During the housing boom of the last two decades, homeownership rates increased to record levels (Kochhar, Gonzalez-Barrera and Dockterman, 2009). However, since then, the collapse in the housing market has brought declining homeownership rates and falling housing prices.
For Latinos, after reaching a record high of 49.8% in 2006, the homeownership rate fell to 47.4% in 2011, matching similar declines among other groups.
Falling housing prices have affected household wealth among Latinos more than other groups. In 2005, Latinos derived nearly two-thirds of their net worth from home equity. However, because many Latinos live in places where housing prices increased the most prior to the housing crisis—and have fallen the most since—the housing bust had a greater impact on Latino household wealth than any other group (Kochhar, Fry and Taylor, 2011).
The steep decline in housing prices has many Latino homeowners underwater on their home mortgages. According to Pew Hispanic survey, 28% of Latino homeowners say they owe more on their home than what they could sell it for—double the share (14%) of homeowners in the general population who say the same.
Being underwater varies by region. More than four-in-ten (41%) Latino homeowners in Northeastern states say their mortgage is underwater, a share greater than any other part of the country. By comparison, 32% of Latino homeowners in the West, 27% in the North Central region, and 21% in the South say they owe more on their mortgage than what they could sell their home for.6
Recent home buyers are more likely to be underwater on their mortgages than other homeowners. Some 39% of Latinos who bought their home between 2000 and 2011 say they owe more in their home than what they could sell it for. This compares to 22% of those who bought a decade earlier (1990 to 1999) and only 15% of those who bought between 1980 and 1989.
The Investment Value of Homeownership
Despite being hit hard by the housing market downturn, three-in-four (75%) Latinos agree that buying a home is the best long-term investment a person can make in the U.S. This compares with 81% of the general population who say the same (Pew Social & Demographic Trends, 2011).
Large majorities of many groups of Latinos say buying a home is the best long-term investment. Homeowners are more convinced than renters of the value of owning a home. Fully 83% of Latino homeowners say owing a home is the best long-term investment, while 70% of renters say the same. Even among homeowners who are underwater, three-in-four (74%) say buying a home is the best long-term investment.
Home Foreclosures
Latinos have been more affected by the home foreclosure crisis than other groups. According to a recent study by the Center for Responsible Lending (Gruenstein Bocian, Li, Quercia and Reid, 2011), the rate of completed foreclosures on loans originating between 2004 and 2008 was 11.9% for Latinos. That foreclosure rate was more than double the rate for non-Hispanic whites (5.1%) and higher than the rate for blacks (9.8%).
The Pew Hispanic survey asked Hispanics who do not own a home about their experience with foreclosure. According to the survey, 7% of Latinos who do not own homes say they lost a home to foreclosure in the past year. By contrast, 5% of the general public that does not own a home said the same in May 2010.7