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By Manu Kapoor | Broker in Queens, NY

Hispanics Projected = Mega-Consumer in Housing Market

Hispanics Projected = Mega-Consumer in Housing Market

With Hispanics as the largest minority group in the U.S., mortgage industry professionals should also expect Latinos to be key players when it comes to America’s home buying future, according to the 2011 State of Hispanic Homeownership report released by the National Association of Hispanic Real Estate Professionals.

Whether examining data on population, labor, and education, numbers are pointing to Hispanics as a growing consumer in the housing industry.

According to the report, 34 % of Hispanics said they are likely to buy a home in the next three years, compared to 24 % of all Americans.

With low interest rates and decreasing home prices, home buying affordability is at an all-time high, as reported by the National Association of Realtors. While these factors might attract investors, Gary Acosta, co-founder of NAHREP, explained that Hispanics tend to want homes for different reasons.

Hispanics don’t view home ownership as an investment, but want a home for a stable environment for their families.  According to the report, 74 % of Hispanics said that owning a home is a good way to build up wealth that can be passed along to their families, compared to 59 % of all Americans.

Latinos filled 1.4 million or 60 % of the 2.3 million jobs added to the economy in 2011 and are expected to account for 40% of the estimated 12 million new households over the next 10 years, the report stated.

In terms of education, the report stated that from 2009 to 2010, the number of young adult Hispanics who enrolled into college grew by 24 %.

“The need to recognize the most critical variables in housing type, price range, affordability, and mortgage product terms will be critical for all housing stakeholders – from lenders and realtors to policy makers – in order to ensure that the homeownership needs of Hispanics and other Americans are met,” said David Stevens, president of the Mortgage Banker’s Association.

Echo Boomers, which are those born between 1986 and 2005, are led by Hispanic households and in the next 15 years, this group will create substantial demand for condominiums, smaller starter homes, and first trade-up homes, according to the report.

Acosta said the increase in FHA fees for premiums and higher down payments are factors that might create a barrier for potential Hispanic homeowners, at least until the private sector enters the mortgage market again.

Effective April 1, FHA will increase its annual mortgage insurance premium (MIP) by 0.10 % for loans under $625,500 and increase the annual MIP by 0.35 % in June for loans above that amount. Beginning April 1, upfront premiums will also increase by 0.75 %.

Currently, the Hispanic population is experiencing adverse effects of subprime loans. Studies found that risky subprime loans were about twice as likely to be issued to Hispanic borrowers versus non-Hispanic white borrowers.

Presently, California, Florida, Arizona, Nevada, and New Jersey, which is home to 47 % of all Hispanics, have experienced high foreclosure rates, the report stated. Between 2007 and 2009, Latino borrowers also experienced a 7.7 % foreclosure rate, and the report stated that more than 700,000 Latinos are at imminent risk of foreclosure.

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