The United States economy cannot succeed without Hispanics. Already the largest minority group in the US, Hispanics will account for nearly 65 percent of labor force growth over the next decade—and are predicted to account for 53 percent of new household formations and 70 percent of new homeowners over the next twenty years.
And yet, severe wealth gaps continue to undercut the Hispanic community’s ability to help drive the US economy. The National Association of Hispanic Real Estate Professionals (NAHREP) recently spotlighted this problem through its 2022 State of Hispanic Wealth Report, which examines how Hispanics compare to their white counterparts in terms of income, net worth, homeownership, business growth, asset diversification, and other areas that contribute to long-term wealth creation.
Here are some of the highlights from the report:
Income: Hispanic wealth is increasing—fast. The wealth of the average Latino household more than doubled between 2013 and 2019, whereas the average household wealth for the general population increased by just 36 percent.
Net Worth: Unfortunately, those increases haven’t even come close to closing the overall wealth gap between Hispanics and non-Hispanic white households. Today, Latinos have a median net worth of $36,050. White households currently sit at more than $189,000.
Homeownership: A sizeable homeownership gap also persists. At present, 48 percent of Latinos are homeowners. The number of Latino homeowners has steadily increased over the past seven years, but Latinos have a long way to go to match the 74 percent of white adults who are homeowners.
Business Growth: Latino-owned businesses continue to face significant challenges in securing the capital necessary to scale their enterprise. According to a study by the Stanford Latino Entrepreneurship Initiative, Latino business owners are 60 percent less likely to receive approval for $100,000 loans when compared non-Hispanic whites. Venture capital and private equity investment in Latino-owned businesses is virtually nonexistent, coming in at less than 2 percent of all funding.
Asset Diversification: Building a portfolio with a variety of different types of revenue streams is essential to long-term financial health. Homeownership is a key part of this and will only become more important in future (the average home increased in price by 18.3 percent during the first half of 2022).
Investment accounts—including retirement accounts—are another essential element. Unfortunately, the number of Latinos with a retirement account has decreased over time. As of 2019, only 25.5 percent of Latinos invest in a retirement account (the lowest rate of any demographic).
The Takeaway: Hispanic wealth is increasing, but great gains still need to be made to break down the countless barriers and wealth gaps that the community faces. And it’s not just for that community’s sake that we need to reduce those gaps—in the years ahead, Hispanic wealth will be a surefire indicator of the economic health of the United States as a whole.