By Agatha So, Policy Analyst, Economic Policy Project
Ten years after one of the worst financial crises in history, our nation’s economy is recovering, and the housing market is finally getting back to “normal”, according to the Harvard Joint Center for Housing Studies’s (Harvard JCHS) State of the Nation’s Housing Report. Yet, for many Americans, especially communities of color and low-income households, the recovery has yet to trickle down into their neighborhoods. Latino families, who were hit hard by the foreclosure crisis, are just now recovering some of what they had lost nearly a decade ago.
In a national poll of Latino voters, an overwhelming majority of respondents said that they would like to own a home. However, these voters were split on whether they thought they could find affordable housing in the neighborhood where they would want to live. Forty percent of voters reported they would be able to find an affordable place to live and in a location where they want to live, and 9 percent said they had already found that place. On the other hand, 47 percent of voters reported that they don’t think it would be possible to find an affordable place to live and in the neighborhood where they would want to live.
This week, the Senate Banking Committee will hear suggestions from NCLR, other civil rights groups, and the mortgage industry, on solutions for the housing finance system. Since 2009, lenders have been making few mortgages, lending only to borrowers with the highest credit scores. Meanwhile, millions of Americans borrowers, including Latinos who would have qualified for a mortgage under more reasonable lending conditions before the crisis, have been shut out of opportunities to buy a home. At the same time, the report from Harvard JCHS suggests that creditworthy borrowers face another challenge, and that is a shortage of available homes for sale for first-time homebuyers. In other words, as the number Latinos and other American families grow, it’s unclear if there will be enough homes available or built for creditworthy borrowers to buy them.
In fact, homebuilders have built fewer new homes in the last decade than in any 10-year period dating back to 1968. In addition, the supply of homes for sale has decreased every month for the last 21 months. According to projections from the National Association of Homebuilders (NAHB), approximately 7.8 million new homes were expected to be built between 2013-2018. However, since the construction of homes has not been keeping up with the pace of household growth, only about 4.6 million homes are now anticipated. This leaves a shortage of more than 3.2 million homes—over a six-year period—for future homebuyers.
This shortage is especially concerning for the prospects of Latino homebuyers and communities of color. Latinos are expected to account for 40 percent of household growth in the next 10 years. More than 80 percent of the expected 20 million new households in the next 20 years will be started by Hispanic and Black families.
As a result of the crisis, we have learned that these families would have a lot to gain in the home equity they could be building over time in their own home. These new homebuyers would be good news for our nation’s economy. On the other hand, it is difficult to predict that they will all find an affordable place to call home.
We strongly urge the Senate Banking Committee to heed our suggestions for fixing housing finance so that more Latinos who want to own a home will be able to do so.