Latino Buyers Making Strides
Latino Buyers are Making Homeownership Strides But buyers with language barriers need to be extremely careful in our current market.
Census Data Shows Homeownership Growth among Latino Buyers
Anyone who spends any time studying homeownership rates or reading about real estate know that a lot of digital ink has been spilled talking about millennials and their importance on the housing market. But if we’re looking for good news about homeownership growth, we need to look at where growth has been the most robust: latino buyers.
2015 marked the fifth consecutive year that Latino homeownership rose and according to the U.S. Census Bureau, homeownership among latino buyers increased even more in 2016. Here are the numbers they recently reported:
• First quarter 2016: 45.3%
• Second quarter 2016: 45.1 %
• Third quarter 2016: 47.0%
All indications are that these rates will continue to increase in 2017.
While positive, it’s not time to pop the champagne corks quite yet. It will be a while before we can access comparable data for the State of Minnesota but we already know that Minnesota lags behind national averages in our homeownership rates for communities of color.
|Hispanic Homeownership Rate Year- End 2015||
During the buildup to the last mortgage crisis, Latinos were disproportionately targeted for risky subprime loans and were systemic victims of predatory lending practices. We know that households of color were pressed into choosing subprime loans by their lender or broker, even when their income and credit scores qualified them for a less-expensive mortgage. One study of 14 major banks found that this kind of racial targeting was widespread: almost 31% of Hispanics and more than 41% of African Americans were offered these riskier, more expensive loans, while less than 18% of white households were offered a similar mortgage.
While many of the most dangerous products are now illegal… we are seeing a return to our market of products that can be extremely risky for consumers. This is especially true if consumers have language barriers, are less financially savvy or are being told that the product is ‘their only option’ to return to homeownership post-foreclosure.
Recently we’ve seen consumers with:
- dangerously designed Contracts-for-Deed;
- loan products with Debt-To-Income Ratios of more than 55%;
- buyers who have been asked to bring cash to closing to cover lender and agent ‘expenses.’ (Yes, actual cash, in an envelope, not included in any of the disclosure statements, if you’re wondering).
The best way to protect consumers from the resurgence of these products and players is to empower them with first-hand knowledge of financial systems and the steps to successful homeownership so that they don’t fall into a predator’s hands.
Homebuyer education and counseling is the best way to help clients avoid systemic predatory lending and be successful long-term homeowners.
Do you work with latino buyers who are thinking about homeownership? Know someone who was previously foreclosed that would like to return to homeownership? The Center has several member agencies who have Spanish-speaking trained and certified Homeownership Advisors ready to empower your clients with the information they need to be successful:
Serving clients in Suburban Hennepin County Only.
(952) 933-9639 – www.capsh.org
Serving clients in Southeastern Minnesota
(507) 421-1214 – www.threeriverscap.org
Serving clients Statewide
(612) 746-3500 – www.clues.org
Framework Homeownership – our online homebuyer education workshop
is also available in Spanish for Latino Buyers!
Are you a real estate agent or a lender who is as repulsed by these stories as we are? THANK YOU! You need to know that homebuyer education and counseling can also help YOU in the work you do. Your buyers will be better prepared to work with you – and will be much less likely to make financial decisions during the buying process that could torpedo your deal.