Report Examines Homeownership Gap between Hispanic and White Households

A Freddie Mac report, Will the Hispanic Homeownership Gap Persist, examines the homeownership gap between white and Hispanic households. The current homeownership rate in the U.S. for Hispanics is 45%, 26 percentage points lower than the rate for non-Hispanic whites. A significant portion of this gap can be explained by differences between the two populations with regard to characteristics known to influence homeownership, including age, education, English proficiency, income, and region of the U.S. A portion of the gap, however, cannot be explained by these factors.

The report focused on Mexican-origin Hispanics to show how a population’s characteristics partially account for the homeownership gap. The homeownership rate of Mexican-origin Hispanic households is 23 percentage points lower than for white households. The average age of Mexican-origin Hispanics is 11 years younger than that of whites. This age difference accounts for nearly seven percentage points (or 30 percent) of the homeownership gap. Six percentage points of the gap can be explained by immigration-specific attributes, such as English proficiency, foreign-born status, and time spent in the U.S. More than two percentage points of the gap can be explained by the lower incomes of Hispanic households ($45,000 median income vs. $62,000 for white households) and another two percentage points can be explained by lower college graduation rates (5% of Hispanics have Bachelor’s degrees vs. 31% of whites). Three percentage points of the gap, or 13%, cannot be explained by these factors. Some of the unexplained gap may be due to wealth differences and discrimination.

The report estimates that a modest decline in the age gap between Hispanics and whites will reduce the homeownership disparity by more than 5 percentage points by 2035, not accounting for changes in income or education. If Hispanics follow the pattern of previous immigrant populations, their education and income levels should increase over time, helping to further reduce the homeownership gap. A threat, however, is rising job polarization, defined as the economy’s loss of middle-skill jobs and gain in low-skill and high-skill jobs. This polarization may reduce economic opportunities for immigrants with limited or moderate education, thereby reducing their ability to become homeowners.

Will the Hispanic Homeownership Gap Persist is available at: