An eye-opening report released by Fannie Mae revealed new and rather unprecedented developments in the housing horizon. It seems that the homeownership gap between native-born Americans and immigrants has been steadily narrowing in the past decade.
Not only have immigrants weathered the recession better, but they are also being hailed as the solid support for the housing industry. As per the report, while native-born homeownership fell between 2000 and 2010, immigrant homeownership has increased from 49.8 percent to 52.4 percent (by almost 2.6 percent) during this time.
That number is expected to continue rising, which will direct the future demand for housing in a big way. The lengthening duration of their stay, increasing financial strength and spending powers are major contributing factors to their homeownership status.
Improvements in the job market have been instrumental in improving the housing market, but the progress hasn't been steady. While the beginning of 2014 showed immense promise, housing demand and sales have since tapered down to a trickle and are expected to go into their slowest period.
Demand for homes, both old and new, have led to decreasing inventory. This is a great sign for the recovering industry, though the 64.7 percent home ownership figures have yet to reach the level that they held before the recession. But looking at the changing demographics and their corresponding statistics, it seems that the percentages will be highly tilted toward the immigrant population.
The present 18.8 million immigrant renters are slated to be potential homeowners, who by 2022 will own more than 2 million multifamily units and 1.2 million single-family homes. The National Association of Home Builders has also added that foreign-born homeownership will account for more than one-third of the growth in the housing sector by 2020.
Experts are following these developments closely since rising immigrant homeownership will help the market evolve differently than it did in the last few decades. It will also affect all ancillary industries — interior design, home decor, home improvement, etc. — with their increased wealth accumulation and positive spillovers into various spending modes.
Another report published by economists at Rutgers and Georgia Tech shows similar statistics and trends. Though there isn't too much vertical data on which races are buying and investing more, there is an overall summary of the upcoming developments that will affect the housing industry big time.
But one thing has been clearly stated, the length of immigrants' stay is a definite deciding factor. The longer one has stayed in the U.S., the stronger their need for home ownership. Data shows that the Latino immigrant homeownership figures are 59 percent for those who arrived before 1990 compared to 14 percent for those who arrived after 2006.
Despite the income and wealth gap between the native-born and foreign-born population — still tipped in favor of the former — the intrinsic nature for immigrants to play safe and be conservative with their finances has come to their aid when the markets crashed. Their wealth may not have grown as fast as those invested well, but neither did they lose the shirt off their backs.
Delving deeper into how the immigrant population has been able to weather the recession storm better, economists have found their strong community networks and links to be a decisive factor. Added to this is their cultural outlook toward money and finances, which is more oriented toward savings rather than debt creation.
This has led to building up of a financial cushion of sorts and perhaps made it easier for these immigrants to withstand a bad market. They do look at houses as investments, but more than that, they look at their ownership as the definite realization of their American dream.
