Alan J. Heavens
Despite progress made over the last decade, the percentage of minority homeowners still lags far behind the national average.
"Racial disparities in housing are alive and well in the United States," said Stuart Gabriel, director of the Lusk Center for Real Estate at the University of Southern California at Los Angeles. "It signals that something is wrong in this land of plenty."
Yet the real estate industry is pinning its hope for the future on minority and immigrant buyers.
"Immigrants typically provide an initial stimulus to rental markets for their first few years in the United States," Michael Carliner, an economist for the National Association of Home Builders, said. "After becoming established, they become a major factor in the for-sale marketplace."
Since the 2000 census, "it appears that immigration has accelerated, with a net of about 1.5 million new immigrants coming to this country annually since the beginning of this decade," Carliner said.
The builders' association's forecast of populations and household formations projects a net flow of up to 1.7 million foreign-born people coming to this country every year between 2002 and 2012.
Labor demands created by the retirement of baby boomers are likely to provide economic and political influences supporting immigration, Carliner said. And because of the demographic changes projected for the next decade, the long-term outlook for construction of single-family homes is expected to be more favorable than it was during the last decade.
Considering that Asia and Latin America are the chief sources of immigration, concerns about the lagging minority homeownership rate run deep.
Gabriel, who spoke to a meeting of the National Association of Realtors last month in San Francisco, said the substantial gap exists even though the Bush and Clinton administrations have strived to close it.
"In 2002, the Bush administration announced a policy goal of adding 5.5 million minority homeowners by the end of the decade," he said. "Under Clinton, the Department of Housing and Urban Development specified a national homeownership goal of 70 percent [it's now 68.4 percent], which implied a 15 percent reduction in the gap between whites and minorities."
Government policy over the last 75 years has made housing more affordable, with creation of the Federal Housing Administration in the 1930s, fully amortized fixed-rate mortgages, deductibility of mortgage interest, and the secondary mortgage market.
"Yet despite changes in federal mortgage policy over the last 20 years, this gap of 25 to 30 percentage points between Anglo and minority homeownership hasn't changed at all," Gabriel said. "And racial segregation of neighborhoods remains high in metropolitan areas."
The ability of cities to thrive and compete globally depends on the willingness of communities to respond positively to growing diversity in demographics and lifestyles, said James Johnson Jr., a professor at the Kenan-Flagler Business School at the University of North Carolina in Chapel Hill.
Over the latter part of the 20th century, U.S. immigration laws became more liberal as civil-rights laws were enacted, resulting in a greater flow of immigrants from Latin America and Asia than from Europe, Johnson said. "The nation became a stew pot, rather than a melting pot," he said.
Homeownership opens the door to success for immigrants and minority groups in America, Gabriel said.
"It is the primary wealth-creating vehicle in the United States," he said. "Elevated homeownership among minority households would boost their wealth and economic status.
"Research shows that homeownership confers benefits to neighborhoods in the form of improvements in property upkeep, safety, school quality, and other amenities," he added.
Gabriel hypothesized that, if the socioeconomic status of minorities were raised to that of whites, the homeownership gap could be closed. To test his hypothesis, he used census data for Los Angeles, whose school district has students who speak 100 different languages.
Gabriel studied data on white, African American, Latino and Asian households separately. The combined total of households in the study was about 150,000.
He found that, while income was important for all groups in determining the likelihood of buying a home, it was most important for African American households.
"This suggests that blacks are more likely to increase homeownership as their economic status improves," he said. "Equating the socioeconomic characteristics of minorities and whites closes the homeownership gap by more than 70 percent."
There are other stumbling blocks to minority homeownership, and one is the belief among real estate agents that African Americans, Latinos and Asians only want to deal with their racial or ethnic group.
Emily Fu, owner of Re/Max Greater Atlanta International, who emigrated from China more than two decades ago, said: "When I came to this country, I was scared. I didn't want to go to a real estate agent because I thought they were all millionaires."
Realtors need to reach out, she said, noting: "There wouldn't be such a large gap if we were willing to provide more education to our buyers."
Studying different cultures would help real estate agents who deal with immigrants, "but you don't have to learn their languages," she said. "You just need to be patient and understanding. The rewards can be big."
Between 1990 and 2000, the U.S. population grew by nearly 33 million, with almost half of that gain attributable to immigration, Johnson, the North Carolina professor, said.
With more baby boomers leaving the workforce over the next few years and fewer native-born Americans to replace them because of the lower birthrates that followed the boom, immigrants are playing a critical role in maintaining workforce productivity.
Latinos are dominating the influx of immigrants, and have now surpassed African Americans as the largest ethnic minority group in the United States, Johnson said.
And they are increasingly moving to markets outside coastal areas such as California, New York and Florida, long considered the prime "immigrant magnet" areas, he said. New magnet markets tend to be smaller to medium-size markets in the South Atlantic region, followed by communities in the West and a few in the Midwest.
"A major geographic redistribution is under way, which has big implications for population growth and development patterns," Johnson told a meeting of the Urban Land Institute in San Francisco last month.
As many as 10 million immigrants will reach their peak home-buying years in the next decade, presenting lucrative opportunities for those in real estate who target immigrant markets, he said.
The flow of immigrants has caused some major residential builders to change the way they design, build and market homes and developments.
"We've had to rethink how we brand communities and reconsider our messaging," said Brent E. Herrington, vice president of DMB Associates, a Scottsdale, Ariz., developer of master-planned communities.
"For instance, suburban communities that are named, gated, or built around a single amenity, such as a golf course, are more apt to imply exclusivity rather than inclusivity to immigrants," Herrington said. "That does not work well when you are reaching out to a diverse market."
Because immigrant families tend to be more multi-generational, his company is starting to include more access to social and health-care services within its communities, and it is using more varied product designs, with more flexible floor options, Herrington said.
When dealing with minorities and immigrants, agents should always expect the unexpected, Fu said.
"One of my agents who works with Latino clients was talking to a buyer about earnest money," she said. "The buyer asked if our company had a coin roller. It seemed that she had been saving quarters for 10 years, and wanted to use them."