Affordable Housing and Education Critical For Immigrant Homeownership

Immigrants are twice as likely to own their own home in cities that are new settlement destinations rather than traditional immigrant gateways, in which housing tends to be expensive. And while low-income immigrants face the same affordable housing challenges as the low-income native born, a far higher proportion of immigrants live in high-cost areas and spend in excess of 30 percent of their income on housing.

These are among the findings of a new study, From Homeland to a Home: Immigrants and Homeownership in Urban America, written by MPI President Demetrios Papademetriou and Policy Analyst Brian Ray. Part of a series of Fannie Mae Papers, an occasional series on policy issues of interest to the housing community, the study focuses on the top 100 metropolitan areas, where 83 percent of immigrants live. It arranges cities into four categories based on relative size and growth rate of the immigrant population: Traditional Large Immigrant Gateways, Slow-Growth Immigrant Destinations, New Immigrant Gateways and New Fast-Growing Immigrant Hubs. The study assesses homeownership rates of immigrant and ethnic groups in each city type.

The study finds that immigrants within the top metropolitan areas are far from a homogenous group. In terms of overall ownership rates, European/Canadian immigrants are almost indistinguishable from the U.S.-born (62.7 percent and 65.1 percent), and East Asian and Southeast Asian groups also lead other groups. The lowest homeownership rates are found among Central Americans (33.6 percent), Africans (38.1 percent) and immigrants from the Caribbean (41.8 percent).

All homeownership rates increase outside of Traditional Gateway Cities, where high demand and strong population growth mean higher housing costs. Length of residence in the United States is also found to be a key factor in determining homeownership, as are English-language proficiency and household income.

Based on these findings Papademetriou and Ray identify certain strategies that may increase immigrants' chances for homeownership. These include:

• Flexible mortgages, loans and savings programs;
• Programs like those adopted by Fannie Mae that help lending institutions reach out to immigrant communities;
• Group-specific interventions that address barriers to ownership;
• Cross-sector initiatives that provide funding, education and training; and
• Incentives that encourage buyers to revitalize deteriorating neighborhoods.

"Fifty-two percent of all immigrants live in the 10 metropolitan areas with the largest immigrant populations, so expanding the supply of affordable housing will continue to be critical," said Ray. "But because immigrants are so diverse and have so many different reasons for choosing where to settle, they will continue to create new housing markets and opportunities in cities throughout the United States."

Please click here for the full report, upon which the Fannie Mae paper is based.

For more information about Fannie Mae papers and initiatives, please contact Betsy Hildebrant at 202/752-7608.