Report: Immigrants fuel home ownership demand

• Immigrant buyers played key role in boosting home demand in past decade
• Share of native-born home buyers seen growing in this decade
• Foreign-born owners to provide most growth in home ownership in six states

Immigrants will generate almost 36% of the increased demand for U.S. homes this current decade, new research shows.

That's down from 39% in the past decade, according to a report by researchers at the University of Southern California.

Immigrants' share of demand growth is being reduced largely because native-born buyers' share is growing, the researchers say.

However, the immigrant buyers "really filled a big hole," in the last decade as the number of native-born home buyers lagged due to demographic trends that saw many Americans too young for home ownership, says Dowell Myers, director of the Population Dynamics Research Group at the University of Southern California.

Myers says home ownership demand from the native-born will pick up, as the number of buyers in the 25- to 34-year-old age group expands, but demand will remain strong among immigrants.

That will benefit the housing sector, which appears to have hit bottom last year and is now seeing rising prices in most states.

"We'll be firing on all cylinders," Myers says. "The native born were absent in the last decade. Now, they're more present."

The research was sponsored by the Research Institute for Housing America, the independent research foundation of the Mortgage Bankers Association.

In the 1990s, 7.9 million native-born homeowners were added in the U.S, followed by a dip to 3.7 million in 2000–2010 due to the Great Recession and the smaller pool of people in their prime home-buying ages.

In this decade, researchers forecast growth of 5.1 million native-born homeowners.

Meanwhile, foreign-born ownership demand in the current decade is projected to account for a majority of the growth in six states: California, New York, New Jersey, Massachusetts, Connecticut and Michigan, the report says.

In California, immigrant buyers will account for 71% of the growth in owner households in the current decade, down from 82% in the prior decade.

​​​In New York, they'll provide 59% of the growth in homeowner demand, down from 65% a decade earlier.

Only Georgia and Connecticut will see immigrants account for a bigger percentage of the growth in homeowner demand.

The longer immigrants stay in the U.S., the more likely they are to become homeowners.

Among Hispanics who arrived in the U.S. during the 1980s, home ownership rose from just above 15% in 1990 to nearly 53% in 2010. That's projected to exceed 61% in 2020 when those immigrants will have been in the U.S. more than 30 years, says John Pitkin, senior research associate of the Population Dynamics Research Group.

Declines in rentership are the flip side of higher home ownership rates that occur as immigrants are in the U.S. longer.

Immigrants accounted for nearly 32% of the growth in renter households between 2000 and 2010. That will drop to 26% in the current decade, the researchers predict.

Even though their share of demand growth is smaller than in the past, "immigrants will be key to the housing market for decades to come," says Mark Zandi, economist with Moody's Analytics.