There is currently a great deal of buzz in the media touting the impact of millennials on the housing market. Will they purchase homes? Are they going to rent forever? Is their student loan debt to high?
What we know is that we are seeing signs of change as millennials are rethinking their future and are now seeking opportunities to become home buyers. Unfortunately, the story stops there, as a general all-encompassing statement and an incomplete story at best.
Where is the mention of the impact of the Hispanic millennial community on the general landscape?
Hispanics are earning more money, becoming better educated and forming households at a faster pace than any other demographic in the United States. They also continue to demonstrate a strong desire for home ownership and as such has become a key component of the real estate market.
With a population that is only now beginning to age into the prime home buying years adding 800,000 potential buyers annually the emergence of young Hispanic millennials and their impact on the market have established them as a major part of the landscape within the industry.
All indications are that Hispanics will account for 52% of new home ownership between 2010 and 2030. The Hispanic rate of home ownership increased to 46.0% in 2016, while the nation’s overall homeownership rate declined to 63.4%. In fact currently nearly half of all first time buyers are Hispanic.
Of course when you consider that 76.4% of all growth in the US Labor Force has been via the Hispanic Community going back as far as 2010 and an upward trend in home ownership not only seems logical but in fact probable. Sprinkle in the fact that the median annual household incomes rose by 6.1% and it is easy to see how this trend of home ownership can gain traction.
Unfortunately, the Spanish community continues to face challenges where obtaining mortgage financing is concerned. Today Hispanics are declined for conventional credit at a rate that is 7% higher than the national average and first-time buyers who usually have less cash for down payment and often lower credit scores are also affected disproportionately. In total 17% of all conventional applications from the Hispanic community are declined while 15.5% of all FHA applications meet the same fate.
Family First Funding is actively working to reverse that trend and Team Barber is leading the way. With so many people desiring to own a home it is imperative that we determine where the obstacles lie and ensure that we eliminate their impact. Team Barber has established a department capable of helping to overcome the two biggest challenges facing these young home buyers who when polled indicated that their concerns were obtaining the money required for the down payment and closing costs and developing their credit profile. Sprinkle in the fact that only 4% of mortgage originators speak Spanish when 52% of those polled stated that they would prefer to complete the transaction in Spanish due to the complexity of the process and it is clear that there are issues providing an appropriate level of service for the fastest growing segment of our population.
Perhaps an even bigger problem is that 27% of Hispanics are considered credit invisible meaning they simply have no credit profile at all which is by all accounts normal for the culture. Even with all of these obstacles in their path the Hispanic market has outgrown what was once considered to be a niche lending opportunity.
While much of the housing industry is just beginning to recognize the significance of the Hispanic community Family First Funding and Team Barber have developed a team within the team that is dedicated to providing guidance and opportunity that will Improve credit access for first time buyers, afford access to programs with low down payments and ensure that those stuck in the credit margins are provided the tools that they need to enable the successful transition to homeownership.
If you have any questions or want to see what your loan options are, give Anthony a call at 732.299.4824 for your free consultation. Hablamos espanol.