THE MINORITY HOMEOWNERSHIP GAP, HOME FORECLOSURE, AND NATIVITY: EVIDENCE FROM MIAMI‐DADE COUNTY*

In housing research as in employment, education, or demographic research, a central theme is the identification of gaps in outcomes and a desire to understand the extent to which these gaps are due to mutable individual characteristics. A well-developed strand of housing literature, for example, addresses the gap in homeownership between white, non-Hispanics and other groups and asks how much of that gap can be attributed to discrimination and how much is actually explained by other, changeable factors such as group age structure, geographical location, or educational attainment. A key variable in explaining gaps in homeownership has been nativity— the fact that large proportions of some groups simply have not lived in the United States long enough to transition to homeownership—and nativity and homeownership has developed into a sub-branch of housing research all its own. With regard to the homeownership gap, whether the focus has been on race and ethnicity or immigrant status, well into the first years of the 21st century, the assumption remained that once gaps were closed, they would not open again. Instead, in the midst of the current foreclosure crisis, we are faced with the proposition that, just as homeownership varies across groups, foreclosure risk will also be unevenly distributed. The recent and ongoing nature of the foreclosure epidemic, however, means that research on the geography and socio-demographic factors related to foreclosure is still developing. This paper seeks to contribute to the nascent body of research on this topic. The current study focuses on Miami-Dade County, a housing market with ample numbers of not only foreclosures but also immigrants. It is, moreover, one of the more racially and ethnically diverse parts of the country, which permits us to consider, all in one location, the interplay between nativity, race and ethnicity, and housing outcomes. In the Miami-Dade county area, almost two thirds of householders were foreign born in 2000 (Table 1).1 To put this figure in context, in 2000, just over 11 percent of the U.S. population as a whole was foreign born and for the entire state of Florida, just under 17 percent would be considered immigrant (Malone et al., 2003). In terms of race/ethnic background only about 26 percent of the Miami-Dade area householders were white, non-Hispanic and about half were some category of Hispanic. Recent work has suggested that minority homeownership rates are higher in more ethnically diverse metropolitan areas; Miami certainly qualifies as such, and the current work extends existing research on the relationship between ethnic diversity and homeownership (Flippen, 2010). TABLE 1 Householder Population Composition Miami-Dade County Area, 2000 Across all race and ethnic groups, a sizeable share of the population was foreign born in 2000, but a great deal of variation existed in terms of length of residence in the U.S. This is potentially important, as it permits us to test whether any immigrant-native born differential in terms of homeownership and foreclosure is due to length of time in the U.S. and whether this varies across race and ethnic groups. Myers, Painter, and colleagues’ (2010) work revealed that Hispanics who have been in the United States for at least 20 years have homeownership rates above those of even native Hispanics. On the other hand, newly-arrived Hispanics have homeownership rates much lower than native Hispanics. Tied to length of time in the United States and also to place of birth for the foreign born population is economic status; immigrants who have been in the United States for two or more decades tend to be more stable financially than newly-arrived immigrants. Higher incomes and more stable employment increase immigrants’ prospects for homeownership and can also help protect them from mortgage delinquency and foreclosure situations. In addition to its ethnic diversity, Miami-Dade County, along with many other fast-growing markets across the country, has been disproportionately impacted by the housing crisis that began in the late 2000s. In Miami-Dade, there were 64,000 foreclosure filings in 2009, 2.4 times the number of filings in 2007 and 6.5 times the number of filings in 2006.2 The metropolitan area ranked 10th out of all metropolitan areas in the United States in foreclosure filings at the end of 2009, with 1 in 14 households experiencing foreclosure (Realty Trac, 2010). Kochar, Gonzalez-Barrera, and Dockterman’s (2009) analysis found that foreclosure rates were especially high in counties in the United States that were both traditional and new destinations for immigrants, including Florida. That work compared the factors contributing to higher-than-normal foreclosure rates in Miami-Dade County and suggested that demographic factors were among the most important (economic factors were relatively more important in other counties). Such findings suggest that Miami-Dade County is a natural test case for our study on foreclosures, nativity and race/ethnicity at the neighborhood level. Data on housing tenure and the characteristics of the homeowner are easily obtained from the decennial census (until 2000) or the American Community Survey (2005 onwards). In contrast, research on foreclosures is hampered by a lack of data: even when reliable data are available on individual foreclosures (such as we use here), those data provide no information on demographic characteristics of the homeowner in foreclosure. In order to take full advantage of data availability where possible, we approach homeownership in this paper at the individual level and foreclosure at the community, or census tract, level. This approach prohibits a direct link between characteristics of homeowners and foreclosures, but does allow us to more fully understand the landscape of foreclosure in the Miami area, given the factors associated with homeownership in the area. The results of the two different types of analysis have the potential to significantly impact policy, especially in those jurisdictions hard hit by the current foreclosure crisis. While foreclosures cause harm to individuals, they can also harm entire neighborhoods by lowering quality of life. Understanding the dynamics of the determinants of homeownership in a particular area can inform localities on how best to tailor their approaches to the needs of different residents, improving residents’ chances for successful homeownership and reducing foreclosure risk. At the community level, jurisdictions can prospectively identify especially vulnerable neighborhoods, or those at greatest risk, and infuse those areas with needed attention, allowing the distribution of limited prevention and intervention resources to be as efficient and effective as possible. In the next section we provide an overview of the more fully developed literature on socio-economic predictors of homeownership as well as the extant literature on foreclosures. We also give a short description of homeownership, nativity, race/ethnicity, and foreclosures in Miami-Dade County. Section 3 details the data used in the analysis. Sections 4 and 5 provide analyses of homeownership and foreclosure, respectively. Section 6 offers a discussion of the results and following that we offer brief concluding remarks in section 7.