Family Life and Living Arrangements - Homeownership

Owning one's home has traditionally been the American dream. Unfortunately, for many Americans, especially minorities, purchasing a home can be difficult or impossible. The Housing Vacancy Survey conducted by the U.S. Census Bureau calculated homeownership rates by race and ethnicity of householder (the rate was computed by dividing the number of owner households by the total number of households). In 2004 the rate for non-Hispanic white householders who owned their homes was 76, while for Hispanic householders it was 48.1, for African-American householders it was 49.1, for Native American or Alaska Native householders it was 55.6, and for Asian and Pacific Islander householders it was 59.8. (See Table 2.8.)

Growth of Homeownership

While compared with non-Hispanic white homeownership the numbers of minority homeownership are low, these numbers actually reflect significant growth in the purchase of homes by minorities. While homeownership rates rose for all groups, they rose faster among minority groups. From 1994 to 2004 the homeownership rate for non-Hispanic whites grew from 70 to 76, for Hispanics it grew from 41.2 to 48.1, and for African-Americans it grew from 42.3 to 49.1. During this same period the homeownership rate by Asians and Pacific Islanders grew from 51.3 to 59.8. (See Table 2.8.)

A number of factors were responsible for the growth of minority homeownership in the 1990s. The administration of President Bill Clinton helped to provide greater lending opportunities for minorities by revitalizing the Federal Housing Administration and improving enforcement of the Community Reinvestment Act, which was passed by Congress in 1977 to encourage banks and other lending institutions to invest in the communities in which they operate. Furthermore, the U.S. Department of Housing and Urban Development pressured the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) to initiate programs to help minority and low-income borrowers in securing mortgages. Fannie Mae is a private TABLE 2.8 Homeownership rates by race and ethnicity of householder, 1994–2004 "Table 20. Homeownership Rates by Race and Ethnicity of Householder: 1994 to 2004," in Housing Vacancies and Homeownership Annual Statistics: 2004, U.S. Census Bureau, February 17, 2005, http://www.census.gov/hhes/www/housing/hvs/annual04/ann04t20.html (accessed December 28, 2005)company that was created by Congress in 1938 to improve the housing industry during the Great Depression. Its smaller counterpart, Freddie Mac, is a shareholder-owned company created by Congress in 1970 to support homeownership. Both Fannie Mae and Freddie Mac buy mortgages, package them into bonds backed by the government, and sell them to investors, thereby freeing up money for additional mortgage lending. Besides these efforts, minority homeownership was also helped by a considerably strong economy and a robust stock market during the 1990s and by low mortgage rates during the early 2000s.

TABLE 2.8
Homeownership rates by race and ethnicity of householder, 1994–2004
	1994	1995	1996a	1997	1998	1999	2000	2001	2002	2002b	2003	2004
Notes: NA = Not applicable. Homeownership rate equals the proportion of households that are owners; rate is computed by dividing the number of owner households by the total number of households.
aBeginning in 1996, those answering 'other' for race were allocated to one of the 4 race categories—white, black, American Indian, Aleut, or Eskimo (one category), or Asian or Pacific Islander.
bRevised
SOURCE: "Table 20. Homeownership Rates by Race and Ethnicity of Householder: 1994 to 2004," in Housing Vacancies and Homeownership Annual Statistics: 2004, U.S. Census Bureau, February 17, 2005, http://www.census.gov/hhes/www/housing/hvs/annual04/ann04t20.html (accessed December 28, 2005)
U.S. total	64.0	64.7	65.4	65.7	66.3	66.8	67.4	67.8	67.9	67.9	68.3	69.0
White alone, total	67.7	68.7	69.1	69.3	70.0	70.5	71.1	71.6	71.8	71.7	72.1	72.8
Non-Hispanic white alone	70.0	70.9	71.7	72.0	72.6	73.2	73.8	74.3	74.5	74.7	75.4	76.0
Black alone, total	42.3	42.7	44.1	44.8	45.6	46.3	47.2	47.7	47.3	47.4	48.1	49.1
All other races alone, total	47.7	47.2	51.0	52.5	53.0	53.7	53.5	54.2	54.7	54.5	56.0	58.6
American Indian or Alaskan Native alone	51.7	55.8	51.6	51.7	54.3	56.1	56.2	55.4	54.6	54.0	54.3	55.6
Asian or Pacific Islander	51.3	50.8	50.8	52.8	52.6	53.1	52.8	53.9	54.7	54.6	56.3	59.8
Other	36.1	37.4	NA	NA	NA	NA	NA	NA	NA	NA	NA	NA
Hispanic or Latino	41.2	42.1	42.8	43.3	44.7	45.5	46.3	47.3	48.2	47.0	46.7	48.1
Non-Hispanic	65.9	66.7	67.4	67.8	68.3	68.9	69.5	69.9	70.0	70.2	70.8	71.5

President George W. Bush also made minority home-ownership a priority of his administration. In 2002 he challenged the real estate industry to invest more than $1 trillion to increase the number of minority homeowners by at least 5.5 million families by the end of the decade. Acknowledging that many Americans can afford a monthly mortgage payment but lack the funds for a down payment, in 2003 President Bush signed the American Dream Downpayment Assistance Act, authorizing $200 million per year in down payment assistance to at least forty thousand low-income families. In January 2004 Fannie Mae announced that it planned to help 1.8 million minority families buy their first home in the next decade.

Private-sector real estate lenders were likely to follow suit in targeting minorities, in part as a simple acknowledgment of changing times. As the baby boomer generation (1946–64) begins to leave the workforce, and because of the low birth rate of native-born Americans, minority groups (dominated by Hispanics) are expected to play an increasing role in the economy. The 1990s saw a major influx of immigrants, who at first typically rented their homes but later became factors in the home-buying market. According to James Johnson, who is quoted in John Handley's "Demographic Trends to Shape Future U.S. Housing Markets" (February 2005, http://www.ris-media.com/index.php/article/articleview/9392/1/632/realtorsontherise), it is estimated that ten million immigrants will reach their peak home-buying years between 2005 and 2015, making them a market to be courted by real estate lenders. Aside from the benefits enjoyed by the individual, an increase in the number of minority homeowners is likely to improve the quality of life in entire communities, improving such areas as safety and the quality of schools.