Homeownership Losses Are Greatest Among Minorities, Report Finds

May 13, 2009

By JOHN LELAND

After a decade of growth, the gains made in homeownership by African-Americans and native-born Latinos have been eroding faster in the economic downturn than those of whites, according to a report issued Tuesday by the Pew Hispanic Center.

The report also suggests that the gains for minority groups, achieved from 1995 to 2004, were disproportionately tied to relaxed lending standards and subprime loans.

An exception to the reversal of homeownership gains, the research shows, can be found among foreign-born Latinos, whose rate of ownership, while low, has stalled during the downturn but has not fallen.

After peaking at 69 percent in 2004, the rate of homeownership for all American households declined to 67.8 percent in 2008. For African-American households, it fell to 47.5 percent in 2008 from 49.4 percent in 2004. Latinos, native and foreign-born together, had a longer period of growth, with homeownership rising until 2006, to 49.8 percent, before falling to 48.9 percent last year. Homeownership for native-born Latinos fell to 53.6 percent from a high of 56.2 percent in 2005.

The decline among whites was more modest, to 74.9 percent last year from 76.1 percent in 2004.

So was the decline among immigrants, to 52.9 percent last year from 53.3 percent in 2006. Latino immigrants, who have the lowest rate of homeownership among the groups studied, did not lose any ground, remaining at the high of 44.7 percent they reached in 2007.

The numbers are a reflection that immigrants today have typically been living in the country longer than immigrants of the past, said Rakesh Kochhar, associate director of research for the Pew Hispanic Center, a project of the nonprofit Pew Research Center. The longer immigrants are here, the more secure they tend to become. Among foreign-born Hispanics, “the force of assimilation into homeownership is strong,” even during a downturn, Mr. Kochhar said.

The decline in homeownership among other groups, he said, reflects both high foreclosure rates and lower rates of home buying.

Even with the decline, the rate for all groups together remains higher than before the boom, with nearly 68 percent of American households owning homes last year, up from 64 percent in 1994.

The gaps between white and minority households remain significant, however, with homeownership rates for Asians (59.1 percent), blacks (47.5 percent) and Latinos (48.9 percent) well below the 74.9 percent among whites.

Like previous studies, the report found that blacks and Hispanics were more than twice as likely to have subprime mortgages as white homeowners, even among borrowers with comparable incomes. In 2006, the last year of heavy subprime lending, 17.5 percent of white home buyers took subprime loans, compared with 44.9 percent for Hispanics and 52.8 percent for blacks.

These loans, which typically require little or no down payment and are meant for borrowers with low credit scores, made homeownership possible for many black and Hispanic families during the boom years, but also led to high rates of foreclosure.

“Basically, that gap was closed on poor loans that never should have been made and wound up harming folks and their neighborhoods,” said Kevin Stein, associate director of the California Reinvestment Coalition, an organization of nonprofit housing groups.

African-Americans and Latinos remain more likely than whites to be turned down for mortgages, with 26.1 percent of applications from Hispanics rejected in 2007, 30.4 percent of applications from blacks and 12.1 percent of applications from whites.

Though there were no figures available on the race or ethnicity of homeowners in foreclosure, the researchers found that counties with high concentrations of immigrants had particularly high foreclosure rates.

But the research did not suggest that high rates of immigration on their own caused high levels of foreclosure, Mr. Kochhar said. High unemployment, falling home prices, subprime loans and high ratios of debt to income all contributed.

Enrique Lopez, a Miami real estate agent, said that with the tightening of credit, his Hispanic clients had had a harder time getting mortgages than non-Hispanics, in part because they had lower credit scores.

Mr. Lopez, a member of the National Association of Hispanic Real Estate Professionals, said, “There are people we work with that make enough money, and we can’t put them in homes.”

Carmen Gentile contributed reporting.

Copyright 2009 The New York Times Company