, respectively.
39% of Latinos Are In the Market for a Home
While having the second-lowest homeownership rate across race and ethnicity groups, Hispanics value homeownership and the benefits it confers. The survey indicates that 39% of Latino adults are currently looking for a home. Across generations, millennial Latinos are the dominant cohort, with 50% seeking a home, followed by Gen Z at 43%, and Gen X (33%).
Of Hispanics who are currently seeking to purchase a home, 58% are first-time buyers, a larger share than the national average. About a quarter of Hispanics in the market for a home are current owners, who are also in the process of selling their existing property while buying the next one. Younger generations are more likely to be first-time buyers, with 66% of Gen Z and 64% of millennials indicating they are looking for their first home. Interestingly, a quarter of millennials are homeowners looking to sell and buy another house. And 18% of Gen X Hispanics are looking to buy another property, in addition to the home they own, double and triple the share of other generational cohorts.
Safety and Affordability Are Top Neighborhood Considerations
We asked Latino survey respondents what factors influence their choice of neighborhoods during the shopping process. Topping the list is the safety of the neighborhood, followed by overall affordability of homes in the community. Commute time to and from work is the third highest ranked choice, and proximity to shopping, entertainment and leisure venues took the fourth spot. Hispanic buyers also value quality school districts, proximity to parks and outdoor trails. These factors held relatively constant across generational cohorts.
23% of Hispanics Are First-Generation Homeowners
We asked survey respondents if their parents or grandparents own a home, and 64% said that their parents do and 35% indicated that grandparents also do. Interestingly, 23% of Hispanics are the first generation to own a home, with the shares across generational cohorts closely aligned.
Mirroring the fact that many are moving up the economic ladder, a majority of Hispanic adults did not inherit a family home. Generationally, Gen Z and millennials show higher shares saying they inherited a home, compared with older cohorts.
At the same time, a majority of Hispanic adults plan to pass a home to their children in the future, a clear signal that housing plays a pivotal role in wealth building. The shares of Latinos who plan to pass real estate to the next generation is the highest for Gen Z (86%) and millennials (80%).
Family is Important for Hispanic Communities and Real Estate Decisions
The 2022 survey data echo our 2021 findings and highlight that family is important to Hispanic communities. Seventeen percent of respondents indicate that they live in homes with 3 or more generations under the same roof. The shares were slightly higher for Gen Z and millennial generations.
In addition, two-thirds of Hispanic adults actively consider extended family in the home-buying decision. Of those, 27% would like to buy a home near extended family, 22% would like a home that can accommodate family visiting or staying part-time, and 17% would like a house that could offer enough room for extended family living full-time. Once again, younger generations have higher shares indicating a desire for extended family space, with Gen Z and millennials at the top.
58% of Hispanics Are Familiar with Down Payment Assistance (DPA) Programs
Real estate markets have been especially challenging over the past two years, as tight inventory, strong demand and record-low interest rates pushed prices to new highs. The landscape has been particularly challenging for first-time buyers. We asked Hispanic adults across the country if they were familiar with programs which provide assistance with down payments and ease the financial burden of paying for a home. A noticeable 43% had never heard of DPA programs. Of the 58% who were familiar with them, 22% had used one of them, while the remainder had heard of them but had not participated in them. On the upside, homeowners had a much-higher share who made use of the program—35% vs 9% of non-homeowners. The shares of younger adults who were unaware of DPA programs were slightly smaller, a likely sign that information availability is broader for Gen Zers and millennials.
Interestingly, a third of Latinos expressed concern that using a DPA program could lower the chances of having a home offer accepted, a likely reflection of the highly-competitive nature of housing markets during the pandemic. Younger buyers were more likely to feel the pressures of the market, with many seeking their first home, a segment which has seen fierce competition from buyers and investors alike.
When it comes to most-trusted sources of DPA program information, Hispanics trust their banks and real estate agents the most. Government websites, online real estate platforms, along with family and friends are other sources of DPA program information for buyers. Interestingly, younger generations—Gen Z and millennials—are more likely to rely on online and social media sources, even as they view real estate agents as a highly-trusted source, as well.
Competitive Housing Market Creates Obstacle to Hispanic Homeownership
We asked survey respondents what are the biggest hurdles to purchasing a home this year. High prices and finding a home in the desired price range topped the list of obstacles, followed by challenges with credit history or credit scores. The inventory shortage and difficulties with saving money were also notable hurdles for Hispanic respondents. Generationally, younger Latinos view personal finances and saving money as comparatively larger obstacles, while older Hispanics struggle with finding a home in their price range a bigger hurdle.
Majority of Hispanic Buyers Used Down Payments of 20% or Less
Hispanic buyers used a wide range of down payments, from 0% with VA loans (9%), to 3.5% for FHA loans (10%), all the way to 100%, in the case of all-cash buyers (6%). The majority of buyers put down 20% or less on their home purchase, with an almost equal share using an amount between 3.6% – 10% and 11% – 20%. The shares were fairly evenly distributed across generational cohorts.
When it comes to down payment sources, the largest share of Hispanic buyers saved a set amount each month (40%). Latino buyers also saved tax returns and bonuses (27%), cut back on daily spending (22%), used DPA programs, and made use of family gifts and investment proceeds. When looking across generations, Baby Boomers were more likely to save a fixed monthly amount, while millennials and Gen Z tended to use DPA programs, sell investments or borrow from retirement savings.
Conclusion
Homeownership can be a way to build generational wealth for families, but there are significant barriers to entry, especially in today’s high-priced and fast-moving housing market. There are a number of programs available to help first-time buyers break into the market, but many people either don’t know that these programs exist or don’t know where to start in finding one that works for their situation. With real estate agents, banks and online portals at the top of buyers’ lists for information sources, there is both an urgent need and a great opportunity to broaden accessibility to financial resources, data and insights for today’s buyers.
Survey methodology
This survey was conducted online within the U.S. from Jan. 14-25, 2022 among 1,002 U.S. adults who identify as Hispanic by HarrisX. The sampling margin of error of this poll is plus or minus 3.1 percentage points. The results reflect a nationally representative sample of Hispanic U.S. adults. Results were weighted for gender, age, region, education, and income where necessary to align them with their actual proportions in the population.