Immigrants Chase American Dream

They're all reaching out to the more than 30 million immigrants in the USA who are an increasingly important factor in the housing market by revitalizing inner cities, changing the texture of suburbs and propelling subtle changes in home design.

Higher-than-expected immigration, both legal and illegal, is a major reason some economists expect the housing market to stay strong as mortgage rates rise from their lowest level in decades and the baby boomers begin retiring, putting homes on the market.

Foreign-born households bought nearly 8% of new homes and 11% of existing homes from 1998 to 2001. Immigrants were 12% of first-time home buyers in 2001 and buy more expensive homes on average than U.S.-born first-time owners, says the Harvard University Joint Center for Housing Studies.

While immigrants are concentrated in about a dozen large cities, including New York, Miami and Los Angeles, they are spreading out. Thirteen states had more than a 100% rise in their foreign-born population in the 1990s.

"It's security for my daughter, the security of owning the roof over your head," says Mislanys Rodriguez, 34, of Spring Hill, Fla.

With the help of Spanish-speaking mortgage brokers and real estate agents, Rodriguez and her husband, Angel, who came to the USA from Cuba in the mid-1990s, recently sold their starter house and moved to a larger home. Three of Angel's brothers own houses in the USA, as well.

While immigrants are a growing presence, they lag behind the U.S.-born population by large margins when it comes to homeownership.

About half of immigrants own homes, compared with 70% of those born in the USA, a gap that closes as immigrants become U.S. citizens. The difference is also reflected in minority and white realty rates. About 47% of Hispanic and 49.7% of African-American households own their homes, compared with about 76% of whites. About 58% of Asian, Native American and Pacific Islander households are owners, says the National Association of Realtors.

"If I'm paying rent, I don't get any equity, I don't have a tax deduction, and the rent in San Francisco is just so high," said Giri Sastromihardjo, 34, an accountant who came from Indonesia in 1993.

He worked with Asian Inc., a San Francisco non-profit, and used government and private programs this summer when buying his first home outside San Francisco.

A growing market

Corporate America sees huge potential in the immigrant market.

Former federal Housing and Urban Development secretary Henry Cisneros is now chairman and CEO of American CityVista, a joint venture with national builder KB Home, which constructs urban "villages" in big cities like Dallas, Fort Worth and Houston.

"We have yet to build a community that doesn't sell as fast as it can," says Cisneros, adding that one development in California was sold out at its groundbreaking.

"When we have a gap in the homeownership rate, that's more than just a gap in the honor of buying a house. That's a gap in the access to wealth," Cisneros says.

Real estate agents around the country report strong demand from foreign-born clients who see homeownership as the American dream. Immigrants are three times as likely as other adults to rank home buying as their top priority, says Andrew Schoenholtz, deputy director of the Georgetown University Institute for the Study of International Migration.

"They've struggled long enough. They have decent jobs. They want to leave a legacy for their kids," says Roberto Laureano, a real estate agent in Silver Spring, Md. "Go to settlement with a Hispanic family. You're not going to see just father and mom. You're going to see father and mom and the kids. They'll bring a camera. It means a lot."

The affordability barrier

But as prices rise, affordability is becoming a bigger barrier. Inability to speak English is a constant hurdle. Many foreign-born residents don't have credit histories. Discrimination is a factor.

Immigrants, on average, earn less but are clustered in some of the highest-priced housing markets in the country. Asians, however, have higher incomes on average than other ethnic groups. Another hurdle: An estimated 8 million to 10 million foreign-born people are in the USA illegally, lacking documents to get a mortgage.

"They are not easy loans by any means ... you need to have a really good heart, a social service attitude toward your buyers," says Yamila Ayad, president of Mission Home Loans in San Marcos, Calif.

Some immigrants use backdoor methods to edge into the market, breaking the law and making them targets for exploitation. The Utah attorney general's office is investigating a scam involving up to 100 homes, many bought by illegal immigrants using stolen Social Security numbers.

Recent Census Bureau data show that Asian and Hispanic populations in the USA grew nearly four times as fast as the overall population from 2000 to 2004. There were about 39.9 million Hispanics in the USA in July 2004, nearly 14% of the population. Asians were the next-fastest-growing segment, at about 4.6% of the population.

"Any demographer in the state of Texas would tell you that in just a few short years ... whites, or Anglos, will be a minority. That's coming to a neighborhood near you," says Gary Maler, associate director of the Real Estate Center at Texas A&M University.

The number of new households, key to housing demand, could be about 10% higher in the next decade than predicted, largely due to immigration, says the Harvard Joint Center for Housing Studies.

"It's had a very dramatic impact," says Eric Belsky, director of the Harvard Center. Housing experts had warned that the baby bust, a smaller generation after the baby boom population surge, would suppress household growth and demand for starter homes.

"That didn't really transpire," Belsky says. "While that baby bust (population) is still smaller than the baby boom, it's a lot less smaller than it would have been."

Some experts point out that immigrant homeownership rates declined in the 1990s, probably due to the sheer size of immigration during the decade, the highest since the late 1800s. But homeownership rates typically rise after immigrants have been in the country a period of years.

"We will see an increase in homeownership rates for immigrants over time. ... In a decade, I think we may see that it's a significant increase," Schoenholtz says.

Closing the housing gap

Still, the non-profit Center for Housing Policy points out that 14% of immigrant families pay half their incomes for housing, vs. about 8% of U.S.-born families.

Politicians, sales agents, bankers and non-profit groups are trying to help close the housing gap, with everything from financial training to down-payment assistance.

The Congressional Hispanic Caucus, working with housing giant Fannie Mae and others, has created a housing program targeting congressional districts with large Hispanic concentrations. The League of United Latin American Citizens (LULAC) and GMAC Mortgage plan to provide more than $400 million in loans to Hispanic communities in the next four years.

Some banks are experimenting with loans using a federal tax identification number in lieu of a Social Security number. That could help immigrants who don't have legal documentation. The subprime market, loans to higher credit risks, is an important factor.

Asha Abokor, 36, from Somalia, recently bought a house in Phoenix. She used her own money and a rebate from KB Home for a down payment. Because she does not have a credit history, she is paying an above-market interest rate.

"I wanted it as an investment, to belong to a community with established roots. All those things were really important," Abokor says.

The National Association of Realtors, the National Association of Hispanic Real Estate Professionals and other groups have stepped up cross-cultural marketing.

Texas A&M's Maler surveyed more than 4,000 Texas residents about housing preferences. He found Asians were willing to spend more for a house than other groups. Blacks were more apt to visit neighborhoods before buying. Hispanics had the least experience with home buying, were likely to seek family advice and wanted a sales agent who speaks Spanish.

Omar Garcia started Aventa Real Estate Services in Tampa last year, offering real estate, title insurance and mortgage service. He now has nearly 50 employees.

"Why would I open up a real estate company (now)? Rates are at an all-time low, going to go up. Impacts of technology are starting to affect the general real estate market, margins are getting thinner," says Garcia, whose firm helped the Rodriguez family.

But he says there are unmet needs in the Hispanic market, particularly in financing.

Home Depot is accelerating its efforts to reach the multicultural market. The home-improvement chain hired a new ad agency and significantly increased its Hispanic marketing budget. It sponsors the Mexican national soccer team, supports the Hispanic Chamber of Commerce and other groups.

Saul Gitlin, executive vice president for strategic marketing at Kang & Lee, a New York-based multicultural advertising firm, says participants at the National Hardware Show — firms selling products for the home — were intrigued this spring when he laid out statistics about market clout of Asians in the USA. Though less than 5% of the population, Asians have the highest median home value in 48 states.

"The financial services industry ... are all over the Asian-American market like a bee on a flower," Gitlin says.

The Asian Real Estate Association of America cautions that many Asian immigrants need home-buying help. The group is conducting a study of income and education trends and needs within the Asian community.

"A house means the future of our family," Ayad says. "It's one of the greatest joys."