The roller-coaster ride of the real estate market over the last 15 years has soared higher and plunged deeper for minorities nationwide than it has for whites, according to a study of homeownership released Tuesday.
The declines in homeownership among African Americans and U.S.-born Latinos in recent years were especially sharp, according to the study by the Pew Hispanic Center, a project of the Pew Research Center in Washington.
Overall, the homeownership rate nationwide dropped from 69% in 2004 to 67.8% last year, a loss of 1.2 percentage points. The rate for black households, though, fell 1.9 percentage points, to 47.5%, reversing increases over four years. The rate for U.S.-born Latinos peaked in 2005 but has since fallen 2.6 percentage points to 53.6%.
The declines among the two minority groups were surprisingly severe, said Robert Kleinhenz, deputy chief economist at the California Assn. of Realtors.
“I don’t think it’s a function of ethnicity, or at least not exclusively, but has a lot more to do with the socioeconomic situations these households find themselves in,” he said.
For Californians, Kleinhenz suspects, the swings are magnified because of traditionally higher home prices and an ownership rate that usually lags behind the national rate by about 10 percentage points.
“We’re seeing much more severe corrections taking place in a much shorter period of time,” he said. “High home prices drove large segments of the California population to experiment with new types of financing, many of which turned out to be problematic. Households at the margin were trying to get their piece of California homes.”
Kleinhenz believes that ownership rates nationwide will start picking up as early as next spring but after that won’t reach peak levels any time soon.
During the boom time, roughly 1995 to 2005, minority groups reached for the American dream at a much faster pace than whites did. Homeownership among whites increased 5.6 percentage points to 76.1%, while increases among minority groups ranged from 11.7 percentage points (to 60.8%) for Asians to 6.8 percentage points (to 53.3%) for immigrants. The rate for Latinos rose 9 percentage points to 56.2%, and for African Americans, 7.5 percentage points to 49.4%.
The statistics showed that the gap in homeownership between whites and minorities had narrowed but still remained significant, according to the study’s authors, Rakesh Kochhar, Ana Gonzalez-Barrera and Daniel Dockterman.
They also found that blacks and Latinos were more likely than whites to take out higher-priced subprime loans, designed for borrowers with low credit scores. Just 10.5% of loans to whites in 2007 fit that category, compared with 27.6% of loans taken out by Latinos and 33.5% by blacks.
One surprise from the study was that the drop in homeownership hit U.S.-born heads of households harder than immigrants, who were less likely to be homeowners anyway.
The Pew study analyzed data from private and government sources, including the Census Bureau and the Bureau of Labor Statistics.