"Unveiling the Truth: Hispanic Wealth and Driving Economic Growth in the U.S."

Dispelling Myths About Hispanic Wealth and Economic Growth

This blog is based on the 2024 State of Hispanic Wealth Report: Dispelling Myths published by NAREHP (National Association of Hispanic Real Estate Professionals). The report addresses various misconceptions surrounding Hispanic wealth and economic contributions. These myths often exaggerate disparities and perpetuate inaccurate narratives that obscure the full economic impact of the Hispanic community. Below, we examine each of these myths in detail, present the facts, and offer data to support a more accurate understanding.

Myth 1: The Wealth Gap Between Hispanic and Non-Hispanic White Households is Growing

The misconception that the wealth gap between Hispanic and non-Hispanic White households is growing perpetuates a false narrative of economic stagnation within the Hispanic community. This idea fuels a sense that Hispanic households aren’t making meaningful financial progress.

Fact: In reality, the wealth gap between Hispanic households and their non-Hispanic White counterparts has been shrinking. In 2013, non-Hispanic White households had $8.87 for every $1 held by Hispanic households. By 2023, this ratio dropped to $4.47, indicating significant progress in narrowing the wealth disparity. Furthermore, age plays a crucial role in this equation. Hispanic households tend to be younger on average than non-Hispanic White households, and when adjusting for age, the wealth gap narrows even further, particularly for households headed by individuals under 35, where the ratio is $1 to $3.63.

Myth 2: Hispanics Predominantly Purchase Real Estate in Low- to Moderate-Income Neighborhoods

There is a persistent myth that Hispanics primarily buy homes in low-income or moderate-income neighborhoods. This misconception not only misrepresents the purchasing power of Hispanic households but also overlooks their growing presence in higher-income areas.

Fact: Contrary to this belief, in 2023, the majority of Hispanic real estate purchases (71%) occurred in middle- and upper-income neighborhoods. Only 4% of Hispanic homebuyers purchased properties in low-income census tracts. This trend shows that Hispanic households are increasingly accessing higher-cost markets, particularly in areas where home prices exceed the national average, such as Los Angeles. Moreover, nearly 45% of Hispanic homebuyers in 2023 were under the age of 35, demonstrating that younger Hispanics are entering the real estate market in more expensive areas at a higher rate than their non-Hispanic counterparts.

Myth 3: Very Few Hispanic-Owned Businesses are Employer Firms

A common misconception is that Hispanic-owned businesses are mostly small, sole proprietorships, and that very few of them are employer firms that contribute significantly to the job market. This myth underplays the economic contributions of Hispanic entrepreneurs.

Fact: In reality, Hispanic-owned businesses are growing at an impressive rate, outpacing the overall market by a significant margin. Between 2017 and 2021, the number of Hispanic-owned employer firms grew by 26.1%, compared to just 2.6% for all businesses. These firms are not only growing in number but also in influence, employing over 3 million people and generating $573 billion in revenue. Hispanic businesses are an essential driver of economic growth, creating jobs and fostering development across multiple sectors of the economy.

Myth 4: A High Percentage of Hispanics are Unbanked and Don’t Utilize Financial Services

There’s a widely held assumption that a large percentage of Hispanic households are unbanked and not engaged in the financial system, contributing to the idea that they lack the financial literacy or resources to build wealth.

Fact: This myth is far from the truth. Nearly all Hispanic households (96%) have a checking or transactional account with a bank or financial service provider. Additionally, 43.7% of Hispanic households own at least one non-cash financial asset, such as stocks or bonds, 33% invest in retirement accounts, and 15% invest in brokerage accounts. These numbers demonstrate that the majority of Hispanic households are actively engaged with financial institutions, highlighting the community's significant financial participation.

Myth 5: Hispanics Don’t Have Enough Wealth to Pass to Their Heirs, So They Don’t Need an Estate Plan

This myth suggests that Hispanic households don’t accumulate enough wealth to require estate planning, implying that they don’t need to worry about passing assets to future generations.

Fact: In contrast, Hispanic households are accumulating substantial wealth, and many would benefit from estate planning. As of 2022, there are 1.2 million Hispanic households with a net worth of over $1 million, and 641,000 Hispanic households earn more than $250,000 per year. In total, Hispanic households control trillions of dollars in assets, including real estate, business assets, and financial holdings. Estate planning is essential to ensure that this wealth is effectively transferred to future generations, avoiding complications or loss of assets.

Conclusion

The myths surrounding Hispanic wealth are often based on outdated or misleading data that fail to reflect the significant progress and contributions made by the Hispanic community. Hispanic households are closing the wealth gap, purchasing homes in higher-income areas, growing businesses at an impressive rate, and engaging actively with financial institutions. As these trends continue, it’s clear that the economic power of Hispanic households will continue to expand, bringing greater opportunities for wealth-building and economic growth across the U.S.

To see the full report  CLICK HERE https://acrobat.adobe.com/id/urn:aaid:sc:us:197c8360-c0e3-42d0-ab49-def5518d97b6