By 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 Angelescolor>. "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," said Michael Carliner, an economist for the National Association of Home Builders. "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.
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.
Still, concerns about the lagging minority homeownership rate run deep.
Gabriel, who spoke to the National Association of Realtors in San Francisco in November, said the substantial gap exists even though the Bush and Clinton administrations have striven 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, Gabriel said.
Under Clinton, the Department of Housing and Urban Development specified a national homeownership goal of 70% -- it's now 68.4% -- which implied a 15% reduction in the gap between whites and minorities.
Government policy over the last 75 years has made housing more affordable, with the creation of the Federal Housing Administration in the 1930s, 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."
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.
"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 although 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 obstacles to minority homeownership.
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.
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."
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.
They are increasingly moving to markets outside coastal areas such as California, New York and Florida, 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.
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.
Because immigrant families tend to be more multigenerational, his company is starting to include more access to social and health care services within its communities and is using more varied product designs, with more flexible floor options, Herrington said.