The National Association of Hispanic Real Estate Professionals (NAHREP®) and the Hispanic Wealth Project™ (HWP) today released their annual State of Hispanic Wealth Report (SHWR) at the L'ATTITUDE conference. The report's findings include member survey results that demonstrate a professional network's power in wealth creation, as three-quarters of NAHREP members have a net worth of at least $150,000 – more than 4 times the median net worth of Latinos in the U.S.
"Hispanic wealth is on the rise, but more work is needed to make a major leap forward. This year's report highlights NAHREP as a case study, one that could offer a roadmap for other networks in increasing homeownership, scaling small businesses, and diversifying investments," said Gary Acosta, NAHREP Co-Founder & CEO.
The report finds three-quarters (74.7 percent) of NAHREP members invest in retirement or brokerage accounts, significantly outpacing the general population of Latinos. NAHREP members invest in real estate at nearly seven times the rate of Latinos overall with 58.7 percent owning an investment property outside of their primary residence. The report finds these patterns are a direct outcome of association with NAHREP: Leveraging a set of culturally relevant wealth disciplines known as the NAHREP 10, NAHREP members have been able to close knowledge gaps and transform thinking about money, entrepreneurship, and investments. The net effect is a professional network that over-indexes in high-net-worth individuals. NAHREP shows that by focusing on the shared values of members within a network, wealth creation can become a movement that has a ripple effect on communities nationwide. The report's findings include:
1. Latino wealth is increasing at more than three times the rate of the overall population: Latino median household wealth increased by 138 percent between 2013 and 2019 as compared to 36 percent for the overall population. With a sharp rise in home equity and higher homeownership rates in both 2020 and 2021, the next iteration of the Survey of Consumer Finances is poised to show that Latino median household wealth increased substantially during the pandemic.
2. The wealth gap remains large and poses risks to long-term U.S. prosperity: Despite Latino household wealth doubling since 2014, a sizable Latino/non-Hispanic White wealth gap remains ($153,050). Latinos have a median net worth of $36,050, compared to $189,100 for non-Hispanic White households. The future of U.S. economic growth will rely heavily on Latinos. Latinos are young, with a median age of 30, and are just aging into their prime wealth-building years. Latinos have had the highest labor force participation rate for the last two decades and will account for the majority (64.8 percent) of labor force participation growth over the next ten years. Similarly, Latinos are predicted to account for more than half (53.1 percent) of new household formations and 70 percent of new homeowners over the next 20 years.
3. Homeownership is pivotal to wealth creation: The wealth gap narrows considerably when controlling for homeownership status and owning real estate has become more lucrative than ever. In June 2022, average home prices grew by 18.3 percent, marking the 125th consecutive month of year-over-year increases. There have been no declines in median sales prices since 2009. At the end of 2021, the average annual equity gain was $55,300, more than double the annual gain in 2020.
4. Homeownership gap remains sizeable but is largely driven by age: Today, 48.4 percent of Latinos are homeowners, a rate that has steadily increased for the past seven years. While even modest homeownership gains are significant, especially given the immense population growth and disproportionate rates of household formations among the Latino population, the gap has yet to narrow significantly. The Latino homeownership rate is 25.7 percentage points lower than their non-Hispanic White counterparts. However, age is a key driver of the homeownership gap. When comparing adults under the age of 30, the gap nearly closes, narrowing by 18.8 percentage points.
5. Latinos drive small business growth: The number of Latino-owned businesses is growing at a faster rate than other demographics, and Latinos have held the highest rate of new entrepreneurs for the last two decades. Real estate is also the fourth fastest-growing industry for Latinos. However, Latino-owned businesses continue to face challenges securing the capital they need to scale, despite their growing economic potential. According to the Stanford Latino Entrepreneurship Initiative (SLEI), Latino business owners are 60 percent less likely to receive approval for a $100,000 loan when compared to their non-Hispanic White counterparts.
6. Latinos lack asset diversification: Asset diversification among the Latino community has worsened in recent years, posing long-term risks for the broader Latino population. Latinos lost two-thirds of their household wealth during the Great Recession, in large part due to their lack of asset diversification outside of real estate investments. Today, diversification within the Latino community has not improved significantly, over-exposing them to long-term market risks. In 2016, the Latino retirement account participation rate decreased by 14.1 percent, the largest dip among all demographic groups. As of 2019, only 25.5 percent of Latinos invest in a retirement account, the lowest of any demographic.
7. NAHREP serves as a case study for how networks, narrowing knowledge gaps, and an enthusiastic pursuit of the American dream can offer a roadmap for closing the wealth gap. NAHREP is a space where members obtained continuous access to financial education, where they masterminded and inspired wealth-building strategies, where they were encouraged to develop deliberate strategies to build wealth among like-minded individuals, and where the ultimate motivation was rooted in family—building generational wealth while impacting the broader Latino community. NAHREP members over-index in high-net-worth individuals, scaled business ownership, homeownership, and asset diversification.
Ultimately, the member survey findings highlight what is possible when a community's zeal to achieve the American dream and the ability to close knowledge gaps coincide.
For the full report see the 2022 State of Hispanic Wealth Report, available for digital download.
About the Hispanic Wealth Project: The Hispanic Wealth Project (HWP), a nonprofit 501(c)3 organization, is committed to empowering Latinos to fully participate and prosper in the U.S. economy through education, small business development and sustainable homeownership.
About NAHREP: The National Association of Hispanic Real Estate Professionals® (NAHREP®), a nonprofit 501(c)6 trade association, is dedicated to advancing sustainable homeownership for the Hispanic community in America. NAHREP has a network of over 40,000 real estate professionals and 100 local chapters nationwide, hosting several national events per year and publishing multiple industry cornerstone reports annually and multimedia content. Join us in advocating for policies that grow sustainable Latino homeownership, read our 2022 policy priorities here. See the NAHREP Hispanic Homeownership by Congressional District Tool which measures Hispanic homeownership by U.S. congressional district, allowing constituents, advocates, policymakers, and lending and housing professionals to evaluate district performance at a glance.