Will the Hispanic Homeownership Gap Persist?

MCLEAN, VA--(Marketwired - Jun 27, 2017) - Freddie Mac (OTCQB: FMCC) released its Insight for June, which looks at the gap in the Hispanic homeownership rate and explores if it will persist over time like it has for African-Americans or if it will close over time like it did for other immigrant populations.

Homeownership provides a key measure of transition from a newly-arrived immigrant to an established resident. Many immigrants arrive without the financial resources needed to purchase a home. In addition, the unfamiliarity and complexity of the U.S. housing and mortgage finance systems pose obstacles. As a result, homeownership rates start low for new immigrants but rise over time.

How big is the homeownership gap and what factors are influencing it?

  • At 45 percent, the Hispanic homeownership rate was 26 percentage points less than the homeownership rate for Whites in 2015. This gap has narrowed in recent years (from 29 percentage points in 1995), but very slowly.
  • The Hispanic homeownership rate is influenced by the same factors that influence the homeownership rate of Whites -- primarily age, income and education -- and these factors account for almost 90 percent of the homeownership gap.
    • Age is the most important single factor influencing the homeownership gap. The 11-year difference in the average age of Whites and Hispanics of Mexican origin (similar results hold for other Hispanic subgroups) explains almost 7 percentage points of the over 20-point difference.
    • A combination of immigration-specific attributes -- foreign-born, length of U.S. residency and level of English language skills -- accounts for six percentage points of the White/ Mexican-origin Hispanic homeownership gap.
    • Differences in income, education and the region of residence each explain between 1 and 3 percentage points of the homeownership gap.

Will the gap narrow?

  • Future age distribution and resident status will be the biggest drivers that close the White/Hispanic homeownership gap.
    • The modest narrowing of the age gap is expected to reduce the homeownership gap by an equally modest amount: 3 percentage points by 2025 and 5.1 percentage points by 2035.
    • The homeownership rate is lower for new immigrants versus long-time residents. In a baseline projection that includes all Hispanics (current residents and future immigrants) in the U.S, the 26-percentage point gap in 2015 drops to 22 percent in 2025 and 20 percentage points in 2035. For current residents, the gap narrows to 16 percentage points in 2025 and nine percentage points in 2035.

Quote: Attributed to Sean Becketti, Chief Economist, Freddie Mac.

"For decades, the homeownership rate of Hispanics has remained more than 20 percentage points below the rate for Whites. This gap has narrowed in the last 25 years, but very slowly. These populations are growing and aging at different rates, with the average age of Whites increasing by six years over the next 45 years compared to nearly 10 years for Hispanics. If these Census projections about age distributions are realized, the White/Hispanic homeownership gap is likely to narrow by 20 percent by 2035. In addition, changes in other factors like income and education should further reduce the Hispanic homeownership gap."

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we've made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at, Twitter @FreddieMac and Freddie Mac's blog

Chad Wandler

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