“We came here to achieve the American dream,” said Monica Morales.
And that dream has come true for the native of Colombia and her husband, Mauricio, born in Venezuela. They are among an increasing number of immigrants who are buying homes in the United States and making a major contribution to the housing boom.
In fact, Chicago’s suburbs are becoming a veritable United Nations of homeowners. The city has long been a medley of nationalities, but now 20 percent of buyers of new-construction housing in the suburbs are foreign-born — four times higher than 10 years ago — estimates real estate analyst Tracy Cross.
“No home-building records would have been set in the Chicago area in the last three or four years without the impact of immigrant buyers,” said Cross.
They are coming from Mexico, eastern Asia, India, Eastern Europe and other parts of the world. Each has a story about coming here and their path to homeownership.
Monica and Mauricio emigrated from South America in 1990. She first went to Miami. After their marriage in 1991, they rented in New York City. In 1993, they came to Chicago, where they rented in Lincoln Park.
She worked in medical technology before the arrival of their two children, Camillo, 7, and Nicole, 3. Her husband is a physician in private practice in Joliet.
Monica said that in South America most people pay cash for homes or make installments so the total is paid within a year because of interest rates of 25 to 30 percent.
She said they left South America because of the opportunity for better jobs here. “It’s very bureaucratic there.”
Their road to homeownership required some financial help — the down payment for a townhouse in Glenview — from Monica’s father.
They now live at Glenridge Meadows in Glenview. Next year they plan to move to a larger house at Southgate at The Glen, also in Glenview.
Chicago has always been a destination for immigrants, and it has profited from the current wave of new U.S. residents. “When you leave your home country, you want to go where you feel comfortable. Many come to Chicago because it already has a large immigrant population,” said Erik Hurst, assistant professor of economics at the University of Chicago.
“The influx of immigrants in the last five years has been one of the foundations of the housing market [both resale and new homes],” said Van Davis, president and chief executive of Century 21 Real Estate Corp.
“The gigantic growth of the Hispanic population — both from immigration and birthrate — will be the most significant factor in the first-time home market during the next decade,” Davis said.
The majority of immigrants tend to settle in metropolitan areas, such as Chicago, New York, Miami, Houston, Los Angeles and San Francisco.
Douglas Duncan, chief economist of the Mortgage Bankers Association of America, predicted that 4 million additional home sales will be generated in 20 years by the children of immigrants who are now buying homes.
Cross said 4.6 percent of the estimated 900,000 immigrants (including those undocumented) entering the U.S. every year come to Illinois and 98 percent of those are in the Chicago region.
“Large home builders, especially those who cater to first-time buyers, have caught on to the potential of the immigrant market,” said Cross, president of Schaumburg-based Tracy Cross and Associates. “Nationalities tend to cluster in small and large pockets, especially in the southwest suburbs and in northwest Lake County.”
He explained the current boom among Spanish-speaking buyers: “The peak arrivals of Mexican immigrants followed after the amnesty in 1989. Now they have matured in the workforce. It takes 8 to 10 years to become assimilated, so they started buying entry-level homes in great numbers starting in 2001,” he said.
“The message to all builders is that they better become bilingual. But in what language? Besides Hispanic buyers, there are many from Eastern Europe and Asia,” Cross said.
Gerardo Barajas, a real estate broker with Baird & Warner’s Bolingbrook office, is a native of Mexico and now specializes in helping Hispanics navigate the complexities of home buying. “Many of them have no clue what they’re getting into. I have to explain the whole process from beginning to end,” Barajas said.
He noted that homes in Mexico often remain in one family for generations. “Mexicans hardly ever go to a bank for financing a home, though that has started to change in the last 10 years.”
Barajas said he tells prospective buyers what they have to do to qualify for a mortgage. Only about 50 percent speak English.
“While some immigrants may live here for years, the younger generation is seeing the value of owning a home as an investment,” he said.
“Immigration has not only sustained housing but driven it to new heights,” said Barry Zigas, senior vice president of the National Community Lending Center for Fannie Mae, the mortgage giant based in Washington, D.C.
“[Immigrants] bring with them suspicions and apprehensions about government, regulators and big institutions,” Zigas said. “Because of their fears, some may keep money in mattresses. They don’t always use banks. They are vulnerable to unscrupulous lenders who prey on them.
“Predatory lending may result in immigrants not getting the best mortgage rates. If they don’t have established credit, they can’t get credit scores. But it’s possible to establish non-traditional credit if they have paid rent and utilities over a period of time,” Zigas said.
“They must show a history of legally working in the U.S.,” he added.
Despite the increased effect of foreign-born home buyers, the group lags financially behind U.S.-born home buyers, according to “Homeownership in the Immigrant Population,” a study by George J. Borjas, Pforzheimer professor of public policy at Harvard University’s John F. Kennedy School of Government.
“In 1998, the typical immigrant worker earned 23 percent less than the typical native worker,” the study said. This translates into lower homeownership rates among immigrant households than among native households.
But, not all immigrants have low buying power. Immigrants have bought 10 percent of the new-construction houses at Southgate at the Glen, one neighborhood at the expensive golf course community in Glenview. Almost 60 percent of the townhouses at Southgate at the Glen have been sold to immigrants; with many of them investors from Russia, according to the builder, Edward R. James Partners.
Michael Carliner, staff vice president at the National Association of Home Builders in Washington, D.C., said that immigrant home buyers filled in for the fewer buyers in the Baby Bust generation, those born roughly between 1965 and 1979.
Builders have recognized the increasing impact of foreign-born buyers and are catering to them.
Lakewood Homes, one of the largest builders in the Chicago area, prints cost calculation information sheets in 12 languages.
Spanish-language buyers are leading the way in volume. “We’re seeing a soaring buying power of Hispanics,” said Christopher Shaxted, Lakewood’s executive vice president, who added that the builder plans a Spanish version of its Web site.
“We also advertise in Hispanic publications, and have had Hispanic buyers in all our developments. Once a nationality starts to move in, others follow,” he said.
Shaxted noted that East Indians have been attracted to Lakewood Ridge in Bolingbrook, and Koreans and Eastern Europeans are buying at Lakewood Grove in Round Lake.
Roger Mankedick, executive vice president of Concord Homes, which builds in the suburbs and the city, estimates that immigrants are 25 to 30 percent of the firm’s buyers.
“The phenomenon began in the late 1990s and is still growing. Immigrants tend to be hard-working and driven to homeownership. Foreign-born buyers will continue to be a big driver of the housing market in the next decade,” Mankedick said.
