Latino Homeownership in Chicago: What You Need to Know about Navigating Today’s Market

With a competitive nationwide housing market, potential homeowners may feel discouraged and their goals out of reach. However, across the country—and in Chicago—there are resources and opportunities to make home owning a reality.

Recently, Hispanic homeownership has been on the rise. The National Association of Hispanic Real Estate Professionals reported the national rate grew to 49.5% in 2023, which is the largest single-year increase in 18 years. Also, Hispanics are buying homes at younger ages with most 2023 buyers between the ages of 25-35. As of 2022, 59% of Illinois Hispanic are homeowners, higher than the national average.

The Chicagoland area also represents one of the top 25 most opportune markets for Hispanic home buyers based on affordability.

Despite market difficulties including high interest rates and a lack of inventory across the city, realtors and industry workers alike have the same message for potential buyers—don’t give up hope. La Raza spoke to homeowners and housing market professionals about navigating Chicago’s current market and resources available for those looking to buy now. 

The State of the Market

Erika Villegas, president of the Chicago Association of Realtors, has over 30 years of experience working in realty in the city. Compared to last year, she said closed sales were down and sales prices have increased by nearly 7 percent.

“The closed sales were down, I think primarily because we have a lack of inventory,” she said. “We have the buyers that are already prepared, pre-approved, but we don’t have enough inventory to fulfill all the needs that we have in Chicago.”

Villegas said she’s spoken to other realtors around the country and found that the lack of houses to buy isn’t unique to Chicago right now. Due to the shortage, it’s become more difficult for first-time home buyers as well as folks looking to move up and buy larger homes.

However, her average age of Hispanic or Latino buyers is around 30-31 years old—the lowest age in any segment of the market, she said. She’s noticed a lot of her clients have the value of homeownership instilled in them from a young age due to immigrant parents who desired to build generational wealth through home buying.

The issues facing the greater Chicago area are also prominent in majority-Latino neighborhoods like Pilsen and Little Village, with a lack of inventory and multiple-offer situations. With that, potential buyers are offering above asking price in order to get the houses they want.

But when it comes to these situations, Villegas said it’s important to sit down with clients and make sure they feel comfortable bidding on a house that has multiple offers.

“[Their ability] is based on their down payment, their grants, their savings,” she said. “Maybe for someone, a $10,000 price increase is only going to be about $70 a month, so I like to sit down with my clients about … what does that mean on a monthly basis and what does that mean long term? … what small adjustments do I need to make to be able to still afford that?”

Other times, clients decide the price is too high and walk away to start over. As a realtor, Villegas said sometimes her job is seeking out properties that haven’t hit the market yet for her clients to scope out and sometimes pairing potential buyers up with sellers.

When working out finances, Villegas said the best time to buy is whenever buyers feel they have the financial means to. She said she’s been in situations where buyers’ eventual mortgage payments are a thousand dollars less than what they were paying in rent.

And there’s lots they can now do with that money—put it into retirement, buy another investment property, save for children’s college educations and more.

“That is a very personal decision that one has to make, if it makes sense to buy a home,” she said. “But I think that buying a home is always the right option because it helps create generational wealth. And that’s something I’ve been teaching my clients for a long time and I practice it myself.”

Mabel Guzman also lives in the city and has been working as a realtor for 26 years. One thing she has seen recently is Latinos who qualified for prime mortgages being instead placed into subprime mortgages—which have a much higher interest rate and can require a larger down payment. Therefore, it’s important for buyers to be aware of which programs they qualify for based on their credit.

A couple aspects of the market Guzman said she’s seen changing are access to credit and interest rates, both which can greatly affect buyers’ financial ability to purchase.

“All of a sudden, what you could afford is no longer attainable because that price point doesn’t exist, or in the community you wanted to be in, it’s no longer attainable on interest rates,” she said. “Moreover, it’s just the cost of getting in.”

She said last year more than any other, people were using down payment assistance programs. This way, people can pay the upfront costs—including closing costs, which Guzman said she’s seen go up dramatically—and get on to simply managing monthly payments.

One strategy she sometimes uses is asking sellers to assist in a percentage of closing costs. This way, people can still offer a good price in the neighborhood they’re wanting to stay in but not have to bear the total amount of the closing costs.

Due to a lack of affordability, she’s seen people be pushed out of majority Latino neighborhoods such as Pilsen and Little Village—often even migrating out of Cook County altogether.

Testimonies from Chicago’s Latino Homeowners

Jeni Mota, 23, is a recent success story. She bought a single family home in Oak Lawn with her partner after only spending a month or two in the homebuying process.

She initially planned to look for houses around the Oak Lawn and Midway area due to the fact she and her partner both work in the city and want to be close to the highway. She also grew up around and is familiar with the neighborhood.

“I had always never really wanted to rent,” she said. “I always wanted to own my space and that was something that was passed down to me from my family because they’ve always done the same thing.”

Jeni’s parents came from Mexico and “went from the bottom up” to own their home. Having family who had gone through the process before and stressed the importance of homeownership made the process less scary and foreign for her.

Financially, she said this was also a big help as they advised her on what to do and what to avoid in order to save money. She asked their advice on how much money they had saved or what they thought a good amount to put down was in her situation. She also had the luxury of being able to live at home while she saved up for a home.

Heading into the homebuying process, she imagined it would take six months to a year or more due to the heavily competitive market. She said the houses she was looking at were being sold to offers much higher than the asking price—if she was looking at a house, she had to choose to either put in a bid that day or risk losing it.

One day, she put in an offer for a house she loved, and her realtor, Villegas, later told her the sellers had chosen to go with a cash offer. Initially, Jeni just accepted it wasn’t meant to be.

“The whole mindset I came in with,” she said. “I was saying, ‘What’s meant to be mine will be mine.’”

Twelve hours later, Jeni got a call: the sellers had changed their mind and decided to go with her offer. The house had only been on the market for one day and had already received three to four offers total.

Her brother Jonathan’s experience was very different. He bought a home with his partner before she had their twin baby girls last August. It took them a little over half a year to find a home after a Chicago Ridge home they were about to close on caught fire, forcing them to start over.

“They just went, ‘Well, yeah, you can wait [and] they can fix it or you can just get your money back,’” Jonathan, 29, said. “We had to look somewhere else, the damages were pretty severe.”

While Jeni bought a house more so solely because she felt ready, Jonathan also felt the pressure of time—he started looking into homes soon after he found out he was going to have children.

One of the most important aspects of his process was finding people he could trust as realtors and lenders. He initially went with a realtor friend of his who was new to the business, but Jonathan didn’t really match well with any of the houses he saw. He ended up going with his parents’ and sister’s realtor, Villegas, whom he said was more knowledgeable and experienced.

The house he ended up signing for was brick-layered, rather than the original Cape Cod style home which caught on fire. However, his current home required many renovations while the other one did not. Like Jeni, his family helped with some of the renovation process to ease financial burdens.

He dealt with the same market issues as Jeni, putting in offers on three or four houses before finding the ones he was able to get. He also loosened the boundaries of where he was willing to look since the market was so competitive.

“I kept getting outbidded,” he said. “I’m excited [to bid] and then boom, bam. I kept getting turned down. So it was exciting but then a constant let down.”

For his current house, he went with a more personal approach and brought his pregnant girlfriend and talked about his new family and how the house was for them and their future. In the end, it worked out for him—even though the seller was receiving cash offers, she decided to go with Jonathan.

He said he’s seen sellers choose to give homes to families because they could see it was going to be a family home instead of just a project for investors.

“Try to use empathy, sympathy, use a love story,” he said. “If you don’t have an abundance of money, go about it that way. Maybe someone will be like, ‘You know what? I want to give it to this family.’”

He had found the house after it had only been listed for 30 minutes, and decided he needed to see it right away. Jonathan ended up being the first one to show up to see it.

As far as the financial process went, Jonathan said he used a program through the state of Illinois for first-time homebuyers which allowed him to receive $7,500 toward his house. He also qualified for other assistance opportunities due to his good credit.

Jeni said she had a beneficial experience with her lender who told her to put the paperwork under one person’s name—this way, she fell under the threshold of income needed to qualify for assistance for a first time home buyer. Her lender also had her take a class on some of the more basic financial information needed for purchasing a home, such as different costs to replace certain things around a home or how to pay or contact people about bills.

However, one thing that did surprise her was the price of closing costs. In Chicago, these are reported to be anywhere from 2-4% the price of the home.

“I didn’t know until after how much it really is,” she said. “On top of what you already should have saved, you should have more.”

One of the most impactful pieces of advice Jeni and Jonathan said their parents gave them was to get a more run-down house and fix it up themselves—something they did with their own home. They both had the benefit of having family members around who could help them fix up different aspects of their homes.

“That’s the best way,” Jonathan said. “That’s the best way, to find somebody or get family involved if [spending renovation] money is not your thing.”

Overall, both homeowners believe it’s important to keep an open mind and not lose hope. Throughout the hardships buyers may encounter during the process, the right home will find them.

 “Don’t let it break you down,” Jeni said. “Keep a positive mind, because I think that’s what saved me a couple times when I did put in a couple offers and I didn’t get it. What’s yours will be yours.”

Resources and Advice for Potential Homeowners

For those who know exactly what they need or who don’t know where to start, there are resources around Chicago available to make the homeownership process easier.

Some of the main areas to begin looking for resources in the city include the City of Chicago Department of Housing, Neighborhood Housing Services of Chicago and Chicago Housing Authority.

Jimmy Stewart, manager of CHA’s Choose to Own and down payment assistance programs, handles much of the first-time homeowner resources for the organization. He creates curriculum and programming to help families in the transition from renting to home owning.

With the Choose to Own program, CHA essentially helps buyers pay their mortgage with the  portion of the subsidy they’re eligible for. Stewart works to make sure residents understand what the requirements are—and all programs require an orientation so folks have the opportunity to ask preliminary questions and learn the basic information.

“Sometimes it’s money, sometimes it’s education, sometimes it’s fear,” he said. “We really want to engage our clients right up front with what those things are and make sure we direct them to the resources.”

When folks apply to CHA resources, some which are only available to CHA residents while others are available to all Chicagoans, Stewart said the first step of action is to refer buyers to homeownership counseling. They work with different organizations in Chicago to provide pre and post purchase counseling to make sure all buyers are well-equipped to handle all parts of the process—it also helps them better understand what strategies will be best for getting them the best bang for their buck in all aspects.

CHA also partners with different lenders around the city in order to both help match buyers with the best lender for them and also stay alert to all the new programs available, Stewart said. A lot of times, the families involved with CHA hear about these programs first or as soon as it hits the market. There’s also a new down payment program CHA has begun in the last year in which they partner with over 20 banks or lenders who can also provide information about what homeowners in Chicago need, he said.

After that, Stewart said CHA keeps in contact with the realtor buyers choose to go with in order to make sure the home is all good and up to codes. Finally, they work with them through the closing process and post-purchase counseling sessions.

NHS Chicago also offers similarly focused resources such as classes—on everything from financial literacy to foreclosure prevention and more—, loans, grants and down payment assistance. They also offer one-on-one consultation for people looking for more specific information for their buying situations.

The City of Chicago’s DOH web page also contains a plethora of information and resources available to Chicagoans, from potential home buyers to those needing assistance while owning. It also provides city-sourced data on affordable housing across the city and initiatives to help those seeking homeownership.

For Villegas on the realty side of things, she said her process for finding grants for buyers involves meeting with them, looking at their needs, talking about all financial aspects and then matching them with a lender who can match their needs.

She recently worked with a client who qualified for a grant with Bank of America, which can provide up to $17,500 if the home is bought in a low to moderate income neighborhood. He ended up having to provide nothing for the closing because the grant amount covered his down payment and closing costs.

“That’s just one grant,” she said. “There are grants with the state of Illinois, with [Illinois Housing Development Authority], and they have two or three types of grants—depends on income, depends on neighborhood. So it has to be almost kind of customized to that client once they sit down to have that one on one with their realtor.”

Therefore, Villegas recommends buyers have early conversations with a realtor and lender about where their finances are at and what their goals are. She often asks folks how their credit card debit is and what they can pay off as well as save within the next year. That way, people don’t rush into something and can make sure they’re making decisions that serve them.

She also recommends getting to know the neighborhoods and visiting different places they may be curious about living in. Buyers may have to go through different training programs for buying or home owning which qualifies them for further grants, which realtors can clue buyers in about.

As far as finding realtors, she recommends interviewing a couple to see if they’d be a good fit and asking friends and family if they have anyone they’ve had a good experience with. Find out if they’re experts in the desired neighborhood so they know the in’s and out’s of that market.

“You want to be able to ask those questions,” she said. “‘Hey, where’s a favorite coffee shop? Where’s the grocery store?’ Especially if you don’t know the neighborhood.”

Like Villegas, Guzman highly recommends working with a realtor to make sure buyers have access to all the information possible. They can direct buyers to lenders, share resources and find assistance programs buyers can qualify for. Especially due to the connections they may have with and simplified explanations they can provide about loan groups such as IHDA, which can offer valuable down payment programs.

Guzman also recommends keeping an open mind about a future home due to the lack of inventory and thinking through in detail what’s important in a home. Consider lifestyle, financial goals and the type of style or structure that will make sense years in the future.

“Do you travel a lot? Maybe a condo is more something that would be better suited for you … or do you want something that’s going to give you peace of mind, so you need that residual income from maybe another tenant or two,” she said. “Think about what your long term goals are.”

It’s important to also consider what buyers are qualified to pay versus what they would be willing to pay. Maybe opt for a lower price in order to save some money extra cash, she said. She recommends landing on a desired payment price and working backwards from that on what is affordable and what’s available.

Looking at the market overall, Guzman said it’s imperative buyers remain patient and look around at all possible options—with houses coming and going off the market quickly and constantly, there is always the potential for new options that align with buyers’ desires.

Stewart said one of the biggest benefits he’s seen homeownership provide people is a sense of pride—he’s spoken to hundreds of people who’ve said they feel more confident and capable in what they can accomplish, and others, like their children, feel the same confidence in turn. It’s changed the trajectory of their mindset and of their lives.

One of the most common misconceptions he’s seen people have is that they won’t be eligible for assistance and they won’t be able to afford a home. However, despite the pessimistic views of the market today, Stewart said there are always more programs available to look into to help buyers reach their goals.

“I just think people are not as hopeful, I also believe that they don’t hear enough of the success stories,” he said. “There are some stories out there, people who go into foreclosure, people whose taxes do increase and all that type of stuff. But there are so many ways to prepare for those types of hardships and avoid them.”

Contact with Organizations

City of Chicago Department of Housing

www.chicago.gov/city/en/depts/doh.html

Chicago Housing Authority

www.thecha.org

Neighborhood Housing Services of Chicago

nhschicago.org

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The production and publication of this story by La Raza have been made possible in part thanks to a grant from the Chicago Community Trust through its Cross Community Impact grant program.