Tino Diaz is senior vice president of Columbus Capital Lending, the premier mortgage lender for the Hispanic market.
Their mission is to strengthen America’s social fabric
through sustainable homeownership. Reach Diaz at
Hispanic Homeownership Rising
Unlocking this market is vital to the future of the mortgage industry
By Tino Diaz
In 2004, there were 5,448,000 Hispanic homeown- ers in the United States. By 2016, that number had reached 7,301,000. That is an increase of 34 per- cent in just over a decade.
To answer the “so what?” question, consider this:
In both 2015 and 2016, Hispanic homeownership
increased, going from 45. 4 percent in 2014 to
45. 6 percent in 2015 and topping 46 percent in 2016.
Plus, these increases happened while the nation’s
overall homeownership rate declined to 63. 4 percent,
a 51-year low.
If you are a mortgage originator searching for a
replacement for refi production in 2017, these numbers should be a wake-up call. The Hispanic homebuying market is growing and will be a dominant
force for many years to come. While these statistics
may seem remarkable, they are, in fact, not surprising.
According to the 2016 State of Hispanic Homeownership Report (HHR), published by the National Association of Hispanic Real Estate Professionals and the
Hispanic Wealth Project, several factors account for
the differential between Hispanic homeowners and
overall homeowners. The report findings provide clear
indicators of what to expect for decades to come.
The report cites three key data points that have a
direct correlation to the increase in Hispanic homeownership, which mortgage originators need to
understand if they wish to reach these potential
homebuyers. These key factors are:
n Increases in income;
n Improvements in educational levels; and
n Growth in entrepreneurship.
The report states that Hispanics are buying more
homes because they can afford to. According to the
HHR, the annual median income of Hispanic households increased by 6.1 percent in 2015, which was the
largest income gain of any group. In addition, poverty within the U.S. Hispanic population declined to
21. 4 percent.
In addition, Latinos have accounted for 29 percent
of U.S. income growth over the past decade, according to the report. This growth was at least partially
fueled by a 194 percent increase from 2005 to 2015 of
Latino households that have annual incomes surpassing $150,000.
This income jump coincides with the fact that the
high school dropout rate of Hispanics has declined
dramatically over the past 10 years, leading to an
82 percent national graduation rate as of 2015. As a
result, more Hispanics are choosing to go to college.
By 2015, 864,000 young Hispanic adults had earned
college degrees — bachelor’s degree or higher — an
increase of nearly 300,000 since 2009.
Finally, the report states that in 2015, more than one-fifth ( 20. 8 percent) of all new entrepreneurs were
Hispanic. The HHR cites a recent study by the Stanford Latino Entrepreneurship Initiative noting that
Hispanic-owned businesses increased from 3. 3 million
in 2012 to about 4.2 million by the end of 2016. This
growth has led to Hispanics contributing some
$668 billion annually to the U.S. economy. A large portion of these Hispanic businesses are owned by millennials with college degrees, according to the reports.
Obstacles to growth
These are all impressive numbers and speak to the
importance of this segment to the mortgage industry, because the spike gives us future indicators as
well. The HHR indicates that the median age for
Hispanics is 28 years old, while the average age of the
overall population is 37. This means that, unlike the
average American, Hispanics are more likely to be
millennials — a group that should embrace homebuying opportunities in the near future.
And yet, many obstacles continue. Consider that
nearly $85,000 needs to be paid in regulatory costs
(local, state and federal) to build a home today, according to a National Association of Home Builders study.
These steep regulatory costs are a significant barrier
that has curbed the growth rate of homeownership. In
effect, “affordable housing” has become an oxymoron.
To help unlock the Hispanic housing market, mort-
gage professionals and elected officials must begin
encouraging homeownership in general by streamlin-
ing regulations to lower costs and designing financing
options that are within reach of a greater portion of
Ask any mayor where to find the safest part of that
city — the areas with better health, higher educational
attainment, greater variety of choices in goods and
services and more wealth — and they will invariably
point to areas with high concentrations of homeowners. This is because when individuals and families
live in homes they own, entire communities are safer
Ultimately, when we create a system that provides
easier access to homeownership, we create sounder
cities and neighborhoods for all. But what does this
mean for the mortgage industry overall? To serve the
U.S. Hispanic community, mortgage originators need
to continue doing their best to help families think
through what is truly affordable and sustainable.
As an industry, we must unite and impress on our
legislators at the federal, state and local level to make
the available stock of entry-level, affordable housing a
priority. This will help ensure that low-downpayment
mortgages are available and affordable, which will
increase the rate of homeownership.
n n n
Sustainable homeownership is a time-tested component that has helped the greatest number of American households to improve their lot in life. Sustainable
is the operative word. America needs to embrace
the next generation of homeowners — a large number of whom are Hispanic — to surpass the current
63. 4 percent homeownership rate, lest we retreat to a
lower quality of life for future generations. n
Read more about the Hispanic
homebuying segment at:
NAHREP 2016 Report:
Hispanic Progress Report:
Urban Institute Headship Report: