Report

Through Boom and Bust: Minorities, Immigrants and Homeownership

The boom-and-bust cycle in the U.S. housing market over the past decade and a half has generated greater gains and larger losses for minority groups than it has for whites, according to an analysis of housing, economic and demographic data by the Pew Hispanic Center, a project of the Pew Research Center. From 1995 through the middle of this decade, homeownership rates rose more rapidly among all minorities than among whites. But since the start of the housing bust in 2005, rates have fallen more steeply for two of the nation's largest minority groups—blacks and native-born Latinos—than for the rest of the population.

Overall, the ups and downs in the housing market since 1995 have reduced the homeownership gap between whites and all racial and ethnic minority groups. However, a substantial gap persists. As of 2008, 74.9% of whites owned homes, compared with 59.1% of Asians, 48.9% of Hispanics and 47.5% of blacks.

At the same time, blacks and Latinos remain far more likely than whites to borrow in the subprime market where loans are usually higher priced. In 2007, 27.6% of home purchase loans to Hispanics and 33.5% to blacks were higher-priced loans, compared with just 10.5% of home purchase loans to whites that year. For black homeowners who had a higher-priced mortgage, the typical annual percentage rate (APR) was about 3 percentage points greater than the rate on a typical 30-year, fixed-rate conventional mortgage; for Latinos who had a higher-priced mortgage, the typical rate was about 2.5 percentage points higher than that of the conventional mortgage. 

Moreover, in 2007, blacks and Hispanics borrowed higher amounts than did whites with similar incomes, exposing themselves to greater debt relative to their incomes. On both counts—the likelihood of higher-priced borrowing and higher debt relative to income—the gap between minorities and whites is greater among high-income households than among low-income households.

One surprise to emerge from this analysis is that the recent decline in the homeownership rate has hit native-born heads of households harder than immigrant householders. Immigrant householders are less likely than native-born householders to be homeowners (52.9% versus 70.0% in 2008) but their losses in recent years have been smaller than those of the native born.

Read the full report Through Boom and Bust: Minorities, Immigrants and Homeownership on the Pew Hispanic Center's Web site.