Rising rents pushed these first-time Latino homebuyers to take the plunge

Despite high mortgage rates and a dearth of affordable starter houses, these families saw the upside of making the investment now.

The Gonzalez family stands on the front porch of their new home in the near western suburbs.
The Gonzalez family stands on the front porch of their new home in the near western suburbs. Manuel Martinez / WBEZ
The Gonzalez family stands on the front porch of their new home in the near western suburbs.
The Gonzalez family stands on the front porch of their new home in the near western suburbs. Manuel Martinez / WBEZ

Rising rents pushed these first-time Latino homebuyers to take the plunge

Despite high mortgage rates and a dearth of affordable starter houses, these families saw the upside of making the investment now.

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Aurea Diaz and Adrian Maldonado recently bought their first home in the city’s Back of the Yards neighborhood. There’s excitement in Diaz’s voice as she describes it.

The Gonzalez family just became first-time homeowners, too, after looking beyond the city’s Northwest Side to the near western suburbs.

Prospective buyer Samuel Morales is also eagerly looking.

These Latino home buyers aren’t just first-timers. They are first-in-their-generation purchasers motivated to take the plunge, despite headwinds like high mortgage rates and low supply that have made other buyers skittish.

What’s driving them is a combination of factors that the real estate industry is closely watching. Anecdotally, there appears to be some payoff to a newer spate of specialized lending programs and mortgage-prep courses aimed at stoking homeownership among Black and Latino Chicagoans. Some are run by nonprofits; others are being led by real estate companies.

James Salazar is a realtor for Baird & Warner.
James Salazar is a realtor for Baird & Warner who specializes in working with first-time Latino homebuyers. Manuel Martinez / WBEZ

But if those programs laid the groundwork for these families, rising rents sealed the deal. In Chicago, the mean of listed rents was $1,983 at the end of February, a 7% jump from a year prior, according to data from Zillow.

The Gonzalez family, for example, felt they didn’t have much choice after the owner of their Belmont-Cragin apartment building sold to a new property management company at the end of 2022. Rents were about to go up by $500 a month.

“We would have been paying $2,200 per month or more,” said Natasha Roman-Gonzalez. “That put us over the edge.”

Studying up on homeownership

Aurea Diaz and Adrian Maldonado have been together for 26 years and immigrated together from Mexico. They started renting a three-bedroom, basement apartment in Little Village for $750 a month, a decade ago. But by 2022, rent had climbed to about $1,000 a month.

Diaz, a factory laborer, and Maldonado, a restaurant cook, wanted more space for themselves and three of their four children who still live with them, ranging in age from 12 to 25.

Aurea Diaz (center) and Adrian Maldonado (right) pose with their son in front of a downtown window.
Aurea Diaz (center) and Adrian Maldonado (right) pose with their son after closing the deal on their Back of the Yards home. Courtesy of Aurea Diaz and Adrian Maldonado

They’d also been studying up on homeownership: For two years, the pair attended free, first-time homebuyer education classes through The Resurrection Project, a social-impact, HUD-approved housing counseling organization headquartered in the Pilsen neighborhood.

The program is one of several in the city aimed at addressing a legacy of segregation. But change has been slow to come: From 2011 to 2021, the percentage of Chicago homeowners who identify as Latino barely budged from 19% to 22%, according to the U.S. Census Bureau’s American Community Survey.

Programs like Full Circle Homes are aimed at improving those statistics. Through The Resurrection Project, the couple was preapproved for a loan from a partner credit union and qualified for a $20,000 grant.

The grant is available to new homebuyers in Chicago Lawn, North Lawndale and Back of the Yards, and is forgiven if the buyers stay in their homes for at least five years.

The Resurrection Project also provides affordable homes for rent and for sale. Once the couple started looking, they had to act quickly. In Back of the Yards, they found a house that was close to the adults’ workplaces and that would allow their children to remain in their same schools. The house offered lots of natural lighting, a big bay window and a pleasant street view.

They made their winning offer of $229,500 while they were still at the open house visit, eyeing a long line of other potential buyers.

“We knew there was no time to waste,” Diaz said.

They made a 10% down payment and incurred no PMI because they took the lender’s portfolio loan product. Their monthly mortgage, at a 7.1 percent interest rate, is $1,550.

Diaz’s advice to other would-be homeowners? “Get informed,” she said. “Take a leap of faith.”

Finding it cheaper to move west

When Adrian Gonzalez and Natasha Roman-Gonzalez looked to buy a house in their immediate neighborhood, they worried that staying in Belmont-Cragin would be too expensive of a proposition. The median price of a single-family home has gone up in Belmont-Cragin, from $265,000 in January 2020 to $330,000 in January 2023, according to Midwest Real Estate Data, or MRED.

When they started looking, the Gonzalez family were parents to Cayden, who is now 3, and there was a baby on the way.

“Our search for our home was focused around school districts and property taxes,” Roman-Gonzalez said. “We looked at surrounding neighborhoods, and Franklin Park” – in the near west suburbs, south of O’Hare International Airport – “ended up checking all of the boxes on our checklist,” she said.

Even better, her husband’s mother lives six minutes away, her mother is six minutes in the other direction and Adrian and Natasha’s sisters each live a 10-minute drive away from the house they found.

They found a four-bedroom, two-bath home that measured 1,376 square feet.

But the house had seven bids, and Roman-Gonzalez was pregnant with Rylan, now seven months old.

“If it’s the right home that fits people’s lifestyle, and it’s in a sought-after location, it can get multiple offers the first day,” says Sarah Jaffe, a real estate broker with Baird & Warner.

“We were biting our nails,” said Roman-Gonzalez. “It came down to us and another person who had out-bid us by $5,000. The lady who owned the house, who had raised her children there, accepted our bid.”

Pedestrians cross a busy stretch of North Central Avenue near West Belmont Avenue in the Belmont-Cragin neighborhood.
Pedestrians cross a busy stretch of North Central Avenue near West Belmont Avenue in the Belmont-Cragin neighborhood. Home prices and rents have risen in the neighborhood, sending some residents looking elsewhere for housing. Tyler Pasciak LaRiviere / Chicago Sun-Times

They paid $330,000, put down 3 percent and got a 30-year mortgage at a 5.5 percent interest rate. Their lender also required them to take out private mortgage insurance, bringing the monthly mortgage payment to $2,486.

The couple feels grateful that they can afford the mortgage and afford for Adrian Gonzalez to stay home with their daughters. He had been a quality-control technician for a company that closed its Chicago operations in May 2021.

Roman-Gonzalez works a hybrid schedule, going to the office a few times a week for her job as a finance and IT senior manager at a membership association for orthopedic foot and ankle surgeons.

“We didn’t grow up in a house [that their parents owned], so to be able to give our daughters this experience is very special,” said Roman-Gonzalez.

Refusing to settle

A different first-time homebuyers’ workshop, this one from Northwest Center, motivated prospective buyer Samuel Morales to start looking. The two-part, eight-hour group course, which comprises 80% Latino families, outlined the home buying process, from building credit to getting that first set of keys.

Morales, who lives in a Brighton Park apartment, pays $1,200 in monthly rent. He and his family have rented for 10 years, and they’ve been watching as rent prices in Brighton Park jump to $1,800 for many families.

“If we could come up with another $600 a month, that’s our goal for a mortgage,” said Morales, the sole wage earner.

He and his wife have been searching since late November in and around the western and southern suburbs, including Alsip, Oak Park and Palos Heights.

They are looking for a house with accommodations for their 11-year-old son, Samuel Jr., who has spina bifida and requires a wheelchair. That includes a ramp, walk-in shower, wider-than-normal doorways and either an indoor elevator or ramp.

Already they fell in love with a home near Alsip, but the property taxes would have put the monthly payment, with mortgage, at $3,500.

“We’re, like, OMG,” Morales said. The family was shocked to find other area homes with property tax bills of $4,000 to $6,000 twice yearly.

Locally, Latino home seekers have been struggling with scarce housing inventory that is affordable on household incomes that are typically less than $120,000 a year, said James Salazar, a realtor who serves as the director of growth and development at Baird & Warner.

“Often, [Latino families] have to settle because they cannot find anything in their price points without going far from their work and sacrificing their employment,” said Salazar, who watched his Guatemalan parents work hard to buy their first home in the Irving Park neighborhood in the early 1980s after they had rented for 13 years in Uptown. At that time, residential mortgage rates stood at 18% and lenders insisted on 20% down payments.

Salazar now specializes in working with first-time Latino homebuyers out of Baird’s Berwyn office. The Berwyn office partners with the Spanish Coalition for Housing and the YWCA of Metropolitan Chicago to offer “Home Easier” workshops that cover everything from financial management to down-payment assistance.

Morales said he remains hopeful that some sellers may start negotiating on price, but he doesn’t want to go beyond his budget and end up living paycheck to paycheck.

The family recently toured what Morales described as a “beautiful,” newly renovated house selling for $100,000, but Morales said he was concerned about the family’s safety. The house on the far South Side had empty lots on both sides and was one of only three on the street.

“It’s a little frustrating,” he said.

So he’s still looking.

Sandra Guy is a freelance writer living in Chicago.