Hispanics Drive Homeownership Growth – Industry Outlook

By May 1, 2019Industry Outlook

Do Homeowners Fare Better Than Renters? – According to new research from CoreLogic, affordability is a much more pertinent issue for renters than homeowners. Since 2005, the monthly cost to rent a single-family home has risen significantly, while the monthly principal-and-interest mortgage payments of homeowners dropped slightly. CoreLogic’s national rent index jumped 36 percent in December 2018 compared to December 2005. On the other hand, the typical mortgage payment fell 4 percent over that same period. Researchers say mortgage rates have made a big difference in the change. In December 2005, the 30-year fixed-rate mortgage averaged 6.3 percent. In December 2018, 30-year rates were at a considerably lower average of 4.6 percent. Even though the median sales price in 2005 was only $190,000, compared to $220,305 in 2018, the typical monthly mortgage payment was still lower because of the lower mortgage rates ($941 in 2005 versus $904 in December 2018), researchers noted.

Mortgage Rates Rise Again, But Remain Below Yearly Lows – Based on Freddie Mac reports, for the third week in a row, mortgage rates inched upward, but economists were quick to reassure home buyers and potential refinancers that rates still remain well below year-ago averages. “After dropping dramatically in late March, mortgage rates have modestly increased since then,” says Sam Khater, Freddie Mac’s chief economist. “While this marks the third consecutive week of rises, purchase activity reached a nine-year high which is indicative of a strong spring homebuying season.”

HUD Seeks Input on Maximizing ‘Opportunity Zones’ – Based on the Department of Housing and Urban Development’s latest announcement, they are seeking public comment on how it can use “Opportunity Zones” to better benefit residents and communities. The federal Opportunity Zone Program, created by the Tax Cuts and Jobs Act of 2017, seeks to aid economic development in distressed areas by offering real estate investors significant tax breaks. More than 8,700 communities have been designated ripe for revitalization and fall within “Opportunity Zones.” HUD is asking the public to share knowledge and provide recommendations for public and private investments within Opportunity Zones, as well as whether HUD should create an information portal. About $100 billion in private capital investment originally was expected to be poured into Opportunity Zones, but by many estimates, that has failed to materialize so far. Opportunity Zones have created a “frenzy” among real estate firms and other industries to tout the tax benefits, according to a recent Bloomberg report. But anecdotal evidence shows some investors are holding off, awaiting more rules and guidance from the IRS to provide clarification on the exact tax benefits. A second round of regulations are due out over the next several weeks to provide further clarity. “Opportunity Zones present tremendous promise for America’s distressed communities,” says HUD Secretary Ben Carson. “Through HUD’s request, we are looking to better understand how HUD can better tailor its policies and help Opportunity Zones create more positive economic outcomes for the millions of Americans that live in these areas and for our country as a whole.”

Hispanics Drive Homeownership Growth – According to the 2018 State of Hispanic Homeownership Report, Hispanics are fueling homeownership growth in the U.S. They represented 62.7 percent of the increase in the U.S. net homeownership rate from 2008 to 2018, 81 percent of the U.S. labor force growth, and 32 percent of U.S. household formations. “Hispanic household growth continues to outpace the overall U.S. household growth and is anticipated to do so for the foreseeable future,” the report notes. Overall, the U.S. homeownership rate among the Hispanic population grew to 47 percent in 2018, marking the largest net gain since 2005. “Despite concerns about housing inventory and changing government policies related to homeownership, the leading indicators, such as household formation, income trends, age, and consumer sentiment, suggest that Hispanics will continue to drive homeownership gains in America,” according to the report. Hispanics have been the only ethnic demographic group to increase their homeownership rate in each of the past four years, the report notes. The Urban Institute has predicted that Hispanics will account for more than half of all new homeowners over the next several years and for 56 percent of all new homeowners by 2030.

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