It's Complicated: Latinos' Use of Social Networks in the Home Purchase Process

Background and Purpose. Although the subprime housing crisis that precipitated the Great Recession of 2007 caused widespread losses in household wealth, Latino households were particularly hard hit. As 16% of white wealth was lost, Latino households lost nearly two thirds (66%) of their wealth, largely the result of unsustainable mortgage loans made in over-heated housing markets. The crash cooled policy interest in promoting home ownership for low to moderate income minority households, despite strong evidence that fault lay not with consumers but rather with unsuitable financial products.

In the absence of strong policies that would ease entry into the housing market, Latino households are increasingly forced to rely on friends and family for support in their purchase. Little is known about this process, as research is currently focused on measuring social capital after home purchase, rather than leading up to it.

Methods. This longitudinal study followed thirteen participants recruited from a HUD-sponsored First Time Home Buyer training held in the overwhelmingly Latino (97%) and lower income (27% poverty rate) neighborhood of East Los Angeles. Monthly brief and in depth interviews conducted over an average of four months were recorded, translated (as needed), transcribed, and uploaded to Dedoose.  Team coding was used to develop and test the application of the codebook, with Cohen’s Kappa of at least 0.80 used to indicate adequate inter-rater reliability for research team members. Analytical memos were used to capture observations while coding, and validity was further strengthened through peer debriefing sessions.

Findings. The social network, consisting of family, friends, and community members, was found to play an important role in the participants' home buying process. Overall, family and friends were emotionally supportive of participants' attempt to purchase a home. However, participants also reported tensions with some family members in response to the reallocation of budget priorities. While we found few instances of direct financial support towards the purchase (i.e. down payment assistance), we did find considerable indirect financial support (e.g. furniture). Yet family ties were not altogether productive. Participants often allowed family members to utilize their credit and provided ongoing or emergency financial support to family in countries of origin. Participants from immigrant mixed status households reported additional barriers resulting from trying to purchase with under-documented partners.

Conclusion and Implications. Findings highlight the importance of the social network throughout the home buying process. Greater understanding of the influence of one's social network may lead to more culturally sensitive support for those in the home buying process. It is clear that friends and family are not able to make up for the lack of financial assistance programs available to low-income prospective home buyers. Social workers can contribute to advocacy for greater inclusion of vulnerable populations in asset-building programs.