The decline in the U.S. homeownership rate has been well-documented over the last couple of years; in the second quarter, the rate fell to a 51-year low of 62.9 percent.
The homeownership rate is not declining for everyone, however. There is one group that is grabbing an increasingly higher share of the American Dream of homeownership.
According to Trulia, the gap is closing between the homeownership rate for immigrants (U.S. residents born outside the country) and the rate for domestic-born residents. The disparity in homeownership rate between immigrants and domestic-born U.S. residents peaked in 2001 at 20.7 percentage points between the two rates but has narrowed considerably since then (15.7 percentage points in 2015).
The homeownership rate of domestic-born U.S. residents has basically stayed flat over the last two decades while the rate for immigrants has increased during that same period, according to Trulia. In 1994, the homeownership rate for immigrants was 48.1 percent, compared with 66 percent for U.S.-born residents (a difference of about 17.9 percent). Both rates rose and then peaked during the bubble years, then started to fall; however, by 2015, the homeownership rate for U.S. residents in 2015 was basically the same as it had been in 1994, while the rate for foreign-born immigrants in 2015 (50.5 percent) was 2.3 percentage points higher than it was two decades earlier.
Homeownership has long been viewed as a key to economic prosperity and building wealth. The closing disparity between the two and the fact that the homeownership rate is higher for immigrants than it was two decades ago indicates that immigrants are building more wealth and contributing more to the economy, according to Trulia.
Immigrants are closing the gap because many of them are staying in the U.S. longer and building up a solid credit history and employment history, Trulia found. For instance, the homeownership rate among immigrants who have lived in the country for five years or less was much lower than that of immigrants who have lived in the U.S. for 10 or more years in every state.
“This is likely due to the fact that immigrants who lived in the U.S. less than five years do not have adequate credit history in the U.S. to obtain a mortgage, which forces them to rent rather than own,” said Mark Uh, data scientist with Trulia. “Thus, those states with a greater proportion of foreign-born having lived in the U.S. for longer durations saw higher rates of homeownership.”