Hispanics and the Economic Downturn: Housing Woes and Remittance Cuts
Like the U.S. population as a whole, Latinos are feeling the sting of the economic downturn. Almost one-in-ten (9%) Latino homeowners say they missed a mortgage payment or were unable to make a full payment and 3% say they received a foreclosure notice in the past year, according to a new national survey of 1,540 Latino adults conducted by the Pew Hispanic Center. Moreover, more than six-in-ten (62%) Latino homeowners say there have been foreclosures in their neighborhood over the past year, and 36% say they are worried that their own home may go into foreclosure. This figure rises to 53% among foreign-born Latino homeowners.
The economic downturn has also had an impact on the amount of money Latino immigrants send to family members or others in their country of origin. Among Hispanic immigrants who sent these remittances in the last two years, more than seven-in-ten (71%) say they sent less in the past year than in the prior year. However, while the amount of money Hispanic immigrants say they sent abroad has declined, the share of Hispanic immigrants who say they remitted funds is unchanged from 2006. More than half (54%) of foreign-born Hispanics, and more than one-in-three (36%) Latinos, say they sent remittances in the past year. In 2006, 51% of the foreign-born, and 35% of all Latinos, said they sent remittances in the prior year.
Latinos make up 15 percent of the total U.S. population, and in many respects their downbeat assessment of the nation’s economy is similar to that of the general population. According to a recent survey from the Pew Research Center for the People & the Press (December 2008), almost six-in-ten (59%) say the U.S. economy is in poor condition, a belief held by 63% of Latinos. And similar shares of the general U.S. population and Latinos say that jobs are difficult to find where they live—73% versus 78%.
However, Latinos hold a more negative view of their own current personal financial situation than does the population as a whole. More than three-in-four (75%) Latinos, and 84% of foreign-born Latinos, say their current personal finances are in either fair or poor shape, while 61% of the general U.S. population says that. But Latinos are more optimistic than others about the future: 67% expect that their financial circumstances will improve over the next year; just 56% of the general population feels the same way.
As the economy has soured, many Latinos are adjusting their economic behaviors. More than seven-in-ten (71%) report that they have cut back spending on eating out. Two-thirds (67%) say they planned to curtail holiday spending. More than one-fourth (28%) report that they helped a family member or friend with a loan.
A majority of Latinos (57%) say they do not have a very good understanding of recent financial problems involving financial institutions and companies with ties to the housing market that have dominated the economic news in recent months. When asked who or what has contributed to these problems, a large majority of survey respondents (76%) point a finger of blame at individuals who took on too much debt. But most Latinos also blame the lending policies of banks and financial institutions (70%) and insufficient government regulation of financial institutions (67%).
This report is based on a bilingual telephone survey of a nationally representative sample of 1,540 Hispanics ages 18 and older. Interviews were conducted from November 11 through November 30, 2008. The margin of error for the full sample is plus or minus 3.0 percentage points at the 95% confidence level. For a full description of the survey methodology, see Appendix A. Key findings of this study include the following:
- Half of adult Latinos are homeowners. Of this group, nearly one-in-ten (9%) say they have missed a mortgage payment in the past year.
- Among Latino homeowners, 3% have received a foreclosure notice in the past year.
- More than one-third (36%) of Latino homeowners are worried that their home may go into foreclosure in the next year.
- More than six-in-ten (62%) Latino homeowners say there have been foreclosures in their neighborhood in the past year.
- Nearly one-in-ten (8%) Latino homeowners say they have had a home equity loan denied in the past year, and 8% say they have had a home refinance application denied.
- Among Hispanic immigrants who sent remittances in the last two years, more than seven-in-ten (71%) say they sent less in the past year compared with the prior year.
- Among foreign-born Hispanics who say they sent less money abroad in the past year, 83% cite financial circumstances as the main reason.
- More than half (54%) of foreign-born Hispanics say they have sent remittances abroad in the past year; 17% of native-born Hispanics say they have done so.
- According to central bank reports, remittances to Mexico and Central America increased rapidly from 2000 to 2006. However, growth has tapered off for most countries in the past two years. More details from these sources are available in Appendix C of this report.
Economic Conditions, Jobs and the Credit Crisis
- More than six-in-ten Hispanics (63%) say economic conditions today are poor, a sentiment shared by 59% of the general public.
- Similar shares of the general U.S. population and Latinos say that jobs are difficult to find where they live—73% versus 78%.
- A majority of Hispanics (57%) say they do not understand the financial problems involving Wall Street investment banks or other companies with ties to the housing market.
- When asked about who is to blame for the current economic financial crisis, Hispanics cite individuals taking on too much debt (76%); lending policies of banks and financial institutions (70%); and the lack of adequate government regulation of financial institutions (67%).
Personal Financial Situation
- More than three-quarters of Hispanics say their personal finances are in fair (46%) or poor shape (30%).
- Hispanics are more likely than the general U.S. population to rate their personal financial situation as poor or fair—75% versus 61%.
- More than eight-in-ten (84%) foreign-born Hispanics report that their finances are in either fair or poor shape. Among the native born, 66% say as much.
- Two-thirds (67%) of Latinos expect their personal financial situation to improve in the coming year, compared with 56% of the general population.
- Nearly one-in-four (23%) Latinos report that they have more debt than they can afford, while 25% of the general population reports the same.
- Hispanics are more likely than the general population to report that they have no credit card or installment loan debt—28% versus 19%.
- Almost half of Latinos (47%) say they delayed or canceled plans to buy a car or make some other major purchase in the past year.
- More than seven-in-ten (71%) Latinos say they have cut back spending on eating out as a result of the economic downturn.
- Two-thirds (67%) of Latinos say they planned to curtail holiday spending as a result of the economic downturn.
- More than one-quarter (28%) of Latinos report that as a result of the economic downturn, they helped a family member or friend with a loan in the past year.
- Nearly two-in-ten (17%) say they received a loan from a family member or a friend in the past year.
About this Report
The National Survey of Latinos 2008, Economics and Politics, focuses on Hispanic adults’ views of the state of the economy, their own personal finances and housing market conditions. It also asks about the sending of remittances in the past year and how Latinos have changed their economic behaviors in the economic downturn. The survey was conducted from November 11 through November 30, 2008, among a randomly selected, nationally representative sample of 1,540 Hispanic adults. The survey was conducted in both English and Spanish. The margin of error for the full sample is plus or minus 3.0 percentage points.
A Note on Terminology
The terms “Latino” and “Hispanic” are used interchangeably in this report, as are the terms “foreign born” and “immigrant.”
The terms “general population” and “general public” are used interchangeably in this report to refer to the entire U.S. adult population, including Hispanics.