An Untapped Market: Immigrants
By BOB TEDESCHI
Published: September 3, 2006
AFTER 12 years of increases, home ownership declined slightly last year in the United States as home prices kept many prospective buyers in the rental market. Of course, a softening market could lead to a rebound in ownership rates in the coming years, but another source of momentum could come from a different source: immigrants.
Graphic: Mortgage Rates Even as immigration levels surged in the last several years, homeownership rates among Asian-Americans and Hispanics, who make up a majority of immigrants, continue to lag behind the rate of non-Hispanic white Americans, according to a recent report by Harvard University’s Joint Center for Housing Studies.
The ownership rate among all American households was 69.8 percent last year. The ownership rate among all minorities was just over 50 percent, compared with about 75 percent for non-Hispanic whites.
But that is starting to change. According to the Harvard report, home ownership among both Hispanics and Asian-Americans jumped by nearly 10 percentage points from 1995 through last year, as both groups grow more affluent.
Despite that increased buying power, though, mortgage executives and advocates for minority groups said that recent immigrants found the practicalities of American mortgages and homeownership at odds with what they experienced in their countries of origin.
Nicolas P. Retsinas, the director of the Joint Center for Housing Studies at Harvard, said other nations have higher rates of ownership than the United States, but the economic factors of homeownership are vastly different.
In Mexico or Argentina, “you can own a home, but there’s no market for buying and selling,” he said. “In many cases in Mexico, even though you own the home, you don’t have title to the land, so you can’t sell it.”
Other countries also have different practices when it comes to mortgages. For instance, according to Asian Americans for Equality, an advocacy group in New York, in many Asian countries — China, for instance — the minimum down payment for a mortgage is typically more than 50 percent, so underwriting methods are different.
Mr. Retsinas said that American lenders have “to find a better way to connect with these markets, because as interest rates go up, they’re going to have to find a way to help people buy homes’’ if they are going to make money, “and the people who need homes are immigrants.”
The biggest institutions in the lending industry are starting to do just that. Fannie Mae and Freddie Mac, the government-sponsored companies that help finance most mortgages in the United States, have recently begun studying the new approaches to homeownership among immigrant populations.
Fannie Mae, for example, is looking at ways to track the roughly $40 billion sent by Hispanic immigrants to relatives back home each year. By doing so, Fannie Mae hopes it can show lenders that the fiscal responsibility those payments demonstrate would extend to mortgage payments.
Harold Lewis, the senior vice president for community and multicultural lending, said Fannie Mae was also looking more closely at how Asian immigrants approach housing. He said they may pool their incomes to buy a house, perhaps because they are not aware that they can individually qualify for mortgages with a low down payment, or because they do not see the benefit of securing a mortgage with a smaller down payment.
nytimes.com |
