Lower-income Latinos are still falling behind on rent and mortgage payments, and younger Latinos fear losing their homes.
In honor of Latino Heritage Month, this is one in a series of NCRC snapshots and infographics exploring racial economic and wealth disparities and the economic conditions of various Latino nationalities.
As the population of young Latinos, aged 18 to 35, continues to grow, protecting and expanding their economic progress during a national pandemic-induced crisis will be critical to their wealth-building trajectory. The share of young Latinos living in the US grew 20% over the past decade, and the economic progress of the general Latino population improved as well. From 2000 to 2019, the Latino median income increased from $49,378 to $56,113 — a 13.6% increase. Over the same period, Latino poverty rates decreased from 21.5% to 15.7%, and postsecondary educational attainment increased from 10.6% to 20.8%. By 2019, Latino wealth had rebounded from the Great Recession, reaching a median net worth of $14,000.
Before the pandemic, it was projected that there would be 4.8 million new Latino homeowners by 2040, with younger Hispanic households accounting for the largest household growth. One in three Latinos is currently in the prime home-buying years of 25 – 44, and the median age of Latino homebuyers in 2020 was 41.
Despite the population growth and access to wealth assets that previous generations of Latinos did not have, young Latinos are still dealing with the legacy of the racial wealth divide and the fallout of COVID-19. Lower-income Latinos are still falling behind on rent and mortgage payments; younger Latinos fear losing their homes, and many pay more in loan costs than their White counterparts. Latino’s under the age of 40 are in their prime wealth-building age. Gaining insight into how COVID-19 has impacted the economic security of young Latinos, specifically current homeowners and renters, is imperative to understanding the future trajectory of Latino wealth overall.
To better understand this relationship, this snapshot seeks to answer the following question:
What has been the impact of COVID-19 on young Latino households and their wealth potential?
Using US Census Pulse Survey data from its week 33 round — June 23 to July 5 — NCRC has assessed indicators of economic security of young Latinos between 18 and 40 to understand the impact of COVID-19 and the future of wealth development for the Latino community.
Young Latino Renters and Homeowners: Payment Status
Findings from the US Census Household Pulse Survey illustrated that young (18 – 40) Latinos are still facing significant impacts on the ability to pay rent and mortgage payments over a year and a half into the pandemic. Those facing substantial difficulties in meeting housing payments are concentrated among those in the low- and moderate-income brackets. Pre-COVID, 43% of Latino renter households were rent burdened and economically insecure. This pre-existing trend is likely to continue as COVID-19 has exacerbated economic insecurity and the status of governmental rental relief is in limbo.
Nearly 18% of all Latinos reported being behind on their rent payments; for comparison, 14.8% of total Americans reported being behind while 11% of non-Hispanic White Americans reported the same. When examined by age, 44% of those behind on rent payments are within the 26 – 40 age cohort.
When examining Latino renters under 40, those who reported being behind on rent payments were concentrated in lower-income brackets. Notably, 54% of younger millennials (26 - 30) who reported being behind on rent payments fell into the $25,000 - $35,000 income bracket.
Turning attention to young homeowners, younger Latino households still struggled to catch up on mortgage payments.
When examined by just the age cohort, the distribution of those behind on mortgage payments is relatively equal to the respective age cohort’s share of total Latino mortgage holders. Examining mortgage payment status by age cohort alone also shows a fairly similar distribution among both Latino and non-Hispanic White homeowners.
However,a more granular examination by income brackets within age cohorts shows similar disparities among Latino renters compared to their White counterparts.
Among the 26 - 30 age cohort of mortgage holders, 72% of those behind on mortgage payments had an income between $35,000 - $50,000. Similarly, 63% of older millennials (31 - 40) - who reported being behind on mortgage payments had an income between $35,000 - $75,000. However, this income bracket only represents 38% of total mortgage holders among the 31 - 40 age group, therefore illustrating a disproportionate experience of falling behind on mortgage payments for middle-income Latinos aged 31 - 40. Among White mortgage holders, in comparison, there is a more even distribution across age cohorts of homeowners reporting being behind on mortgage payments.
The Risk of Eviction and Foreclosure
To examine COVID-19’s potential effects on young future Latino homeowners, we can look to the state of evictions and foreclosure rates. For renter households, an eviction on their housing history will result in difficulties and delay in becoming homeowners. The impediments to homeownership could be due to financial setbacks that would cause an eviction in the first place, or debt accrued during eviction and unpaid rent. For current homeowners, a foreclosure would disqualify them from some future mortgages for a period of time, and may make future mortgages more expensive due to a foreclosure’s damage to a credit score. For context, data between 2007 and 2015 — the aftermath of the Great Recession — found 19% of foreclosed homes were in Latino communities, though Latinos only represented approximately 12.5% of homeowners during that time period. Pre-COVID, 54% of Latino renters were cost-burdened and faced higher risk of eviction and involuntary displacement by gentrification. Eviction data from 2012 to 2016 found that Latinos experienced a higher eviction filing rate than White renters (3.6% vs. 3.4%) — a statistically significant difference. The average Latina renter faced higher rates of eviction filing and actual eviction compared to their male Latino counterparts.
Latino renters reported feeling that they are at greater risk of eviction than Latino mortgage holders who reported feeling at risk of foreclosure. Roughly 61% of young Latino renters (18 - 30) reported that eviction is very likely; 35% of young Latinos reported it is not very likely to not likely at all.
Among Latino mortgage holders aged 18 - 30, 80% reported that foreclosure is not very likely to not likely at all. Older Latinos were even less likely to report expecting foreclosure; 95% of 31 - 50 year old mortgage holders reported that foreclosure is not very likely to not likely at all.
The anticipated foreclosure and eviction trends which young Latinos have reported during the pandemic further highlight the economic stability of owning a home and the need for additional resources to young Latino renters.
General Housing Trends for the Latino Population
In spite of COVID-19, the number of Latino homeowners increased by more than 700,000 — reaching an approximate homeownership rate of 49%. Latino homeowners comprised 12.6% of total home purchase loans in 2020, though they comprise about 18% of the population. This home purchase loan rate for Latinos is a 0.5% increase from 2019, and the largest across racial groups. NAHREP reports that about 44% of 2020 Latino homebuyers were under the age of 34, compared to 37% of the general population of homebuyers. About 54% of Latino home purchase mortgages were conventional loans; 35% were FHA-insured and 11% were VA or USDA-insured loans. Latinos experienced a home purchase denial rate of 11% for the year, with the main reason for denial (36%) being their debt-to-income ratio. The median property value of homes purchased by Latinos in 2020 was $265,000.
This increase in Latino homeowners in the face of a pandemic and recession can be attributed to a few conditions. First, the mortgage market experienced record low interest rates, with 30-year fixed rate mortgages falling to an average of around 3%, reaching as low as 2.7% in December 2020. This market trend made mortgage payments more affordable to Latino households for whom historic interest rates made homeownership unattainable. Second, Latinos are also the least likely to have student debt, in part due to having the lowest postsecondary educational attainment, but also due to their use of community college transfer systems as well as living at home while in college. Third, Latino households are 3.5 times more likely to be multigenerational than non-Latinos. This can allow for a larger pooled income or savings to be contributed to the mortgage, as well as a greater number of qualified individuals to be entered on the home title.
The aforementioned Latino housing trends suggest what could be possible if mortgages and homeownership were more affordable. A greater amount of the population could fulfill the dream of homeownership and enjoy the stability and wealth-building accompanied with it.
However, small gains could be lost as national eviction moratoriums expire. As outlined before, the growing young Latino population has greater propensity for wealth-building, which has been actualized over the past year with increased homeownership but also jeopardized as rent and mortgage payments are still outstanding. Moving forward, a targeted effort to homeowner preservation is essential to ensuring that COVID-19 does not result in a disparate experience of mortgage foreclosure, and to secure the intrinsic and financial benefits of homeownership. Providing assistance for renters who are behind on payments and creating a debt-free pathway to resolving lapsed payment status is also pivotal to preventing the COVID-19 pandemic from exacerbating pre-existing housing issues, and impeding on the wealth-building trajectory of younger Latinos.
For more information about 2020 mortgage trends for all racial groups, see NCRC’s 2020 HMDA preliminary analysis.
 In 2019 inflation-adjusted numbers.
 U.S. Census 2015 American Community Survey, 5-year estimates. Retrieved from https://data.census.gov/mdat/#/search?ds=ACSPUMS5Y2019&cv=TEN&rv=HISP&wt=WGTP
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