A lack of trusted real estate information is the biggest barrier to increasing Hispanic homeownership, and improved efforts could boost home sales by nearly 50 percent in the next six years, according to a new study by the Tomás Rivera Policy Institute.
The report predicts that 1.5 million Hispanics will buy homes by 2010, accounting for 19 percent of the nation's home-buying activity over that period. But given that 84 percent of Hispanic renters in the survey "strongly" desire to buy a home – and 55 percent of the market plans to do so within five years – the increase in homeownership would rise by an additional 700,000 home sales with better marketing, counseling, and innovative mortgage products.
"It is essential that policy makers, real estate professionals, community groups and business leaders find new and innovative ways to reach this market and help bridge the home-buying information gap," says institute President Harry Pachón.
The finding comes amid a growing potential market. The Census Bureau reported that Hispanics received nearly 400,000 mortgages in 2000, up 70 percent from 1995. By comparison, the total U.S. population received almost 4.7 million home loans in 2000, up just 41 percent from 1995.
Among Hispanics planning to buy a home over the next five years, 64 percent told the research team that unfamiliarity with the mortgage process was among their biggest challenges. Fifty-three percent said that saving for a down payment was a chief hurdle; the same percentage cited problems with finding a trustworthy advisor. Other homeownership barriers commonly cited by survey respondents were an insecure financial situation, and plans to move to another city.
But the market is complex, comprised of both Spanish-speaking immigrants as well as a more-rapidly growing acculturated, English-speaking Hispanic consumer. More than half (52 percent) of U.S.-born Hispanics lived in their own homes in 2002, compared with only one third (34 percent) of Hispanics born in another country, according to HispanTelligence® estimates based on Pew Hispanic Center data. The figures increased with affluence: Nearly three quarters (74 percent) of U.S.-born Hispanics with household incomes of $50,000 or more owned homes, while 65 percent of foreign-born Hispanics in the same category were home owners.
For their part, home lenders are experimenting with new ways to reach the growing Hispanic market. Washington Mutual, for example, recently introduced free business checking, along with flexible home-loan products. "We're continuing to look at all opportunities to penetrate the Hispanic community," says Peter Villegas, first vice-president of Washington Mutual and national manager of emerging markets.
First American Corp., a leading business information provider well known for its real estate title services, last year rolled out a multi-pronged effort that includes a price-guaranteed bundle of loan settlement services, and an alternative credit-rating product.
Still, the recent emphasis on tapping the Hispanic home-loan market is akin to "putting a toe in the water," observes Gary Acosta, chairman of the National Association of Hispanic Real Estate Professionals. "[Real estate and mortgage professionals] are still in the experimental stages."
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