Immigrants closing gap on homeownership
Despite bewilderingly low interest rates and an apparently improving economy, the housing market is still faltering.
The U.S. homeownership rate fell in the Great Recession and its aftermath — from a peak of 69.2 percent in 2004, to 64.7 percent in the most recent report from the U.S. Census Bureau.
It turns out immigrant households bucked that trend, according to a recent report.
The analysis, published by economist Azanaw Mengistu at Fannie Mae, says that from 2000 to 2010, immigrant homeownership rose more than 2.5 percent, to 52.4 percent, while native-born homeownership fell more than 1 percent over the same period. Research by economists Kusum Mundra at Rutgers University and Ruth Uwaifo Oyelere at Georgia Tech, comes to similar conclusions.
Immigrant homeownership is likely to remain lower than native-born homeownership for the foreseeable future — that's a simple reflection of assets and income, as well as the high-priced metro areas they tend to immigrate to first when arriving in the U.S.
The gap between immigrants and those born in the U.S. appear to be narrowing significantly, though.
A possible explanation for the better homeownership outcome of immigrants in the past decade is that the documented and undocumented immigrants who arrived in droves during the 1980s and 1990s, are now well-established in communities, and in the workforce.
“The immigrants today are more educated, they have more time in the United States, and they’re more likely to be citizens, things that boost home-ownership rates,” says Rakesh Kochhar at the Pew Research Center’s Hispanic Trends Project.
He also points out that recent immigrants are more heavily Asian and Middle Eastern; compared to Latinos. They tend to come to the U.S. with higher levels of education and wealth to begin with.
Mundra and Oyelere speculate in their paper that so-called ‘birth networks’ might help explain why some immigrant groups do better at homeownership. A large concentration of other immigrants from the same country or region might help people get and keep jobs, and pool the financial resources to buy and hold onto their homes in bad economic times.
Jose Quinonez, CEO of the nonprofit Mission Asset Fund in San Francisco, believes immigrant families may have social characteristics that make holding onto their homes more likely.
“Their home means much more than just a mere investment that they can flip,” he says. “It’s really their realization of the American dream, of establishing themselves in the community and in the economy.”
Quinonez says immigrant families have a long history of pool financial resources across generations, and also tend to live together in multi-generational households. So if one adult loses a job, another may be available in the household to keep up the mortgage and hold off foreclosure.