In December of last year, the Open Listings team took a detailed look at where millennials in the United States currently stand with their homebuying plans. And, contrary to many headlines, we found that millennials are actually already buying homes. In fact, 44% of millennials -- largely based outside of major urban areas -- noted that they already own a home.
Over the next couple of years, industry leaders expect one subset of millennials to drive the homeownership rate up even more: Hispanic millennials, or, "hispennials," as the marketing industry has coined them.
What’s motivating this trend?
Proportionately, Hispanics are the youngest major racial or ethnic group in the United States by far. Nearly a quarter (~15 million) of all Hispanics are millennials.
This 15 million-large hispennial population is just coming to the homebuying age. And while Hispanic homeownership has always fallen behind homeownership rates of the U.S. population as a whole, there are many indicators that this is changing.
According to the Hispanic Wealth Project's latest State of the Hispanic Ownership Report, Hispanics are the only demographic that has increased their rate of homeownership for the last three consecutive years.
In fact, according to the same report, Hispanics have been responsible for 46.5% of net U.S. homeownership gains since 2000.
The struggle to homeownership goes beyond affordability
Despite the recent climb in homeownership, Hispanic millennials still face many uphill battles on the road to buying a home, much like others in their generation.
While the affordable housing crisis across the country is impacting all homebuyers, it seems that the odds are especially stacked against Hispanic homebuyers.
Budget cuts for the Department of Urban Development (HUD) are creating an even greater shortage of low-cost housing options, disproportionately affecting Latinos. In addition, Hispanic households have felt lots of uncertainty about long-term homeownership because of increased enforcement of immigration under the current administration.
These newest government headwinds are only coupled with the fact that lenders have been found to turn down prospective Latino buyers for home loans more frequently than Caucasian loan applications with similar financial profiles.
In addition, income disparity continues to be a major issue. According to research from Pew, the country's Hispanic median household income was 67% than that of whites in 1970. By 2014, it was only 61% of white household income.
Hispanic tech workers aren't immune either. Earlier this year, research by Hired.com found that on average, technology companies offer Hispanic job candidates about $6,000 less than their white counterparts.
2018 Open Listings Hispanic Homebuyer Survey
We commissioned the survey in February with 500 Hispanic Americans to take a closer look at the homebuying confidence of Latinos today. The sample size was weighted for the U.S. population by age, region, and gender, so the vast majority of respondents were under 44 and fit into the hispennial category.
Here’s what we found:
Homebuyer confidence remains high for hispennials
While the aforementioned State of Hispanic Ownership report showed that 46.2% of Hispanics were homeowners by the end of 2017, it’s likely that could be rapidly increasing over the next couple years.
Our survey found that just 19% of Hispanic millennials (18-34) currently own a home (compared with 44% of all millennials), but another 22% of hispennials plan to buy their first home in less than two years. If that ends up happening, more than 40% of Hispanic millennials will be owning homes in two years.
Additionally, the percentage of Hispanic millennials that expect to buy a home in more than 5 years (32%), is relatively the same to the broader group of millennials (30%) that we found in December.
Housing price & down payment remain toughest roadblocks
When we asked respondents to name the financial barriers they face in trying to buy a home today, finding a home in their budget range and increasing income to save for a down payment ran neck-and-neck with 56% of respondents choosing each.
These two responses came in well ahead of other hurdles such as cutting expenses to save for a down payment (39%), improving their credit score for better home loan rate (37%), and getting approved for a mortgage (26%).
These responses were already slightly different than findings from Fannie Mae’s October – November 2017 attitudinal survey, which found that credit scores were slightly more concerning to Hispanics trying to buy a home over affording a down payment and insufficient income for monthly mortgage payments.
This may be a further sign of the growing affordable housing crisis, especially in markets highly populated by Hispanics such as California -- home to the largest population of Hispanics in the United States as well as three of the most expensive cities to buy a home in the country.
For survey participants 35+ years old entering peak homebuying age, increasing income to save for a down payment became far less important (37%), while improving credit score for a better loan rate became far more important (40%). One thing remaining the same? Finding a home in their budget range continues to be like finding a needle in a haystack (52%).
Taking drastic measures for home affordability
When we dove further into other measures that Hispanics are considering to make their home ownership dreams come true, we found that uprooting their families to relocate (34%) to a more affordable city and moving back in with family (30%) to save money come only slightly behind getting a second job (35%).
While southern and western states such as California, Texas, Arizona and Florida have long been home to the largest percentage of Hispanic Americans, there are signs that they're moving away. A 2016 Pew Research Report found that the top growing counties in terms of Hispanic population were actually located within North Dakota, Alabama, Georgia, Pennsylvania, Utah and South Dakota.
Long-term ownership confidence grows shaky under Trump
With immigration reform and enforcement as a top issue within the Trump administration, policies & proposals directly affecting the country's Hispanic population such as increased ICE raids and ending the DACA program have created a high level of uncertainty around the long-term living prospects in the U.S.
The respondent sample for our survey did not classify immigration status, but they all self-reported their race or origin to be Hispanic. Furthermore, they are acculturated: noting that they are of Hispanic descent, but prefer to speak English.
With that being said, more than 81% of respondents noted that they are less confident in their long-term prospects for owning a home under the current Trump Administration.
The latest State of the Hispanic Homeownership Report sheds light on how policy changes can directly impact households of many combined resident statuses. For instance, changes to Temporary Protected Status by the current administration can impact 254,550 Latinos. Of that 254,550 approximately 30% are believed to live in owner-occupied homes.
Furthermore, fear, such as wondering if their family could be impacted by policy changes in the future, can certainly play a role in holding off major purchasing decisions -- even if they haven’t been impacted already.
Looking for more insight into today's homebuying market? Check out Open Listings' Millennial Homebuyer Savings Survey, or learn about how we save homebuyers an average of $9,604 with our commission refund of up to 50%.