The Latino housing market hasn’t stalled. It’s where the serious growth has been, and all indications suggest that growth should only get better — to the point where Latinos are likely to represent roughly half of all new home buyers for at least the coming decade.
That makes it particularly important, amid all the ongoing transitions in the industry — including the changing of the guard in the FHFA and GSEs’ leadership, and talk by policymakers and officials of major changes to the GSEs — that financing sources for that demographic remain healthy.
Gary Acosta, a 25-year veteran of the housing industry who co-founded the National Association of Hispanic Real Estate Professionals (NAHREP) with the late Ernie Reyes in 2000, spoke to this and several other issues during a conversation with Mortgage Media’s Dave Stevens in one of several discussions with thought leaders the mortgage, housing, real estate, insurance, consumer advocacy and more.
The biggest challenge Acosta sees — not just for the Latino housing market but the industry as a whole? Lack of inventory: Construction of housing affordable for first-time homebuyers isn’t keeping up with the rate that households are forming. And that, Acosta says, will take a concerted effort on all parts — national and local policymakers, the finance industry, construction, and advocacy groups like NAHREP — to even begin to resolve.
‘Gonna do nothing but grow’
When Acosta and Reyes started NAHREP, it was with the mindset that the Latino market was evolving beyond a niche market but “was becoming part of the mainstream,” he said. Their goal was to advance sustainable Latino home ownership — it was lagging the market at the time and still does, but “that gap is closing for sure.”
As well it might. According to data from the Census Bureau and other government entities NAHREP used to produce its annual report on Hispanic home ownership, the rate is just under 50 percent — and, due to various demographic factors, poised to grow.
“That number has actually improved for three consecutive years. It’s the only demographic that actually have three consecutive gains in terms of home ownership percentage,” Acosta said.
Why is that — and why might it continue? Partly, Latinos represent 50-55 percent of all new households formed nationwide, Acosta said — and, he added, they have the highest workforce participation of any demographic in the country. There’s also much higher attainment in education, college attendance — things that can lead to better jobs and increased financial stability. And look at age: The Latino population is younger than the general population, by roughly 10 years — and just moving into their prime home buying years. Expect those trends to continue, he advised: There are roughly 60,000 Latinos turning 18 every month, and 95 percent of them are U.S.-born, he said.
While there’s still a gap between Latinos and non-Latino in home ownership rates, it’s a narrowing gap — and Acosta and Stevens both expect it to narrow further as the Latino demographic increasingly comes of age financially, so to speak.
“This is what’s driving growth in our industry,” he said. “This is a market that’s not going away, this is a market that is gonna do nothing but grow — and this is also a market that is passionate about home ownership.”
Changes in the wind
There’s been almost a whiplash-inducing whirlwind of changes at the top of key entities, either in effect or soon to come: the Consumer Financial Protection Bureau (CFPB), FHFA, Fannie Mae, Freddie Mac, Ginnie Mae; plus the departure of HUD’s deputy secretary. Stevens asked Acosta to look at the potential impacts new leadership may have. At CFPB in particular, its previous acting director (Mike Mulvaney, now acting White House chief of staff) was known for moves to curtail its regulatory and litigious activity — and in general put more limits and constraints on CFPB — trends that may continue with another Trump designee in the position amid the administration’s general anti-regulation attitude.
Acosta, who formerly was on an advisory board for CFPB, the Inaugural Consumer Advisory Council, himself thought CFPB occasionally was a touch overenthusiastic on the enforcement end of its responsibilities, which are essentially to protect the consumer from predatory practices through both education and enforcement of rules for financial institutions, often achieved through litigation. The council, comprised of people from inside the industry as well as academia, consumer protection and other spheres, was to advise the leadership in its decision-making process — and, Acosta noted, bring up the potential ramifications of its actions.
“There was a lot of concern within the industry that they were gonna sort of curtail things to such a degree, from a regulatory standpoint, that it would choke off access to credit, especially to underserved markets,” Acosta said, noting he and others wanted to make sure CFPB leadership understood their decisions could have a negative impact.
Stevens remarked that the advisory board was or could have been “an important voice for those in the housing community that don’t always get heard by regulators.” It’s somewhat ironic, then, that the board was dissolved by the acting director.
Along the way, Acosta said he developed an appreciation for the work CFPB does, the generally thoughtful process they tried to pursue. “Even though there’s no question that the pendulum swung, I think, too far in some circumstances, I think the presence of the CFPB fundamentally was positive,” he said. It resulted in more parity in the marketplace, more participants, a more competitive environment with more options for consumers, and a lot of small businesses thrived as a result, he said.
“So, I think that’s important to note. And, even though I think that maybe they were a little too aggressive in some of their enforcement activities and in some of the other things that they did, I really would hate to see that agency, you know, for all intents and purposes, go away. Because I think their contribution was more positive than negative.” How things will play out over the coming year, with Trump nominee Kathy Kraninger in the director’s seat (confirmed in a tight 50-49 vote), Acosta will be closely watching — “it will have a formidable impact on our industry and consumers in general.”
He’ll also be watching what direction is taken at FHFA and the GSEs, with one main issue in mind: If people don’t have access to capital and can’t qualify for an affordable mortgage, that’s a problem. Latinos are making strides, but “haven’t closed the wealth gap” yet — “access to low down-payment mortgages is critical.” The GSEs have played “an incredibly important role” in providing capital and liquidity, he said — so the direction the FHFA director and the new leadership at Fannie and Freddie take “can have just an absolute profound, monumental impact — not just on the Latino marketplace, but in the marketplace overall.”
He cautioned: “Anything that I think limits the ability for these agencies and institutions to be able to pivot to serve the needs of the consumers is gonna be, I think, problematic in the long run.”
Where are all the houses?
The big issue on NAHREP members’ minds, Acosta said, is, without a doubt, inventory — housing availability. There was very little new construction between 2007 and 2012-13 during the so-called Great Recession, he noted — but life went on. The population grew; households continued forming. “We’ve never really caught up to that gap. And even today … there are fewer houses being built than there are new households being formed,” he said. Factor in affordability challenges: higher interest rates, higher pricing due to limited inventory, etc., and there’s a big problem.
“That is what I think most of our members are concerned with on a daily basis: How do they find property that they can get their buyers into at a reasonable price right now,” Acosta said.
It’s going to take a concentrated and coordinated effort on the national, state and local levels to make it work, Acosta — creation of new housing stock deals with local economies and local regulatory dynamics, he reminded. “The truth is that it’s gonna require the coordination of a lot of different municipalities and statewide government and local government to really move the dial on this.” And it’s an issue that requires a somewhat longer and more concentrated focus than many politicians are used to giving — politicians focus on things with a short-term return, and this is a long-term challenge, he noted.
That’s where advocates like NAHREP, and people throughout the industry come in — to examine where the challenge is being successfully met on a local basis and see how it can be replicated elsewhere and on larger scale.
“I think the best thing that we can do is really bring focus to some of the success stories that are out there, some of the best practices that we see happening in particular local markets, try to disseminate that information as quickly as possible. I think that’s the one thing that we should be doing as advocates in this industry, you know, to a larger degree,” Acosta said. “Because this is not an issue that’s gonna be solved by any one silver bullet, I don’t think.”
Goals for NAHREP
The purpose of NAHREP, Acosta said, was in part “to create sort of this meeting place, this platform where real estate professionals — both Hispanic and non-Hispanic, but who were focused on serving the Hispanic community in general — can come together and exchange ideas, share best practices, and do the things that I think good and well-run trade associations actually do.”
Back in 2000, “I think everybody that was part of the organization back then was either related to me or owed me money,” he joked — but these days, it has over 30,000 members. Around two-thirds are real estate agents and brokers; the others mostly from the mortgage space but also from elsewhere in housing. And, he added, you don’t have to be Latino to get involved.)
That’s growth that Acosta wants to continue to foster — because as the Latino housing market grows, so does the need for a platform for information and advocacy. NAHREP now is active in 75 local chapters, a figure Acosta hopes to more than double inside two years, with hopes of seeing 200 chapters by the end of 2020. And those chapters aren’t all going to be in the traditional Latino markets, the Miamis and L.A.s and such — some of the fastest growing Latino populations are in nontraditional markets. NAHREP just opened a chapter in Minnesota’s Twin Cities, for instance. He thinks NAHREP can be of even more value to these kinds of markets than to the traditional ones. It’s important to have local presence, Acosta noted: “Real estate is really a local business for all intents and purposes.”
And then there’s L’ATTITUDE, the organization’s national convention that just started last year, with a four-day gathering in September in San Diego. Its focus is not only on the real estate industry, but also across a wide swath of industries — business, technology, politics education, arts and entertainment — to celebrate achievements of the Latino community in these various areas and, notes NAHREP’s website, expand the message of financial empowerment to a broader audience. All in something of the spirit of the South by Southwest festival in Austin, Acosta noted. The 2018 event’s participants ranged from former HUD secretary Henry Cisneros to NPR journalist Maria Hinojosa, from Miami Dade College president Eduardo Padrón to Uber CEO Dara Khosrowshahi to actress (and entrepreneur) Zoe Saldana. L’ATTITUDE drew around 4,200 people for the kickoff year — Acosta would like to grow that to some 50,000 over the next five or six years.
“You talk about energy, that was sort of energy on steroids,” Acosta said. “And it was fun to see.”