From language and cultural barriers to a lack of affordable housing and shrinking inventory, homeownership can often feel like a distant dream for middle Tennessee’s growing Hispanic population.
Nationwide shutdowns from COVID-19 exasperated the path to homeownership, but two years after the start of the pandemic, Hispanics nationwide are proving to be a strong driver in strengthening today’s thriving housing market.
A recent housing report from the National Association of Hispanic Real Estate Professionals reflects that point, showing Hispanics accounted for 62.7% of net US homeownership gains in the past decade with that trend projected to continue gaining momentum for years to come. The report also shows that the Hispanic homeownership rate increased to 48.4%, up from 47.5 in 2019, an increase consistent with that trendline over the last seven years.
This positive growth comes despite a hostile real estate market over the last two years, particularly toward first-time homebuyers or those in the immigrant community who face a higher denial rate for conventional loans and face persistent challenges in obtaining safe, affordable home financing.
Pew Research recently released a survey finding that more than a third of Latino households surveyed used something other than a traditional mortgage – instead opting for alternative financing that can come with high costs and risks.
When most Americans buy a house, they take out a traditional 30-year mortgage by using a conventional loan that is not offered or secured by a government entity. Another option, often popular for first-time homebuyers is an FHA loan, a mortgage insured by the Federal Housing Administration and issued by a bank or other approved lender that requires lower minimum credit scores and down payments than many conventional loans. These two pathways provide the necessary protections for safe and affordable home financing while contributing to the wealth-building that comes with homeownership.
For many in the Hispanic community, as Pew Research found, this isn’t always the path taken. Instead, a more common pathway to homeownership for Hispanics is through mortgage loan programs that use non-traditional qualifiers such as ITIN (Individual Taxpayer Identification Number) to assess a mortgage applicant’s creditworthiness. While the ITIN mortgage program and other alternative financing arrangements provide a pathway to homeownership, there are disadvantages.
For example, an ITIN mortgage loan is considered a non-traditional loan, therefore interest rates can be higher. In addition, they are not offered by all banks and in most cases, an ITIN will require a higher down payment.
Other alternative financing arrangements like personal property loans or land contracts have little oversight and consumer protections and few states have laws on evictions, forfeitures, or foreclosures.
If we want to ensure future growth for our nation, the dream of homeownership can and should be a reality for all, especially for those who are driving our industries and cities forward. To do this, the real estate industry has an opportunity to create a more conducive environment for first-time homebuyers and immigrants who want nothing more than a shot at the American dream.
Ana Maria Cortes is the Nashville Chapter President of the National Association of Hispanic Real Estate Professionals and a partner with AmeriAgency Inc, serving as the Vice President of Business Development & Marketing.
