Since the recession, there's been concern over the lack of new households formed and the decreased rate of homeownership in the United States. And while some suggest that the share of people who choose to buy instead of rent should never ratchet up to the nearly 70 percent seen at the height of the bubble, many lament the loss of the American Dream, which promoted buying a home as a symbol of success and adulthood.
But for some groups, the dream, at least of homeownership, is alive and well. During the past two decades, immigrants have accounted for 27.5 percent of all household growth, according to the Harvard Joint Center for Housing Studies. When it comes to growth among younger generations, the foreign-born population is even more significant, accounting for nearly all the household growth for those under 45.
Last year, immigrant households made up 11.2 percent of owner-occupied housing according to the JCHS—that's up from only 6.8 percent in 1994.
The exact rate of homeownership varies among different immigrant groups, but, overall, the share of immigrants who own homes is growing. In 2000, the rate of homeownership among immigrants stood at 49.8 percent, according to a study by the Research Housing Institute of America. By 2010 the rate was 52.4 percent, and by 2020 that number will climb to about 55.7 percent, the study predicts. In the third quarter of 2014 the overall homeownership rate in the U.S. was 64.4 percent, according to the Census Bureau.
There are several reasons behind the growth rate in homeownership for immigrants, but part of the impetus may be that many immigrant populations are less cynical about the idea of homeownership than their American-born counterparts. "They view homeownership as a piece of the rock. It's a benchmark of being settled," says Dowell Myers, a professor at the Sol Price School of Public Policy at the University of Southern California. "They view homeownership as the American Dream, and they buy into that."
The high numbers of young immigrant households in relation to young native-born households over the past decade or so is partially thanks to the small population of American-born inhabitants in Generation X. "Without the foreign born, what we would've experienced would've been a much more negative impact of the baby bust on the homeownership trends," says George Masnick, a senior research fellow at the Joint Center for Housing Studies. But even though immigrants will make up a smaller share of the massive millennial generation, Myers predicts that they'll still account for a significant portion of housing demand down the line.
That could mean that even as many native-born Americans, particularly millennials, hesitate when it comes to purchasing property, immigrant homebuyers could help prop up the market. "What we figured out is that the two groups, the native born and the foreign born, have been complementary, they've been helping the market in opposite decades," says Myers.
The gap in the rate of homeownership between those born in the U.S. and those who immigrated closed at a faster rate during the 2000s than it did during the 1990s, according to a report from Fannie Mae. That's because as the rate of homeownership among U.S.-born residents fell, home-buying among immigrants continued to grow. This may suggest that the housing bust might have had less of an impact on immigrants than native-born residents when it comes to purchasing property, the report said.
One of the largest determining factors for home buying among immigrants is the amount of time that an individual has lived in the country. That makes the prospect of a wave of recently legalized, but longtime residents an interesting one for the housing market. According to data from Pew Research, about 61 percent of undocumented immigrants in the U.S. have been here for 10 years or more. President Obama's proposed immigration actions, which could provide new legal rights for many undocumented immigrants in the U.S., might have a major impact on the market for homeownership, allowing immigrants who have been in the country for an extended period to purchase a home, without fear of deportation or legal action.
Even more compelling are the possibilities for homeownership among the children of immigrants. "When you look at the children of immigrants, they actually exceed the native born on a lot of measures: on income, on education, on homeownership," Masnick says.
The Harvard study found that second-generation immigrants accounted for the largest share of growth in households headed by the under-30 crowd during the last 20 years. (The second largest share of growth belongs to immigrants.) In the near future, that growth could be even more significant. "Looking forward, we expect that second-generation growth originating from the higher immigration levels of the 1990s and early 2000s will be even larger," the report said. "The children of immigrants are part of the immigrant package; they're the ones who are consuming services," says Myers. "You get a big payoff later on, and one of the payoffs is that they fortify the housing market."