Like many aspiring home buyers, Gil Lopez, 29, is striving to find the right neighborhood for his young family. His bank has qualified him for a loan large enough to buy a $300,000 home, but he has set his own price cap firmly at $230,000 as he searches through north San Diego County. Affordability is his mantra, having had a front row seat to the the darkest hours of the housing crash. Both his parents and his sister's family lost their homes to short sale and foreclosure, and now live in an apartment rental with "only one bathroom."
Yet Lopez escaped the crisis relatively unscathed and has spent the last few years building his credit and his education. Today, he works as an investigator for the district attorney's office. His wife is in school and works part-time, and they both take care of their 3-year-old daughter. The combination of housing affordability, low interest rates, life stage and ambition for building a nest egg have come together to lure Lopez into the housing market this summer.
Finding the right house is not easy. The inventory in the northern San Diego area bears the scars of neglect from foreclosures -- dead lawns, peeling paint, crime -- but that isn't deterring Lopez. He has saved $7,000 for a minimum 3% down payment, and is ready to take advantage of home prices that are down as much as $100,000 from the market peak.
"We are ready as a family to take it to next level and own," says Lopez. "You work hard for what you want and then you get it."
Yet around 20 miles south in Chula Vista, Calif., the other side of the housing crisis story continues to unspool. Amada Escandon, 51, is struggling to hold on to her home, which she says was subject to a fraudulent mortgage after she refinanced in 2008. Armed with a strong spirit and financial knowledge, which she gained working at a bank in Mexico decades ago, she is fighting back.
Every morning she wakes early, exercises and goes to Our Lady of Guadalupe Church to pray. With tears in their eyes, other church members have approached her for help with their homes, many under the threat of foreclosure. Three of her four children live at home with her, but her maternal instincts go far beyond her property as she tends -- alternately as legal adviser and moral crusader -- to the considerable wreckage of the foreclosure crisis.
"Just because you are down, doesn't mean that they can kick you," Escandon says. "Dignity is always there, money or no money."
Fast-Growing Hispanic Population Can Strengthen Recovery
Taken together, Lopez's and Escandon's stories demonstrate both how hard Hispanic homeowners have been hit by the housing crisis, and how young Hispanic American families are poised to play an influential role in the housing recovery as first-time home buyers absorb excess inventory.
More than any other demographic, Hispanic homeowners were slammed by the mortgage crisis. Nearly half of the all the foreclosures in California between September 2006 and October 2009 -- 48% -- were for Hispanic homeowners, according to National Association of Hispanic Real Estate Professionals. That contributed to a 66% decline in wealth for Hispanic households from 2005 to 2009, the largest drop among all racial and ethnic groups according to data from Pew Research.
But Latinos are also one of the fastest growing segments of the American population, especially in the states hardest hit by the housing bust -- California, Nevada, Arizona, Florida -- and the real estate industry anticipates that these young people will emerge as a key source of demand for housing, ultimately helping to lead the market and the economy out of its slump.
In 2010, there were an estimated 47.8 million Hispanics in the United States -- accounting for 15.5% of the population -- and that number is expected to grow to 59.7 million by 2020, according to the Census Bureau. Between 2000 and 2006, Hispanic Americans accounted for half the nation's population growth. The fastest growing demographic in the United States is Hispanics aged 26 to 46. That's a huge group of potential first-time home-buyers.
"Population growth alone means we will play a big part of future home-ownership," says Carmen Mercado, president of NAHREP. "We need to make sure we are preparing, and they are educated and increasing income so they are ready. If we don't focus then who will be the step-up buyer? Seniors won't be able to sell their homes. It's a trickle affect. Make sure younger population are able to buy."
Building Family, Dreams and Wealth Through Home Ownership
Over the last decade, Hispanic homeowners were also one the fastest growing groups in the real estate market. In 2006, the home-ownership rate for Latinos peaked at 49.8% -- still well below the national home-ownership rate of nearly 70%, but significantly up from 1995, when Latino home-ownership was 42.1%, according to Pew figures. A focus on viewing the home as a wealth-building tool -- something heavily emphasized by Latino-focused housing groups -- has been criticized for pushing some families into housing purchases they were not prepared for financially.
NAHREP's Mercado shuts down that argument. "There can never be overemphasis on [on home-ownership]," she says. " You would do a disservice to not emphasize it. This is the way to create a nation of a wealth."
She points to home buyer education and counseling as keys to attracting and sustaining first-time home buyers, especially those who have experienced different home ownership models in other countries.
Janis Bowdler, director of the Wealth-Building Policy Project at the National Council of La Raza, says skewed incentives for brokers and lenders drove the problems, says not the emphasis on home ownership.
Latino borrowers tend to have characteristics that made it harder -- and therefore more expensive -- for brokers to do quick deals. Multiple income sources, cash income, and more than one co-borrower meant that "Latinos were more likely to fall outside the box" says Bowdler. That opened the door for them to push subprime products on the Latino population, while big lenders turned their attention toward more streamlined borrowers.
Lopez offers a different view -- that getting a taste of ownership was enough to suspend reality for moment. "You don't think about [payments] when you are buying a house. You get a home and it is worth $425,000," he recalls hearing from family members. "You just want to have a home, and have something that is yours."
Escandon, who says she has successfully fought back against several wrongful foreclosures for her Chula Vista neighbors, views the home as the spiritual center for the family, and that's what keeps her motivated to wake up every day and face the phone calls and paperwork.
"It is a sin to have a family put on the street just for the greed of the new age investors," she says.
Learning from the Lessons of the Past
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The drive to have a piece of the American Dream has not been diminished, though it has become more right-sized. Lopez emphasizes affordability again and again. "My biggest lessons is that if you are going to get into a house, you want to be comfortable and make sure you sleep at night," he says. "I don't want to be worrying about how to pay bills tomorrow."
Yamila Ayad, who works with many young Latino home buyers in San Diego County at First Nations Home Finance, says her clients are cautious, informed and have learned from the mistakes of the recent past. Now three years out from foreclosure, home buyers who were burned are back to see if they have have another shot at owning a home.
"I would have thought they were so damaged by betrayal and misrepresentation, but 10% to 15% [of my clients] are return homeowners, post-foreclosure or short sale," she says. "You know by all they questions they are asking, that the wound is there ... They look beyond that. They still need a home, this time we understand [they] need the right loan."
This mirrors attitudes that the La Raza found in a recent survey of homeowners. Even those who had been through foreclosures or short sales still reported hopeful attitudes to becoming homeowners once again, says Bowdler.
"As an immigrant community, there is still so much passion around the American dream," says Bowdler. "It means a lot when you risk everything to come here and are willing to sacrifice."
Catherine New is a staff writer for DailyFinance.com. You can reach her at firstname.lastname@example.org.