The emergence of a Hispanic homebuyer mega market

Much has been written about the culture shift that is under way in our nation as the Hispanic population rises to become a dominant force in American life. As a major driver of the national birth rate, household formation and the U.S. workforce, Latinos are emerging as a consumer powerhouse that is reshaping the market. According to the report “The State of Hispanic Homeownership 2011,” In the housing sector, which is in its sixth year of an epic foreclosure crisis, the story of Hispanic impact began with record homeownership growth from 2000-2006 that was upstaged by disproportionate losses in the foreclosure crisis. Today the untold story is the collective forces that are crystallizing into a trend with Latinos taking center stage as a mega force in housing.

Hispanics are already a significant segment of the workforce. Currently, 66.7 percent of all working-age Latinos are employed, nearly three percentage points higher than the rest of the U.S. population. The Hispanic market made up over 50 percent of real growth in the U.S. consumer economy from 2005 to 2008, with $52 billion in new spending. Hispanic purchasing power reached $1.1 trillion in 2011 and is expected to grow by nearly 50 percent to $1.6 trillion by 2016, outpacing the buying power of the general population.

Hispanics are also beginning to drive growth in housing demand. During the third quarter of 2011, Hispanic homeownership rose to a rate of 47.6 percent, accounting for more than half of the total growth in homeownership (53 percent) in the nation. In time, the real story of Hispanic homeownership will not be the community’s overall rate of homeownership but the actual number of housing units it buys as the rate of household growth accelerates.

Latino attitudes about homeownership are an important key indicator in this housing trend. National housing surveys indicate that Latinos are more motivated than the general population to buy a home for both emotional and financial reasons. Today, almost two in three Hispanic renters have high aspirations for owning a home. As the job market improves and young Hispanics move into peak household formation years, they will move from the rental market to homes of their own.

Another key indicator is higher educational achievements among Latinos. Hispanics are now the second-largest racial or ethnic group of young adults in America’s colleges. According to the U.S. Census, the number of young Latinos in college has doubled since 2000 and jumped 24 percent (349,000) between 2009 and 2010 compared with a decrease of 320,000 among young non-Hispanic Whites. Additionally, the number of young Latinos completing high school jumped 13 percent to 73 percent, up from 60 percent in 2000. Higher levels of education translate into higher earning power, more purchasing power in the marketplace, increased mobility and a greater propensity for homeownership.

Source: National Association of Hispanic Real Estate Professionals (NAHREP), The state of Hispanic homeownership 2011, March 2012.