By Justin T. Hilley
Across the nation, new owner household formation increased 125,000 in Q2 2012 to 74.8 million from the same period a year earlier, according to the Census Bureau. Within that figure, white and black owner households suffered declines in formations, while Hispanics and other minorities amplified ownership.
Hispanics and other minorites formed 855,000 new owner households in that period, Census Bureau data shows. Of that, 53 percent, or 453,000, were Hispanic.
But large declines in white homeownership, down by 649,000 households, and black owner households, which declined 81,000, resulted in the net increase of 125,000 among all demographics during the time period reviewed.
Officials from the National Association of Hispanic Real Estate Professionals (NAHREP) say many factors, including relatively young age, population growth and increased incomes, likely signal a heightened share of Hispanic homebuyers.
“The persistent growth of Hispanic homeownership, even in the midst of a lagging economy, underscores a basic reality: first-time minority homebuyers, led by the burgeoning population growth and purchasing power of Hispanics and Asians, are the key to America’s housing and economic recovery,” said housing economist Alejandro Becerra.
Federal officials point out no demographic has been hit harder by the financial crisis than the Hispanic community. From 2005 to 2009, median wealth dropped 66 percent among Hispanics and 53 percent among blacks, compared to 16 percent from whites, according to Pew Research Center analysis of Census Bureau data.
“That’s an absolute tragedy. Completely unacceptable,” HUD Secretary Shaun Donovan said at the NAHREP conference, referring to the dramatic decline in wealth among minorities.
Yet the increase in Hispanic owner households since June 2011 helped Hispanics maintain roughly the same rate of homeownership from a year ago, which now stands at 46.5 percent. In the first quarter of the year, the rate for all Americans stood at 65.4 percent.
Latino homeownership gains have occurred for more than a decade. Latino homeownership grew 63 percent to 6.7 million owner households in June from 4.1 million owner households in June 2000.
Homeownership for whites, on the other hand, grew 2.3 percent to 57.8 million in June from 56.5 million owner households in June 2000.
Becerra says these Hispanic homeownership gains have been overshadowed by young Hispanics forming households at such a large rate that they will necessarily form a greater number of renter households before they are ready to buy a home.
So while Hispanics accounted for 453,000 additional owner households during the last 12 months, they also accounted for an additional 554,000 rental units during the same time period. Effectively, the gain in total Hispanic household growth over the past year was greater than 1 million.
Purchasing power among Latinos in the U.S. rose to $1.1 trillion in 2011, another sign of their continued growth in influence on the economy and housing market. In addition, according to an expansive study by NAHREP in March of this year, Hispanics claimed 60 percent of the 2.3 million jobs that were added to the economy, and projections estimate they will fill 40 percent of the 12 million new households over the next 10 years. Also, throughout the next four years, the group’s purchasing power is expected to jump by 50 percent. Other findings in the report included: 44 percent of the U.S. population since 1980 has been Hispanic, or 8.9 deaths for every birth (by comparison, Caucasians accounted for 1.1 birth to every death); from 2005 to 2008, Hispanics accounted for more than 50 percent of real consumer economy growth, with Hispanic spending growing by 6.4 percent and totaling $52 billion; from 2009 to 2010, the number of Hispanics enrolled in college increased by 24 percent, and by the end of 2010, 73 percent had finished high school and 32 percent were enrolled in college (the latter statistic an increase of 10 percent from 2000); and, perhaps most importantly, Hispanics are a very mobile demographic, and are willing to relocated to whatever location offers the most employment, from El Paso, to Raleigh, to Omaha.
The robust gains are making up for the heavy losses in Hispanic homeownership, but it will “take a while before these gains lead to a higher rate of Hispanic homeownership,” Becerra said.
“Despite recent losses suffered by Hispanics during the housing crisis, young Latino families that were unaffected by foreclosure or lost home values are ready to enter the market,” Carmen Mercado, president of NAHREP, said. “When they do, they will have an exponential impact on housing sales.”
But Becerra says the effect will be slow to come to fruition. “As foreclosures continue to wreak havoc in communities across the country and economic uncertainty prevails, a young and burgeoning Hispanic population will by necessity be creating more renter households than planting roots in homeownership for some time to come,” Becerra said.
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