Residential Magazine

Reason for Hope

Latino homebuyers can be key to the U.S. economic recovery

By Noerena Limón

For the past few years, many economists warned that the U.S. was overdue for an economic correction following more than 10 years of sustained growth. Few if anyone, however, could have guessed what would happen due to COVID-19, and the toll it took on both human life and the economy. 

In times like these, economists and politicians often claim that despite the precarious circumstances, “The fundamentals of our economy are strong.” This statement is true, and a key reason why is because of Latino homebuyers and workers. 

The U.S. economic engine has long been fueled by Latinos, a dynamic, young, entrepreneurial workforce. This past April, the National Association of Hispanic Real Estate Professionals (NAHREP) released its annual publication, the 2019 State of Hispanic Homeownership Report, which showed that Latinos have accounted for 51.6% of the overall U.S. homeownership growth over the past decade, adding 1.9 million new homeowners during that time.

In fact, one can say that Latinos helped spur the nation’s recovery from the Great Recession. In 2015, this population became the first demographic to increase its homeownership rate after many years of declines that affected all demographics. 

Household formations — when people get jobs, secure a residence and start having kids — are another way to look at it. They are a key indicator for measuring future homeownership demand. Over the past decade, Hispanics have accounted for 40.4% of the overall U.S. household formation growth, adding more than 4.3 million new households during that time and significantly outpacing the household formation growth of the overall U.S. population, according to NAHREP’s report. 

The Joint Center for Housing Studies of Harvard University shines a light on the exponential role Latinos will play in driving housing demand in America. It predicted that Hispanics will account for 37% of the nation’s overall household formation growth between 2018 and 2028. The share of Hispanic household formation growth is set to increase even further when the share of non-Hispanic white household formations decreases between 2028 and 2038 due to declines in the baby-boomer and silent generations. 

Housing demand

Although the U.S. housing industry has long been tied to the growth of the gross domestic product (GDP), the total value of goods produced and services provided in a year, it is becoming increasingly clear that the future of the housing industry also is tied to the Latino community. In 2018, housing made up 16.3% of U.S. GDP, a price tag equivalent to $3.4 trillion, according to the National Association of Home Builders. 

What is important to note is that over the past two decades, the Hispanic contribution to GDP through housing significantly outpaced that of the overall market. Hispanics more than tripled their contributions to the housing share of GDP while the overall market only doubled its contribution during this same period, according to the NAHREP report.

Not only have Latinos driven demand for homeownership, but the Latino community also is intricately tied to the supply of housing and housing production. For the past eight years, NAHREP has been reporting that housing-supply shortages for first-time homebuyers have consistently lingered as one of the principal barriers to advancing sustainable Hispanic homeownership. 

NAHB reported that labor shortages are a key element that contributes to insufficient housing stock. In 2018, according to NAHB and NAHREP, one in four construction workers was an immigrant and Latinos made up 30% of the construction labor force. These were larger shares than any other demographic.

The most acute labor shortages came from construction occupations in which the shares of both immigrants and Hispanic workers were the most pronounced. In states with high Latino populations, Hispanics comprise more than half of the construction labor pool, such as in California at 54%, Texas at 60% and New Mexico at 66%. It is evident that current immigration policies only exacerbate these labor shortages. 

Not only are Hispanics aging into prime homebuying years, but some of the indicators that contribute to homeownership gains are only expected to rise with age.

Youthful demographic 

The close nexus the housing industry has with the Latino community is only a microcosm of the role Latinos play within the broader context of the U.S. economy. It is through understanding the characteristics of the Latino community that one can start laying the building blocks for what will be required to stimulate a post-pandemic economy. 

Latinos are young and are the fastest-growing population in the U.S. This means that not only will the U.S. rely on Latino consumption of U.S. goods and services in the future, that consumption will grow significantly. Latinos have accounted for more than half of the total U.S. population growth over the past decade. 

There are 59.9 million Hispanics in the U.S., comprising 18.3% of the nation’s population. The age of the Latino community also is critical. At a median age of 29.5, Latinos are nearly a decade younger than the overall population and nearly 16 years younger than their non-Hispanic white counterparts. One in three Hispanics is 18 or younger. 

In the context of homeownership, not only are Hispanics aging into prime homebuying years, but some of the indicators that contribute to homeownership gains are only expected to rise with age. Credit scores, income, debt-to-income ratios, household wealth and purchasing power — as with all populations — tend to improve with age. Therefore, the age and population growth of Latinos suggest substantial future increases in homeownership growth, as well as overall consumption of goods and services. 

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Emerging workforce

Another building block is the role Latinos play in the U.S. workforce. NAHREP reported that for the past two decades, Hispanics have had the highest labor-force participation of any demographic. At 66.8%, the Hispanic labor-force participation rate is 3.4 percentage points above that of the general population. Over the past 10 years, Hispanics accounted for 71.3% of the overall U.S. labor-force participation growth. 

Although a disproportionate number of Latinos have lost their jobs due to pandemic-related layoffs, the role Latinos will play in a post-pandemic economy has not changed. As older Americans continue to age out of prime working years, young Latinos will offset the anticipated losses in the workforce. 

Latinos also are entrepreneurial and adapt to fit the demands of the economy. The number of Latino business owners in the U.S. continues to outpace the general population, according to a 2019 report from Stanford University’s Latino Entrepreneurship Initiative. Over the past 10 years, the number of Latino business owners grew by 34%, compared to 1% for all U.S. business owners. 

The extent to which Latinos will be able to optimize their role in stimulating the U.S. economy is contingent on how well the U.S. government and housing-industry leaders understand the Latino demographic, and how much they invest in it. In the homeownership market alone, NAHREP’s report notes that Latinos purchase homes at younger ages than all other demographics. Of Hispanic buyers, 40.3% were under the age of 34, compared with 36.3% of the general population. And 69.2% of Hispanics who purchased homes were 44 or younger, 10 percentage points higher than the general population. 

Latinos have a median credit score of 684 and purchase homes with a median downpayment of 3.5%, while one-third of Latinos purchase homes with debt-to-sincome ratios above 45%. The contraction of credit and additional overlays being placed upon the mortgage originations market during the 2020 pandemic are keeping many Latinos from home-ownership opportunities. 

This is a shortsighted reaction to the mortgage servicing liquidity constraints the market currently finds itself in, and more should be done to mitigate this contraction of credit. Additionally, the Paycheck Protection Program and bulk of stimulus money should go to Main Street businesses and workers if the country is to get out of this economic slump anytime soon. These individuals have a higher propensity to consume and therefore are more likely to stimulate the economy than the top corporations that most benefited from the Coronavirus Aid, Relief and Economic Security (CARES) Act. 

• • •

It’s true that the fundamentals of the U.S. economy are strong. This is due in part to the solid fundamentals of the Latino workforce and its consumption potential. It is the rapidly growing, young and entrepreneurial Latino workforce that can help meet the needs of a post-pandemic economy. 

It will be the Latino household-formation increases, the strong desire for homeownership and the growing Latino purchasing power that will help fuel demand for homeownership, as well as broader goods and services, for decades to come. Latinos are the secret sauce to a rapid U.S. economic recovery. It is time to treat them as such. •


  • Noerena Limón

    Noerena Limón is senior vice president of public policy and industry relations for the National Association of Hispanic Real Estate Professionals (NAHREP). In this role, Limón leads NAHREP’s policy and advocacy efforts, as well as the Hispanic Wealth Project. Limón came to NAHREP after spending more than 10 years in the federal government, including serving at the Consumer Financial Protection Bureau, the White House and Capitol Hill. Limón received a bachelor’s degree from the University of California at Berkeley and a master’s degree in public policy from Harvard University’s Kennedy School of Government. Reach Limón at

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