Hispanic/Latino couple holding the keys to their new home

Hispanic homeownership trends reflect challenges, opportunities 

A new NAHREP report shows that despite the tough market, Latinos found creative routes to homeownership in 2023, such as co-borrowing, but barriers remain.

March 12, 2024
4 minutes

Key points:

  • Even against a backdrop of high borrowing costs and low inventory, the Hispanic homeownership rate ticked up last year, reaching 49.5%.
  • Elevated interest rates posed a significant barrier to homeownership, highlighting the need for innovative mortgage solutions and financial assistance programs.
  • Hispanic buyers considered co-borrowing, alternative mortgage options, relocation and financial incentives to achieve their homeownership goals.

Following its pandemic-era boom, the housing market faced significant challenges in 2023: Persistent inventory shortages lined up with higher mortgage interest rates to undermine buying power. 

While all demographics were affected, those conditions had an outsized impact on Hispanic homebuyers, complicating their path to homeownership. That was one of the key findings in the just-released 2023 State of Hispanic Homeownership Report from the National Association of Hispanic Real Estate Professionals (NAHREP).

Despite these obstacles, the research shows that the Hispanic community achieved substantial growth in homeownership rates. The report examined the driving factors behind this trend and the strategies employed to overcome barriers.

Hispanic homeownership up, but lags behind US averages

In the face of formidable market conditions, the Hispanic homeownership rate increased in 2023, reaching a near-historic high of 49.5% — just shy of its record high of 49.7% in 2006 and 2007, and up from 48.7% in 2022. This growth represents a net gain of 377,000 Hispanic owner-households, according to U.S. Census data.

Notably, Hispanics comprise a youthful demographic; the median age of 30.7 has driven household formation and contributed significantly to overall homeownership trends. 

The report noted that Latinos accounted for more than a quarter of U.S. household formation growth in 2023, and they are also buying homes younger, with the largest share of Hispanic buyers in the 25-34 age bracket. 

Still, the Hispanic homeownership rate remains far below the national average. In its annual report on race and homebuying released last month, NAR put the U.S. homeownership rate at 65.2% in 2022. The national homeownership rate for white Americans was 72.3%.

How Hispanic buyers adapted to affordability, inventory issues

Elevated interest rates, combined with inventory shortages and a shrinking share of homes priced under $200,000, posed significant barriers to homeownership, exacerbating affordability challenges and constraining mortgage qualification. 

But Hispanic buyers found ways to overcome some of these hurdles: 

Co-borrowing is becoming increasingly common among Hispanic homebuyers, helping them overcome qualification hurdles. In some cases, co-borrowers intended to live in the home together or purchased a multiplex where they could occupy separate units. Other times, a borrower functioned solely as a co-signer to help secure the loan. 

This trend is a reflection of Hispanic culture, the report stated: "Hispanic culture traditionally emphasizes the value of family and considers its collective good to be of great importance. In the context of homeownership, this often means coming together to support one another financially. Furthermore, multigenerational Hispanic homes are common, so having family members sign onto a mortgage collectively and live together is not abnormal." 

More buyers may be returning to FHA loans, which often have more favorable interest rates and have historically served as an important source of financing. In 2018, 31.3% of homes purchased by Hispanic owners were bought with an FHA loan, but that percentage had declined to 24.7% by 2022 as conventional loans were more attractive to sellers in a competitive market.

The report noted that "there may be an uptick in 2023" of Hispanic homebuyers securing financing through FHA loans as competition for homes has cooled.

Buyers are looking beyond their local markets in their pursuit of homeownership, according to the agents who participated in the report and "described the willingness of Hispanic buyers to relocate from higher cost markets into other areas."

Financial incentives — and guidance from buyer agents — are proving invaluable. The report found that Hispanic buyers turned to their agents to help them identify down payment assistance programs as well as other incentives and programs offered by homebuilders, governments and financial institutions. These programs provided vital support, easing the financial burdens of homeownership for first-time buyers.

A year defined by resilience

Despite market challenges, Hispanic homeownership thrived in 2023, driven by adaptability and strategic decision-making, the report concluded. The group's collective commitment to homeownership as a goal, coupled with support from buyer's agents and financial programs, propelled significant gains in homeownership rates. 

Said participating agent and NAHREP member Juan Umanzor: "For the Latino community, where there is a will, there is a way."

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