Census 2000 figures showed that the Hispanic homeownership rate - the percentage of households owning their own home - was 46 %. This is up from 42%.
For the record, 68.2% of the nation’s families own a home, housing is an American success story.
It has added life to the economy, creating jobs and consumer confidence even during the midst of a recession. It has laid the foundation for healthy communities and strong neighborhoods. It has provided all the comforts of home, while providing typical working families with their one sure guarantee of accumulating family wealth.
Unfortunately, there is another housing story that needs to be told. Amid good times for housing, America is facing a silent housing affordability crisis of epidemic proportions. Millions of families are being deprived of the opportunity to partake of the American dream. These are the facts:
More than 14 million American households are spending more than half their income on housing or live in substandard units. Their ranks surged 67% between 1997 and 2001. Almost 28 million households spend “more on housing than the federal government considers affordable and appropriate,” according to the Millennial Housing Commission, a bipartisan panel created by Congress to assess the nation’s housing needs.
The homeownership rates for Hispanics is 49%, trailing far behind the 74% of non-minority households who own homes. Our country is losing almost half a million low-income rental units a year.
Data shows that the homeownership rate for Hispanics’ is 48.8 percent, a 1.3 % increase over last year. Homeownership rates increased nationwide by .5 % from 67.5 % in 2000 to 68 % in 2001.
While homeownership rates may vary, the figures will vary from quarter to quarter, the most consistent data is year to year. These figures demonstrate the need for policies that vigorously promote new homeownership opportunities for undeserved communities. Some good news: the homeownership rate increase for Hispanics is higher than the increase for White Americans.
The Census Bureau reported an increase from 47.5 % to 48.8 % for Hispanic households. The homeownership rates for white Americans increased from 71.2 % to 71.8 %.
Hispanics have played a significant role in driving the growth of homeownership in the U.S. The 2000 Census reports that more than 35 million Hispanics reside in the U.S., an increase of nearly 58 % since 1990. Recent Census figures show the Hispanic community is the fastest growing demographic group in the country.
Similarly, the Joint Center for Housing Studies at Harvard University recently found that the number of Hispanic households rose 19 % during the last five years. During the next 20 years, the center predicts an increase of nearly 23 % in the number of families in the U.S., with nearly two-thirds of the growth fueled by minority households.
Not surprisingly, the gain in Hispanic population in the U.S. has been accompanied by a rise in homeownership to a historic high of 46 % in 2000, up from 42 % in 1990. Three out of every five first-time home buyers are expected to be minorities during the balance of this decade. Despite that encouraging statistic, the rate of Hispanic homeownership is still well below the national average. It is clear that much remains to be done to close the gap.
Recognizing the important connection between the health of the residential real estate market and the well being of the national economy, the Bush Administration has made increasing homeownership particularly among minorities - a focal point of its governance. In keeping with that direction, President George W. Bush last year announced initiatives aimed directly at making homeownership among minorities a national priority.
The “American Dream Down Payment Fund” was established to provide funding to help 40,000 families to become homeowners annually. On the supply side, the proposed single-family housing tax credit will encourage the construction of affordable single-family housing. The credits are projected to create an opportunity for 200,000 families to purchase new homes during the fist five years of the program.
From a real estate perspective, there is much that can be done to close the ownership gap as well. In addition to being well versed in addressing concerns common to every homebuyer, real estate professionals who wish to serve the Hispanic community successfully must be responsive to cultural diversity and be prepared to respond to its distinctive needs.
As part of a nationwide effort to help millions of diverse home buyers in the U.S. realize the dream of homeownership, Cendant Corporation, on behalf of its franchised real state brokerage networks is working closely with other industry leaders.
In 1999, Cendant and the National Association of Realtors (NAR) co launched” At Home with Diversity,” a certification course offered by NAR to raise awareness of cultural and social differences and their potential impact on the real state transaction.
Most recently, Cendant entered into a strategic alliance wit the National Association of Hispanic Real Estate Professionals (NAHREP) to jointly undertake initiatives that focus on developing viable solutions to the challenges that face all real estate professionals as they strive to better serve the Hispanic population.
Similarly, the ERA network is celebrating the commitment of its affiliates to diverse communities with “Building Business Through Diversity Award.” The accolade recognizes the office’s role as an ethnic-conscious and progressive company within the community. ERA affiliates may also participate in a specialized training course that explores the relationship between culture and the real estate business.
There is much that Realtors can do to help Hispanics achieve the dream of homeownership:
• Develop Marketing that Recognizes
Cultural Diversity - Addressing the needs of Hispanic home buyers must
be reflected in a coordinated marketing effort.
Recent research increases our understanding of housing discrimination for both home buyers and renters, and seeks to report any changes in disparate treatment for home seekers. “Discrimination in Metropolitan Housing Markets: National Results from Phase I of HDS2000” is one such research project conducted for HUD. HDS2000 provides a comprehensive analysis of indicators of discrimination in 23 housing markets.
The report shows that while the incidence of discrimination for Hispanics has declined since 1989, it still exists at levels higher than those faced by white home seekers. Additionally, the report identifies some disturbing discriminatory trends, including geographic steering for home buyers and difficulty in obtaining financing information.
The report, “Risk or Race? Racial Disparities and the Subprime Refinance Market” looks at racial disparities in the subprime refinance market. The study finds that high concentrations of subprime lending and racial disparities in subprime ending exist in all regions of the nation, and that the disparities actually increase as income increases. In conjunction with the study, the Center for Community Change has made available a new database on subprime lending.
With their national scopes and detailed analyzes of metropolitan areas, these two reports highlight trends in rental markets and subprime lending and also discuss as to where additional research, education, and support is needed to combat existing discriminatory practices.
Despite Gains, Hispanic Home Seekers Still Face Barriers
“Discrimination in Metropolitan Housing Markets” is based on the latest national Housing Discrimination Study (HDS2000), the third in a series of studies commissioned by HUD that measure patterns of discrimination in urban housing markets.
The report details Phase I of HDS2000, in which 4,600 paired tests were conducted to measure adverse treatment for Hispanics in home rental and sales markets.
The paired test method yields comparable information about how people are treated when searching for a home. In these tests, two individuals - one minority and one white - each respond to housing advertisements with identical credentials in order to directly observe differences in treatment by sales and rental agents. By implementing methodologies similar to those used in 1989, the report assesses change in levels of adverse treatment over time.
The results indicate that the incidence of discrimination has generally declined since 1989 (the levels remained the same only for Hispanic renters). Yet despite the decline, discrimination is still a pervasive problem for Hispanic home seekers. Incidences of adverse treatment were encountered nationwide, and although some metropolitan areas fared better or worse than others, most were within the national average.
Based on 14 treatment indicators, the summary findings show that discrimination still exists for Hispanic home seekers in the rental and sales markets. Key findings include:
• Non-Hispanic whites were favored in
more than half of the rental tests (52.7 percent), while Hispanics were
favored in only 37.6 percent of tests. A consistency measure that
reflects the extent to which the non-minority group was favored across
the indicators also shows that non-Hispanic whites were more likely to
• Whites received preferable treatment in 53.1 percent of sales tests. Despite the fact that, in many cases, treatment favoring minority home seekers has increased since 1989, the results show that non-minorities were still more likely to receive preferential treatment.
Steering and Financing Discrimination are Increasing
Although HDS2000 found that most indicators of discrimination have decreased since 1989, two areas that increased significantly are geographic steering and reduced financing assistance.
HDS2000 results also found that “Differences in the assistance with financing that real estate agents provide represents the primary source of adverse treatment facing Hispanic home buyers.”
Non-Hispanic whites were significantly more likely to receive favorable treatment across the category of financing assistance. For example, agents were less likely to offer help with financing, recommend lenders, or discuss down payment requirements with Hispanic testers than with non-Hispanic whites.
This is a decline over 1989 figures when Hispanics received favorable financing assistance treatment in 32 % of cases. In 2000, Hispanics were favored in only 24.2 % of the tests.
More Evidence of Barriers to Financing
Borrowers who do not meet credit standards in the prime market often look to the subprime market for loans. When this is done responsibly, subprime lending offer opportunities to expand lending markets to undeserved populations. Yet, research shows that foreclosure rates for subprime loans are high, indicating that many subprime borrowers are entering into loans they cannot afford.
The “Risk or Race” national study analyzes subprime lending patterns in all 331 MSA’s and ranks MSA’s by a variety of measures. The study ranks several U.S. cities with the highest levels of disparity between minority and white home seekers.
Furthermore, high concentrations of subprime lending and racial disparities in subprime lending exist in all regions of the nation. Each region contains metropolitan areas where the level of subprime lending is above the national average of 25.31 % for Hispanics. Disparities exist in all regions of the country.
The study also finds that high concentrations of subprime lending and racial disparities occur in metropolitan areas of all sizes. Of the 17 metropolitan areas found to have concentrations of subprime lending more than 1.5 times the national norm, 12 have populations below 500,000, while 4 have populations of more than 1 million.
A more recent barrier to homeowner financing has been introduced through the use of “insurance credit scoring”, the practice of determining insurance eligibility and premium rates based on a credit score calculated from an insured’s personal credit history. An applicant may qualify for the home loan based on their credit history but be denied insurance for that home based on the same credit history.
A January 2003 study by the Office of the Insurance Commissioner in Washington State revealed that insurance credit scoring has possible negative effects on ethnic minorities and low- income individuals. Almost every state has introduced legislation to ban the practice of insurance scoring but have so far been unsuccessful as the insurance industry is determined to see that this practice continues.
The Center for Economic Justice has also determined that the FCRA does not preempt states from banning insurers’ use of credit scoring.
The number of Hispanic-owned businesses in the United States in 1997 was 1.2 million. These firms employed almost 1.4 million people and generated $186.3 billion in revenues. Hispanic-owned firms made up 6 % of the nation’s 20.8 million non-farm businesses.
The number of firms in 1997 whose owners were of Mexican descent was 472,000. Among Hispanic groups, those of Mexican descent owned by far the highest number of Hispanic firms.
The percentage of minority-owned firms in 1997 owned by Hispanics was 39 %, more than any other minority group.
The percentage increase between 1992 and 1997 in the number of Hispanic firms was 30 %, excluding C corporations, for which prior comparable data are not available. C corporations are incorporated businesses, excluding sub-chapter S corporations, whose shareholders elect to be taxed as individuals rather than as corporations.
The percentage of Hispanic-owned firms owned by women in 1997 was 28 %.
Small Business Access and Alternatives to Health Care
A report recently released by SBA’s Office of Advocacy examined 19 health care plans in two states and determined that administrative expenses for insurers of small group health plans ranged from 33% to 37% of claims versus 5% to 11% for larger companies’ self-insured plans. The report also revealed that sales, underwriting and operating expenses were all higher for small group health plans studied as opposed to those designed for their larger counterparts.
This lack of readily available quality health insurance has forced many small business owners to stop offering insurance coverage altogether. A recent study by the Kaiser Family Foundation showed that only 49% of small firms (those with fewer than 100 employees) offer coverage, due in large part to surging health premiums. By contrast, 98% of all large firms offer health benefits.
This disparity grows even greater at small low-wage firms (firms where more than 50 percent of all employees earn less than $9.50 an hour). Only 24% of all low-wage small firms offer health benefits as opposed to 95% of all low-wage large firms. Hispanics are now the largest minority group in the United States. They are also the least insured ethnic group. Approximately one-third of all
Hispanics do not have any insurance at all, and another 15% to 20% are underinsured. Millions of Hispanics work for small businesses that are unable to provide them with the health insurance coverage they need.
Diverse Face of Business Ownership
According to a 2001 study by the Small Business Administration (SBA), minorities now own 15 percent of this country’s small businesses — twice as many as in 1982. This study really shows there is a great potential for people of color to joining the mainstream of the American business community. Among the report’s significant findings:
• The minority-owned businesses most
likely to survive are those in the service industries. The likeliest
reason for this is the start-up costs tend to be lower than those of
While a lot of progress has been made in the past 20 years, there is still far to go. Minorities make up nearly 31 percent of the total US population, yet own 15 percent of all US businesses. But given the steady growth of these groups, both in terms of the overall population and small business ownership, it is a pretty safe bet that one day in the not-so-distant future, we won’t be talking about minority-owned businesses any more
Partnering with Hispanic Entrepreneurs
Many U.S. corporations have formed outreach programs to locate Hispanic-owned vendors and give them an opportunity of landing large contracts. These large companies see the benefits of doing business with an ever-increasing number of Hispanic-owned enterprises, which generate an estimated $400 million in annual revenues.
Conversely, Hispanic entrepreneurs have found success by forming strong alliances with corporate America via such programs.
The following 25 companies have established key partnerships with Hispanic entrepreneurs, and have ongoing efforts to diversify their list of suppliers.
New Business Wanted
Banks are attracted to Hispanic small business borrowers: American Hispanics show a great deal of loyalty towards brands and companies that serve them well. When Hispanics find a product or service that they have confidence in, they tend to stick with it. As a result, bank’s outreach efforts to the community always benefit them in the long term.
But if American banks are reaching out to Hispanic entrepreneurs, some say they haven’t felt the effects.
Most banks are not targeting Hispanic small business owners. The rejection rate on loan applications for Hispanic entrepreneurs is about 50 percent, twice as high as their non-Hispanic white counterparts. According to 1998 Federal Reserve data-a fact that industry observers say underscores lost opportunities for banks as well as a need for Latin immigrants to do a better job educating themselves about U.S. banking.
To overcome both sides’ challenges, the two must do their part. Hispanic business owners must “learn the ropes” of the American lending process, and banks have to go beyond just translating marketing materials and applications from English to Spanish.
For banks to reach the Hispanic community requires real initiative You can translate materials into Spanish, but if a Hispanic customer walks into a bank and no one’s there to speak their language, then it does no good.
The Federal Trade Commission has released its annual report detailing consumer complaints about identity theft and listing the top 10 fraud complaint categories reported by consumers. As in 2000 and 2001, identity theft topped the list, accounting for 43 percent of the complaints lodged in the FTC’s Consumer Sentinel database. The number of fraud complaints jumped from 220,000 in 2001 to 380,000 in 2002, and the dollar loss consumers attributed to the fraud they reported grew from $160 million in 2001 to $343 million in 2002.
The FTC provides a clearinghouse for consumers, a portal through which consumers can enter complaints and receive assistance and guidance.
Consumers can file fraud complaints online at http://www.ftc.gov/ Identity theft victims or people seeking tips to avoid being a victim, can log on at www.consumer.gov/idtheft
FTC tips for consumers who want to protect themselves from fraud:
Protect your personal information. It’s a valuable commodity. Only share your credit card or other personal information when you’re buying from a company you know and trust.
Know who you’re dealing with. Walk away from any company that doesn’t clearly state its name, physical address, and telephone number. A web site alone or a mail box drop should raise suspicions.
Don’t rely on oral promises. Get all promises in writing and review them carefully before you make any payments or sign any contracts. Read and understand the fine print in any written agreement.
Don’t pay “up-front” for a loan or credit.
Remember that legitimate lenders never “guarantee” a loan or a credit card before you apply, especially if you have bad credit, no credit, or a former bankruptcy.
The “credit score” is increasingly being used to determine the financial fate of consumers. This three-digit number influences everything - from small business loans to mortgages and jobs, utilities to insurance.
• Individual credit scores calculated by the three national credit reporting agencies (Equifax, Experian, and Trans Union) varied by an average of 41 points but differed by as much as 50 points for 29 percent of the files reviewed.
The Center for Economic Justice in a 1999 National Consumer Credit Survey estimated that:
• 30% of these groups have “bad” credit
Credit problems persist across income groups:
• 36 % of consumers with incomes under
$25,000 had “bad” credit records
For Hispanics the estimate is:
• 34% of Hispanics have “bad” credit
Hispanics are perceived to be a group that is “credit poor” and ‘cash rich.”
A 1997 report by the Office of the Comptroller of the Currency found that:
• 80% of the overall population had
deposit accounts at banks or brokerages: