Urban Wire How Can We Advance Latino Homeownership and Housing Stability?
Todd Hill, Amalie Zinn, Aniket Mehrotra
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Despite recent gains, Latino homeownership lagged 22 percentage points behind white homeownership in 2021.

Last year, the Federal Housing Finance Agency introduced Equitable Housing Finance Plans (EHFPs) to provide a road map for the government-sponsored enterprises to eliminate such housing market inequities. Freddie Mac’s original plan broadly included all households of color, while Fannie Mae’s focused on the Black Housing Journey (PDF) because Black homeowners face the widest homeownership gap and Black owners and renters have long faced unique barriers to obtaining stable housing.

This year, Fannie Mae’s updated EHFP includes a new Latino Housing Journey to reflect that this community, too, has been subject to racist, exclusionary, and extractive policies and institutions. The plan includes new data and identifies three stages of the Latino housing journey where common disparities exist.

The addition is timely; it comes at a moment when Latino households are poised to drive homeownership growth in the future. This National Homeownership Month, we are uplifting this new resource to highlight the inequities they face and to showcase solutions to eliminate barriers to equal access to homeownership for the Latino community.

Stage 1: Housing preparation

Research shows the following factors influence Latino households’ ability to enter the housing market:

  • Language. The most recent American Community Survey data show that Latinos who speak only English or speak English very well had the highest homeownership rates. Research also shows that neighborhoods with higher rates of English proficiency tend to have higher homeownership rates than those with lower proficiency rates, even when controlling for other factors.
  • Country of origin. The data also show that Latinos of Cuban origin had higher homeownership rates than those of Mexican, Puerto Rican, or other origins. These relationships are not necessarily causal, but more research should be done at the individual level to control for other factors and to understand the reasons for them.
  • Immigration status. Research has found time living in the United States and citizenship status to be significant predictors of homeownership, though more scholarship that more directly studies these relationships should be encouraged.
  • High proportion of multigenerational households. Latino households are larger and more multigenerationalnearly 10 percent more than their non-Latino counterparts in 2016. This means Latino households are more likely to need larger—and therefore more expensive—homes.
  • Wealth and income gaps compared with white households. These gaps are the result of a long history of racial exclusion in the broader US economy (PDF) and severely limit many Latinos’ ability to afford a mortgage.

These factors show that the Latino population is not a monolith. Disaggregating Latino population data by unique demographic and socioeconomic characteristics can help policymakers understand the unique barriers different Latino households face—and then more effectively target solutions to help them enter the market. Such solutions could include distributing Spanish-language housing education materials in neighborhoods with high concentrations of residents with limited English proficiency or funding for housing counselors in ethnic enclaves with fewer resources.

Stage 2: Home or rental process

Latinos face unique obstacles in the underwriting and home search processes, including the following:

Luckily, research shows several promising solutions can help address these disparities.

Stage 3: Move-in, home maintenance, and preservation

Once they obtain homes, Latino households face the following challenges to maintaining stability and safety:

Housing counseling programs can also support Latino homeowners and renters during this phase of the rental process. According to the US Department of Housing and Urban Development, households that receive post purchase counseling are nearly three times as likely (PDF) to receive a loan modification and have greater reductions in monthly payments and lower default rates for delinquent borrowers. Urban research offers concurring evidence that improvements to the loss mitigation framework to reduce reliance on falling mortgage rates can help ensure that Latino households do not lose their homes during periods of economic distress.

Looking forward

Many of the barriers that Latino households face at every step in the housing journey are the results of systemic racism. Fannie Mae’s new Latino Housing Journey offers data to unpack the disparities Latino households face and presents policy solutions that could increase Latinos’ homeownership capacity.

At a moment when Latino households are projected to drive much future homeownership growth, the EHFP lays a solid foundation, but more research is needed to better understand Latino households’ unique housing needs and improve their housing market access. Urban looks forward to engaging academics, researchers, organizations, and policymakers on further research and policy solutions to improve access to credit for future homebuyers of color.

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Research Areas Housing finance
Tags Homeownership Housing affordability Housing finance reform Housing markets Housing stability Immigrant communities and racial equity Latinx communities Racial barriers to housing Racial homeownership gap Racial wealth gap
Policy Centers Housing Finance Policy Center
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