Homeownership has long been a cornerstone of the American Dream for countless Americans, including Latinos. However, since the Great Recession of 2008, homeownership remains out of reach for many Latinos, leaving numerous families in the rental housing market.
In 2007, about half of Latino households rented their homes. Since then, the rate of Latinos renting their homes increased nearly three percentage points to 52.8 percent in 2017.
While rental costs have increased throughout the country since the Great Recession, housing-cost burdens are felt disproportionately across racial/ethnic groups. Latino renters in particular are more likely to be housing-cost burdened (defined as spending more than 30 percent of their income on rent). In 2017, more than a quarter of renter households of any ethnic background were housing-cost burdened, while the rate of housing-cost burdened Latino renters was 55.3 percent.
Housing cost burdens threaten the economic security of Latino households. Addressing cost burdens is critical to ensure that Latinos have access to affordable homes, which frees up money for health insurance and medical care, savings for an education or a down payment on a home, or money with which to meet day-to-day needs.
“[Our rent is] $900 monthly. Right now, it’s half [of our income], [be]cause he’s not working. He’s always worked. He just had surgery. It’s something that has never happened before. It’s gonna take a while. His surgery has taken a long time for him to recover. We had savings, a little bit. And we have reduced our expenses. Right now, we’re not spending what we used to spend. We have a long time paying rent, but right now, we don’t have the same money that used to come in.” (Valentina, Denver)
To better understand the Latino community’s experience in the rental housing market, UnidosUS, the nation’s largest Latino nonprofit advocacy organization, engaged the UNC Center for Community Capital (CCC) to explore the state of affordable rental housing for Latino families. Through this collaboration, interviews were conducted with 25 Latino renter households in New York City, Washington, DC, San Francisco, Phoenix, Denver, Orlando, and Las Vegas.
A new report, Calling It Home: Latino Rental Housing Affordability, provides key findings from the interviews with these households.
The study’s lead researcher, CCC Senior Research Associate Allison Freeman, found that families struggled to save money, and many had to cut back on expenses to afford their rental housing. Affordability was a key reason people chose their current homes, and affordable rental units are worth hanging on to, especially where few affordable homes are available. Almost all the families pay more than 30 percent of their income on rent, and some households pay upwards of 50 percent of their monthly income on rent.
Throughout the interviews, every participant expressed a desire to own a home: interviews indicated that most renters disliked renting and viewed their rental payments as money wasted on someone else’s home. However, nearly all participants felt it would be difficult to find a home they could afford to buy. Participants consistently identified money and credit issues as the two greatest obstacles to homeownership. Immigration status was raised by several participants as well as a potential obstacle to home purchase. Rising housing costs make securing an affordable rental home especially challenging for Latinos, who on average earn less than whites.
“Man, you got to keep your credit score up, and so many things affect your credit score…I’m going to owe on all my student loans for the next 10 years. When’s the next money that I can put towards buying a home? So, I think that’s one burden too, is student loans. If I could put $500 a month that I’m putting to student loans to something else, I would definitely probably think about buying a home sooner than later.” (Gabriela, San Francisco)
Action is urgently needed, and this report highlights how a lack of affordable rental housing has a significant impact on a family’s economic security, feelings of safety in their neighborhood, their housing options, and their prospects of saving for and buying a home in the future.
The report concludes that federal, state and local policymakers must consider responses that will stabilize circumstances for families who earn incomes that are well below what would be needed to afford a rental home. Policymakers must also address the lack of housing options for families of modest means through policies and programs that create or preserve the supply of affordable homes.
The Center for Community Capital is a non-partisan, multi-disciplinary research center housed within The University of North Carolina at Chapel Hill and is a leading center for research and policy analysis on the power of capital to transform households and communities in the United States. It is part of The University of North Carolina at Chapel Hill’s College of Arts and Sciences and an affiliate of UNC’s Center for Urban and Regional Studies.