First-time homebuyer market led by Latinos
While many of today's Hispanics working in the U.S. may continue to send money to Mexico and other parts of Latin America, they are also putting their hard-earned money toward the purchase of a new property. This is so common that real estate experts believe that their desire for a place to call their own may shape how demand plays out over the upcoming years.
According to the 24-page report released by the National Association of Hispanic Real Estate Professionals, Latinos today are the fastest growing group of first-time homebuyers in all of America. For example, over the past 12 years, more than half – 51 percent – of the total net increase in owner-occupied homes were among Hispanics, or what translates to about 355,000, RISMedia reports.
Juan Martinez, who was recently installed as the newest president of NAHREP, said that this is just the latest sign of how much of an influence Latinos have on the country's economic well-being.
"Despite a difficult economic environment and a tight mortgage market, Latinos are making gains in all the ways that make them ready for homeownership," said Martinez.
He added that because many Hispanics today are responsible with how they manage their money, poor credit is not an issue that will prevent aspiring Latinos to become homeowners in the future should they have that desire. What may impact that reality is the pace with which homes today are being purchased – faster than home builders have been able to refresh inventory levels.
Real estate industry overall impacted by limited supply
This has been an issue for several months. For example, in the latest report published by the National Association of Realtors, pending home sales – which are real estate transactions based on how many contracts have been signed – fell approximately five-tenths of a percent in February. The reason for this was not diminished initiative to buy a property but rather few houses from which to select.
Lawrence Yun, chief economist at NAR, indicated construction firms hold the key to replenishing the diminished supply.
"Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels," said Yun.
He predicted that how property purchases pan out over the next several months will largely rely on improving constrained inventory levels, which he says could be effectuated by making regulatory rules less onerous for construction firms. This may them avoid some of the red tape that's involved with property development.
Though Latinos do appear to be the main driver behind first-time homebuyers, Hispanic homeownership levels have dropped off on a percentage basis. According to the report, approximately 46 percent of Hispanics are homeowners, which is down from 47.5 percent in 2010. This is mainly because there are more people of Latino descent in America today than there were three years ago, RISMedia reports.
The report also revealed other aspects of life in the U.S. that the Hispanic community is having a significant influence on. For example, purchasing power – or how much a given community contributes to a country's economic function – has increased considerably among Hispanics. It now exceeds $1 trillion and is projected to reach $1.5 trillion in two years' time.
Much of this may derive from the education levels Hispanics are achieving. The NAHREP report shows that Latinos represent the largest segment of minorities currently enrolled in universities. They are doing well once they graduate from schools, too, as four in 10 earn an average of approximately $50,000 each year.