Can a person’s language preference keep them from achieving the American Dream of owning a home? According to a study by the Urban Institute, the answer is yes. The study found that nearly 5.3 million heads of households in the U.S. had limited or no ability to speak the English language and that there was a considerable gap in homeownership between this population and those with low levels of limited English proficiency (LEP).
The research, which examined the relationship between LEP and homeownership began after Urban Institute found that there was little research that focused on the relationship between English proficiency and homeownership. The paucity of research especially came to light after the Federal Housing Finance Agency announced in October 2017 that it would add a preferred language question to the redesigned Uniform Residential Loan Application after it received considerable input to add such a question to the redesigned format.
To explore the relationship between LEP and homeownership Urban Institute used 2015 American Community Survey data pooled at the zip code level using the Urban Institute Sloan Administrative Data Research Facility database. The database gave the researchers broad access to variables that capture drivers of the homeownership rate, including the share of residents with LEP, median household income, the share of household heads by racial or ethnic group, the share of household heads by marital status, and share of households without children.
Neighborhoods with the lowest concentration of LEP residents had a median homeownership rate of 74 percent in 2016, the research found, but neighborhoods with the highest LEP concentration had only a 64 percent median rate indicating a difference of 10 percentage points.
The research also analyzed the share of LEP residents on homeownership rates and found that when evaluated at the 90th percentile of the LEP share their calculations predicted a homeownership rate of 63.55 percent, as opposed to 69.87 percent at the median LEP share. This analysis concluded that English proficiency in a neighborhood is a strong indicator of the homeownership rate.
If all other factors that influence homeownership, such as income, age, and race or ethnicity, were controlled, ZIP codes with the highest share of LEP residents had homeownership rates that were 5 percentage points lower than those with a median share of LEP residents.
The research found that 10 languages have the most speakers who lack proficiency in English, with Spanish being the most common language with 42 percent of Spanish speakers who do not speak English very well. It found that 55 percent of Chinese speakers, 59 percent of Vietnamese speakers, and 54 percent of Korean speakers did not speak English very well.