Immigrants provide ‘continued support for housing’

Foreign homebuyers play a crucial role in the U.S. housing market.

Foreign homebuyers play a crucial role in the U.S. housing market.

Immigrants will continue to be an important source of new housing demand in the U.S. throughout this decade, according to a new report by the Research Institute for Housing America (RIHA), a foundation funded by the Mortgage Bankers Association.

The report, “Immigrant Contributions to Housing Demand in the United States: A Comparison of Recent Decades and Projections to 2020 for the States and Nation,” was co-authored by Dowell Myers and John Pitkin, and conducted to determine the impact foreign-born homeowners have on the U.S. real estate market.

Just 30 years ago, most immigrants lived in California, New York and Florida. Today, immigrants are located all across the country, serving to prop up a national housing market still recovering from recession.

The report found that foreign-born individuals make a sizable contribution to housing by increasing the homeownership rate the longer they reside in this country. Furthermore, growth in housing demand has been more stable among foreign-born populations than native-born households in recent decades.

The report offers this example of the homeownership rate among Hispanics who arrived in the 1980s:

  • 1990s: 15.2 percent
  • 2000s: 52.9 percent
  • 2010s: 61.1 percent (projection)

By comparison, in the 1990s, 7.9 million native-born homeowners were added in the U.S. That figure declined to 3.7 million from 2000-2010 due to the Great Recession and a smaller population of people entering the prime homebuying age group: 25 to 34 years old.

Immigrant homeownership demand from 2010-2020

Here are some of the report’s other findings for the current decade:

  • The number of foreign-born homeowners in the U.S. increased by 800,000 in the 1980s, 2.1 million in the 1990s, 2.4 million in the 2000s and is projected to increase to 2.8 million between 2010 and 2020
  • Immigrants are projected to account for 32.2 percent of U.S. household growth and nearly 36 percent of homeownership growth
  • The outlook for growth in immigrants’ homeownership demand varies by state, but is generally projected to be stronger in the future than it was in the past in nearly every state or region
  • Only two states, California and New York, showed projected declines in growth in immigrants’ homeownership demand and those declines are expected to be very small
  • The immigrant share of demand growth is projected to be somewhat reduced compared with the 2000s due to a larger increase in demand among native-born homebuyers
  • Foreign-born homeownership demand is projected to account for a majority of growth in six states: California, Connecticut, Massachusetts, Michigan, New Jersey and New York

In conclusion…

The report concluded that “Foreign-born residents already present in the United States are a substantial source of demand for owner-occupied housing, because their homeownership rates rise so markedly the longer they reside in this country. This has contributed a substantial amount of upward momentum in every decade we analyzed and we believe it will be a source of continued support for housing markets throughout the United States.”

HSH Associates Financial News Blog

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