Homeownership is the one bright spot in building Hispanic generational wealth

• The Hispanic homeownership rate hit an all-time high of 51.1% in 2020.
• As more Hispanic Americans become homeowners, they're creating greater generational wealth.

The Hispanic homeownership rate in the US has hit an all-time high — but but a wealth gap between Hispanic and white Americans persists.

According to the National Association of Realtors, the Hispanic homeownership rate climbed to 51.1% in 2020, marking the highest level ever recorded. Although the rate is less than the white homeownership rate of 72.1%, Hispanic Americans are chipping away at the homeownership gap as they continue to lead growth.

"Hispanic families have considerably less wealth than white families — nevertheless, we are seeing more Hispanic households becoming homeowners," Nadia Evangelou, NAR's senior economist and director of forecasting, told Insider. "Given that homeownership is the main source of building wealth, this could narrow the wealth gap between these two groups in the following years."

While the homeownership gap between white and Hispanic households is beginning to close, the wealth gap persists. Hispanic Americans lag behind their white peers in nonhousing investments, which means their net worths remain smaller in comparison. Although Hispanics have increased their presence in the real-estate market, their lack of participation in other avenues of wealth building could dampen their economic mobility.

"While Latino real-estate purchases and entrepreneurial starts have been robust, formidable challenges threaten future wealth gains," Gary Acosta, the National Association of Hispanic Real Estate Professionals CEO and cofounder, said.

Hispanic Americans face roadblocks to wealth building

Hispanic wealth is on an upward trajectory, but the group still trails other demographics in income and investments.

The median income of Hispanic households was $56,113 in 2019, according to the National Community Reinvestment Coalition. The organization said the rate was 30% less than white households' median income of $76,057. Since 1983, Hispanic households' median net worth has hovered between 2% and 6% of the wealth of non-Hispanic white households, the NCRC said.

"Hispanics median household income of $56,000 leaves little for nonessential expenses like investments that are wealth building," said Dedrick Asante-Muhammad, NCRC's chief of membership, policy, and equity. "This paired with a lack of wealth in the community as a whole maintains deep racial/ethnic wealth inequality."

Income disparity isn't the only threat to Hispanic wealth building. The demographic also has the lowest stock-market participation rates. Between 2016 and 2019, the Hispanic retirement-account participation rate was just 25.5%, continuing the trend of having the smallest rate in the country, according to NAHREP. A 2021 survey from NAHREP found that Hispanics with a retirement account have a median net worth of $133,300, highlighting why tax-advantaged investments are critical for wealth building.

"With a Hispanic retirement-account participation rate at 25.5%, progress for wealth creation will continue to stall," Sara Rodriguez, NAHREP's president, told insider. "Hispanics are not ready for retirement, and those that are currently retired have a net worth of $14,001, more than twice less wealth as Latinos overall."

Many obstacles prevent Hispanic Americans from achieving wealth equality. While the group is leading the nation in homeownership growth, it hasn't made significant gains in other areas that are key to generating long-term wealth. Hispanics will need to participate in different investment avenues to ensure they can pass down their assets from one generation to the next.

"Wealth is the foundation of economic security and upward mobility for all Americans," Asante-Muhammad said. "The racial/ethnic wealth divide faced by so many Hispanics does not only reveal economic vulnerability for our country's largest community of color but reveals a weakness in the future of the American middle class."