Our Country’s Housing Crisis Needs Urgent Action: What to Know and Where to Start

By Rep. Ángel Fourquet (PR), Vice Chair of NHCSL’s Housing Task Force and Ángel Ortiz, former NHCSL Intern

The COVID-19 pandemic laid bare many issues that were disproportionally impacting Latino communities across the country and had, in some cases, fallen under the radar. Although access to health care and disparities in working conditions may come to mind first, access to affordable housing is surely a very close second.

Regardless of which part of the country we live in, we have all heard stories from our constituents, friends and family, or lived experiences ourselves, related to drastic changes in the access to affordable housing, especially since 2020.

Homeownership is a cornerstone of the American Dream. It provides long-term financial stability and generational accumulation of wealth, two issues that have historically eluded our communities.

And the current conditions around both renting and owning the property are not setting us up to fulfill this dream or improve our financial wellbeing.

The Ever-elusive Starter Home

Owning a home helps build equity not only as the mortgage is paid, but also as the property ideally increases in value over time. However, only 46.8 % of Hispanic households owned their homes, 24.9 percentage points lower than white households, per the Joint Center of Housing Studies of Harvard University.

This figure remains low even though in 2022, there were 7.9 million Latinos aged 45 or under who are “mortgage ready,” meaning they have the credit and characteristics to qualify for a mortgage. Additionally, there are 2.8 million who are near mortgage-ready, according to The National Association of Hispanic Real Estate Professionals. In fact, Latinos have the largest share of the near mortgage-ready population of any racial or ethnic group.

Despite this, a study by UCLA’s Latino Policy and Politics Institute points out that “the adjusted denial rate for Black and Latino applicants with excellent debt-to-income ratios was about 13%, compared to a rate of about 5% for whites and Asians with the same DTI ratios.”

There are other factors that stand in the way of Hispanics becoming homeowners, such as:

1. Being more likely to be self-employed or work in seasonal industries and earn lower wages,
2. For new Hispanic immigrants in particular, linguistic barriers, banking and SSN requirements for mortgage qualifications that discourage them from participating,
3. Inability to make larger down payments.

Our communities also tend to be underserved by banks and rely more on mortgage companies, which cover over 70% of Latino home purchases. And, unsurprisingly, 31% have also reported discriminatory practices in the housing market through higher interest rates, additional documentation requirements, and lower-quality options in terms of construction and materials.

Renting: An Increasingly Draining Option

Being kept out of homeownership can be financially draining in an impactful way because of how much renting has increased the last few years. Although renting is very common and one out of three people in the U.S. is a renter, particularly in large metropolitan areas where our communities tend to concentrate, over half of all Hispanics are renting their homes and are the second group most likely to be renters, behind Black households.

The lack of affordability is not new but is compounded by outstanding external factors like a global pandemic, higher inflation, and the threat of a recession. This follows a trend of gentrification that continues to push our communities out of the neighborhoods they have lived in for generations, to favor higher income tenants, who tend to be predominantly white, and short-term rentals.

Renters tend to have lower incomes than homeowners and, as a result, are more likely to be cost burdened by these changes in the housing market. According to the Joint Center for Housing Studies, 51.9% of Hispanic renter households were cost burdened.

This percentage is substantially higher in cities like New York City, Miami, San Diego and Los Angeles, where renters are more likely to spend 30% or more of their income on rent and utilities alone. Two of the areas with the largest concentration of Hispanics, Miami-Fort Lauderdale-Pompano Beach and Riverside-San Bernardino-Ontario (bordering Los Angeles), have the largest share of cost burdened renters in the country.

Where Does This Leave Our Familias?

The answer is: not in a great position, but there are things we can do.

NHCSL Legislators are uniquely positioned to push for better policies. Some of the most effective ones include increasing the inventory of affordable housing units in our states, either by building or repurposing, fighting arbitrary evictions, and creating state-based incentives and programs through public and private partnerships for first time homeowners.

Furthermore, policymakers should consider creating tax benefits for renters that mirror those available for homeowners but making sure they don’t end up in the pockets of landlords. We can also advocate for better funding for housing authorities and create renter-to-buyer pipelines based on the unique circumstances of each jurisdiction.

But we need to do so now! At our 21st Annual Summit, we’ll hold a policy session around Debt Collections and Evictions, following the session on affordable housing we held at our Summer Executive Committee Meeting in San Francisco. One of the most impactful things we, the members of this Caucus, can do is keep presenting effective solutions that provide one of the most basic human rights: to hold a roof over our heads.

Download the 2023 Winter Edition of NHCSL's Newsletter here.