Minorities, Immigrants Become Home-Market Force

August 1, 1998

Four million minority and immigrant households became homeowners between 1994 and 1997, surpassing the growth trend among baby boomers in the 1970s, according to an American Banker report on Harvard University's State of the Nation's Housing study.

In addition, 80 percent of all first-time homebuyers in 2010 will be immigrants, according to William Schenck, chairman and chief executive of Fleet Mortgage Group.

Minorities accounted for 42 percent of the growth in national homeownership between 1994 and 1997, because of the higher growth rate of minority households than that of white households, the study notes.

Still, the national homeownership rate is only 45.4 percent for blacks and 43.2 percent for Hispanics, compared with a 72 percent homeownership rate among white households.

Lenders are trying to meet the demands of the new market with multilingual loan officers, homebuying education fairs, and new loans with low downpayments.

Ownership Rate Among Women Lags

The national homeownership rate for households headed by women is only 50 percent, compared with a national rate of 65 percent, according to National Mortgage News.

That statistic proves there's a large but untapped market of potential homebuyers, said Sandra J. Goodwin, deputy director of Fannie Mae's Kansas City Partnership Office, at a convention of the National Association of Professional Mortgage Women.

The number of households headed by women has quadrupled since 1950, but the median income of those households is lower than the national median income, and they’re more likely to purchase homes in low-income neighborhoods. Most women heading households are classified as elderly, divorced, or single.

As a result of this trend, the U.S. Department of Housing and Urban Development has created Home Ownership Opportunities for Women, which helps women become owners by providing information regarding homeownership. The program was created with Fannie Mae, which provides loans requiring lower downpayments and a lower qualifying income.

Many Opt to Expand, Rather Than Buy, a Home

Many homeowners are finding that expanding their present home with additions—larger kitchens, playrooms, second-story rooms, and more bedrooms—is a viable solution to the tight housing market, according to The Wall Street Journal.

HammerSmith, a Georgia-based construction company, says business has improved since last year and is so brisk, in fact, that the company must turn down new projects.

The demand for home renovations is just as intense on the West Coast, says Dana Loiacono, a California builder. He notes that in 1997 he had just one remodeling job, whereas this year new clients must wait an estimated 18 months for the work to begin.

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