What Does the State of the Housing Market Mean for Prospective Latino Homeowners?
Not long ago, Latinos were projected to drive future home ownership. That may not be the case anymore, and it could come at everyone’s expense.
By Edwin Ortiz Reyes, Civic Engagement Coordinator, Latino Policy Forum
Mortgage rates currently are at their lowest point in over a decade, and demand for homes is significantly outstripping supply. According to Federal Reserve economic data, between April 2020 and April 2021, the median sale price of existing homes increased 16 percent, with an 8-percent increase between January and April 2021.
Pre-pandemic projections for home ownership in the coming decades predicted that Latinos would be the main driving force. In fact, Latinos were projected to account for approximately 70 percent of new homeowners. But with the economic impacts of COVID disproportionately affecting the Latino community, meeting these projections seems more unlikely with each passing day.
All racial and ethnic groups have been impacted by the economic consequences of the pandemic. However, none have been as negatively and dramatically impacted as the Latino community. Latinos are approximately 16 percent of the US population, but accounted for 23 percent of initial pandemic-related jobs lost. Latinas fared even worse, accounting for 45 percent of the COVID-related job losses experienced by women. The widespread job loss among Latinos has severely damaged their economic trajectory and is affecting their ability to purchase homes. And since home ownership is the single most important vehicle for wealth accumulation, this situation is depriving many Latinos of the ability to accumulate wealth.
High unemployment rates and increases in median housing costs mean that for many Latinos, the prospect of purchasing a home is not realistic. Pre-COVID, Latinos were overrepresented in low-wage occupations. In addition, Latinos had significantly less wealth accumulated than their white counterparts. Latinos have also historically faced many more obstacles and discriminatory practices from mortgage lenders than their white counterparts. Between 2012-2018, 70 percent of all mortgage loans in the City of Chicago were for properties in white-majority neighborhoods, and 8.7 percent were for properties in Latino-majority neighborhoods.
We must direct resources towards awareness and financial education around home ownership for renters. Financial education and home-ownership-preparation programs need to be improved and expanded at the state and local levels. Awareness and access to down-payment-assistance programs also need to be increased.
In addition to education and awareness, we must also develop and implement concrete policies for making mortgage lending more equitable. For example, lenders could be incentivized to offer financing to borrowers who have shown themselves to be reliable payors of debt but who may not have resources for a traditional 20-percent down payment.
Another policy focus should be the revamping of credit reporting and criteria for good credit, which would benefit Latinos and all lower-income workers.
It is time to redress the discriminatory lending policies and other barriers faced by Latinos and other people of color when they attempt to secure home mortgages. The inability to secure mortgages is a hindrance both to personal wealth accumulation and macro-economic growth, durability, and stability. Enacting specific policies to make home ownership easier and more equitable benefits everyone and should be a city, state, and national priority.