Housing demand to grow as new immigrants arrive
Rental and homeownership demand from new U.S. immigrants is expected to grow as more foreign-born citizens settle into the U.S, according to a new report.
The study was sponsored by the Mortgage Bankers Association’s Research Institute for Housing America and prepared by the Population Dynamics Research Group at the University of Southern California School of Policy, Planning, and Development.
The report, "Immigrant Contributions to Housing Demand in the United States: A Comparison of Recent Decades and Projections to 2020 for the States and Nation," looks ahead to 2020 and makes a demographic-based projection of the growth in homeowner and renter households headed by immigrants in individual states and across the nation.
Starting with a surge, the volume growth of foreign-born homeowners has expanded each decade, rising from 800,000 in the period stretching from 1980 to 1990 and then growing another 2.1 million from 1990-2000. From 2000-2010, 2.4 million immigrants arrived in the U.S., and that number is projected to rise to 2.8 million from 2010-2020.
"Rising numbers of foreign-born households are driven by the continued increases in homeownership rates achieved as immigrants settle longer in the United States," said John Pitkin, senior research associate of the Population Dynamics Research Group.
He added, "For example, among the cohort of Hispanics who arrived in the United States during the 1980s, homeownership rose from just above 15% in 1990 to nearly 53% in 2010 and is projected to rise to above 61% in 2020 when the cohort will have resided more than 30 years in the United States."
California and New York are the states with the greatest demand in foreign-born homeownership. From 2000-2010, immigrants made up 82.2% and 65.1%, respectively, of the increase in homeowners in those states.
Meanwhile, aggregate increases in foreign-born renter households have also been on the rise. The amount started at 2.3 million from 1990-2000, increased to a net of 1.6 million in 2000-2010, and is expected to reach to 1.3 million in the current decade.
The report projected between 2010-2020 immigrants nationwide will account for 32.3% of the growth in all households, including a 35.7% increase in homeowners and a 26.4% increase in renter households.
The demand for foreign-born homeownership increased significantly in the newer destination states. From 2010-2020, foreign-born ownership demand is projected to remain a majority of the growth in California, New York, New Jersey, Massachusetts, Connecticut and Michigan.
"As the housing market continues its recovery, it is important to understand the demographic trends which are likely to impact housing demand in the years ahead," said Michael Fratantoni, RIHA’s Executive Director. "This study provides information for lenders, builders, and policymakers regarding the future shape of housing demand, which the authors clearly show will be substantially impacted by the housing choices of foreign-born households, whether they are renters or homeowners."