The Federal Reserve recently cut interest rates for the first time since 2020. While many homebuyers are breathing a sigh of relief,
While the housing market has been spotlighted by candidates this election year, what has been largely absent from the conversation is both the power and the plight of the Latino community's access to homeownership. A new administration and Congress are just around the corner, and it will be imperative for leaders tasked with devising national economic solutions to recognize the opportunities presented by the Latino community — and invest accordingly.
For the last eight consecutive years, Latinos have been the only demographic in the United States to increase their homeownership rate — in fact, nonwhite households have driven the majority of homeownership growth since the Great Recession. With one of the highest
But systemic barriers persist, threatening the realization of this opportunity and the long-term health of America's economy. In 2021, Latinos were 47% more likely to be denied financing for a home purchase than non-Hispanic applicants, leaving many Latinos with high-cost, predatory loans as their only financing options.
Latinos are also concentrated in areas experiencing the most severe housing inventory and affordability challenges in America. California, Texas and Florida, for example, have the country's highest housing underproduction rates and are also home to more than 33 million Latinos — half the nation's Latino population. With higher housing costs comes higher debt-to-income ratios — a significant factor in the underwriting process — and bigger hurdles to convince a lender you can manage new debt responsibly.
The Federal Housing Finance Agency issued a proposed rule for the Federal Home Loan Bank System that allows the FHFA director to set "reasonable" board compensation.
As the fastest-growing demographic of the housing market, Latinos will increasingly underpin America's banking system and economy. A community with that power deserves lawmakers' attention and action.
Insufficient savings for down payments continues to be a significant barrier to homeownership for Latinos, and some lawmakers have proposed legislation, like the Downpayment Toward Equity Act, to address this. This is an important step. But another solution that would potentially face less headwind is promoting first-time homebuyer tax credits. But demand solutions are not enough, we must also address housing underproduction by providing federal tax credits, other incentives and reducing regulatory and land use barriers for developers and homeowners to build or rehabilitate homes for homeownership; this would help even the playing field for Latinos nationally.
The Latino community is extremely diverse, and there is not a one-size-fits-all policy to help Latinos achieve their full potential. Most households where an individual tax identification number, or ITIN, is held, for example, are Latino. And most mortgage products require a Social Security number, effectively locking out not only ITIN holders but also Latino immigrants stuck in the complicated, drawn-out process of obtaining an ITIN. Reducing barriers to acquiring an ITIN and allowing them in the financial mainstream is vital.
Research also shows that information gaps are a key driver of racial inequity in access to homeownership. Increasing funding for the U.S. Department of Housing and Urban Development's housing counseling programs is a crucial investment to prepare mortgage-ready Latinos.
The urgency of this issue is set against the unfortunate backdrop of Congress passing less legislation than ever. Luckily, many states are leading on innovative policy solutions and empowering local organizations to drive progress. For instance, recent zoning reforms in California and Arizona aimed at boosting production of affordable starter homes are helping close the "missing middle" gaps in housing. Community-based organizations like the Durham Community Land Trust in North Carolina and Hacienda Community Development Corporation in Oregon are taking ideas to market — and thriving with institutional and corporate backing. The federal government should also focus its efforts on bolstering local resources and funding to make these visions a more scalable reality that can make homeownership more accessible, and therein build economic stability across communities.
In an election year where housing has risen to the top three concerns for likely Latino voters for the first time, it's critical that decision makers in Washington recognize the power of the Latino community and the need to revitalize access to homeownership to achieve our broader economic goals. Owning your home is a universal dream, and Latinos have a powerful role to play in continuing that legacy.
