Immigrants and Home buying

The real-estate boom in America in the last decade has been attributed to several factors: low interest rates, easy availability of credit, growth of the economy, and so on.

What's not often mentioned is the role that immigrants play in this.
Foreign-born populations have been rising in recent decades, as seen from the following charts.
Immigrants now account for nearly one-third of the nation's total population growth.

According to this article from MSN money, a lot of first-time home buyers during the boom were "immigrants who arrived in the 1990s" and "a lot of the children from the earlier waves of immigration". This is certainly true in my experience. Immigrants typically take 10 to 15 years after their arrival to buy their first homes in the United States. It can take that long to build up their incomes, assets, and familiarity with the US home-buying system.

The article states that young immigrants are much more likely to be homeowners than their native-born peers. One reason may be that immigrants place more importance on home ownership than natives, due to their desire for financial stability. Immigrants are also more likely to have multiple streams of income supporting one mortgage, most likely because many find it hard to afford a mortgage on a single income.

This has interesting implications on the impact of immigration (and immigration policy) on home prices.

On the other hand, the current problems with subprime lending also seems to be linked to poor immigrants buying houses they cannot afford. There is an interesting post at The Digerati Life that explores this more.


dong said...

I imagine the immigrant population probably doesn't have the normal bell curve income distribution and is much more likely to have a bimodal pattern than the native population, but I don't know for sure.