Immigrants are closing gap in homeownership
Immigrants are gaining on U.S.-born residents in homeownership, a positive development that’s likely enhancing their contribution to the economy, a Trulia study shows.
“When it comes to achieving the American dream, (immigrants) look very similar to native-born Americans,” says Ralph McLaughlin, chief economist of Trulia, a real estate research firm.
Immigration has played a central role in the presidential campaign, with Republican Donald Trump calling for tighter constraints and the deportation of millions of undocumented immigrants.
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Half of immigrants in the country owned homes last year, compared with 66% of U.S.-born residents, the smallest gap between the two groups in the past two decades, the study says. The disparity peaked in 2001, when 70.3% of American-born residents owned homes, vs. 49.6% of immigrants.
Foreign-born homeowners are more likely than renters to amass home equity and wealth and spend more, adding to U.S. economic growth. They’re also more likely to be involved in their communities and civic affairs.
The main reason immigrants are catching up is that their average tenure in the U.S. has increased, giving them more time to build up a work history, burnish their credit scores and save for a down payment, McLaughlin says. In 2014, 75% of immigrants had lived in the U.S. at least 10 years, up from 65% in 2005, according to data from the Census Bureau and Trulia.
In Montana and Vermont, the states with the smallest gaps between native-born and immigrant homeownership rates — 3.2 percentage points and 4.2 percentage points, respectively — immigrants have among the highest average tenures in the US.
Other forces are also at work. Since the housing crash and Great Recession, the homeownership rate for all Americans has fallen, reaching a 50-year low of 62.9% in the second quarter. Many people lost homes through foreclosure. And credit standards remain tight, especially for Millennials burdened by student debt whose careers were set back by the downturn.
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But in recent years, the ownership rate for American-born residents has continued to fall while the rate for immigrants has leveled off. To immigrate to the U.S., especially in economically challenging times, foreign-born residents likely must have more resources, and skew older than, their American counterparts, McLaughlin says.
From 2006 to 2014, the portion of U.S.-born households headed by 18- to 25-year-olds has been stable at 11%, while the share of immigrant households led by young adults has dropped to 8.7% from 11.6%, according to Census Bureau and Trulia figures.
“It takes some money and job prospects” to pull up stakes, McLaughlin says.
Yet another factor: A tight labor market has many employers struggling to find workers and willing to go to greater lengths to secure visas for foreign employees who are highly skilled, he says.
