Hispanics led home-buying surge last year. Here’s how Latino first-time buyers closed the deal

After noticing home prices begin to soar across the state during the COVID-19 pandemic, Albanita Erebia and her fiancé Daniel Savala knew they needed to act quickly.

“We were scared the market was going to keep going up,” Savala said, who has three children with one more on the way with Erebia.

After three months of searching and placing failed bids on multiple properties, Erebia, 32, and Savala, 40, found their perfect starter home: a $310,000 single-family home in North Sacramento.

Their success on the market made them a part of a coronavirus pandemic home buying trend: The national homeownership rates for U.S. Hispanics climbed faster than any other ethnic group last year, according to U.S. Census Bureau data.

Homeownership rates among U.S. Latinos soared to 51.4% last year, compared to the same time of year in 2017 when the rate was at 45.5%.

Local real estate agents noticed the uptick.

“In 2020, Latinos really came out and started pushing the envelope to purchase homes,” said real estate agent Edgar Sanchez, who’s worked in Sacramento for the last 17 years.

Sanchez believes the increase is partly due to Latinos being more comfortable and educated about purchasing homes after the 2008 housing crisis, when many faced foreclosures and risky loans.

They’re making gains despite the state’s record-breaking housing market.

Today the median home price of a California home is a whopping $827,940, according to the California Department of Finance. In the Sacramento region, the median home price of a home is $515,000, a 21.2% spike from August of last year.

About eight years ago, Savala remembers a former boss offering to sell him a new model home in Sacramento for $130,000. But Savala declined the offer because he felt buying a home was out of reach.

“I just looked at him like, ‘Man, I can’t buy no house. I’m just a neighborhood kid. I can’t,’ and I didn’t think twice about it,” he said. “I’m kicking myself to this day.”

But some families like his are putting to use other lessons from the Great Recession, looking to make extra money and avoid the risk buyers took on in the early 2000s.

He and Erebia have plans to steady their income with their property. They’re looking into converting their new home’s detached garage into an accessory dwelling unit and rent it out to a future tenant.

“I’m reinvesting this back into myself,” Erebia said.

Closing the gap

Homeownership rates among Latinos still lag behind those of whites on a national and state level.

The average homeownership rate for California households is about 55%. For Latinos, the homeownership rate was 44.1% in 2018, according to 2019 Census American Community Survey data, compared to 63.2% of whites, 59.7% of Asian or Pacific Islanders and 36.8% of Blacks.

In 2016, the national median wealth of a white family was $171,000, according to an analysis by the California Budget & Policy Center. For Latino families, who are less likely to own a home than white families, the median wealth was $20,700.

The Newsom administration, using part of the state’s unprecedented $80 billion budget surplus, is launching a new effort to help first-time buyers.

The new state budget includes $100 million to expand the state’s First Time Homebuyer Assistance Program, “which helps first-time homebuyers make a down payment, secure a loan, and pay closing costs on a home,” according to the budget.

“This is one of the primary vehicles that the state uses to help connect families (who) -- without the help and down payment assistance -- would probably otherwise not be able to achieve the ‘American Dream,’” said Secretary of the Business, Consumer Services and Housing Agency Lourdes M. Castro Ramírez. “The program is very much designed and focused on bridging the homeownership wealth gap that exists among Latinos, Black Californians and low- to moderate-income households.”

Learning how to buy a home

Apart from down payment assistance, some new Latino home buyers say they benefited from calling on an expert to walk them through the process.

Lobbyist and San Juan Unified School District President Paula Villescaz had saved money for two years for a down payment and set her sights on buying a single-family home in the Sacramento region.

She turned to a real estate agent with experience coaching Latino first-time buyers to figure out how to do it.

To afford her town home’s down payment, Villescaz used her savings and took out a loan from her retirement plan. She also qualified for a loan from the Federal Housing Administration.

The process was competitive and Villescaz remembers placing at least 10 offers on homes. After months of searching, Villescaz nearly gave up until the highest bid for a $190,000 Carmichael town home she also placed an offer on fell through.

She began house-hunting in 2017 aiming for the stability she missed growing up in a family that faced evictions, shared rooms with other relatives and moved over and over.

“I knew that homeownership and owning property is certainly one of the main ways in America that we establish any kind of intergenerational wealth and so I had always been interested,” Villescaz, 32, said. “It was always a goal of mine to own a home.”

Villescaz recommends that young people should find a trusted real estate agent and get familiar with programs for first-time home buyers.

“My learned lesson was that it wasn’t as far out of reach as I thought it was,” she said. “It’s definitely a challenge but it’s not an insurmountable one.”

This story was originally published October 5, 2021 at 5:00 AM.