Demographically, a lot has been written about how Millennials and Baby Boomers will impact real estate. But how will 11 million undocumented immigrants impact residential real estate if they are given residency?
Will millions of undocumented immigrants buy houses and increase prices and rents? Already, we are starting to see some signs of how immigration is impacting housing.
As American home buyers have receded during and after the recession, foreign buyers have stepped in and taken a larger share of residential purchases.
Last week, the National Association of Realtors released their annual report on foreign buyers, which showed that Chinese nationals are the leading foreign buyers of US real estate, accounting for $22 billion in sales or 24% of the total US homes purchased by overseas buyers.
This week, the Los Angeles Times published a front page story claiming that Orange County’s Asian American population is the third-largest in the US, behind second-ranked Santa Clara County and first-ranked Los Angeles County. Among Orange County’s 3 million residents, the nearly 600,000 Asian Americans account for 20% of the population, a dramatic 41% increase from 2000 to 2010.
The recent images of Central American teenagers flooding into America’s porous borders will certainly raise the issue of immigrant housing in the near term.
According to research by Professor Albert Saiz, at the Wharton School of the University of Pennsylvania, cities where high concentrations of Hispanic immigrants have moved have experienced faster housing price and rent appreciation. In a paper titled “Immigrants, Hispanics, and the Evolution of Housing Prices in the US,” professor Saiz provides insight into the causal link between Hispanic-dense metropolitan areas and rising rents and home prices.
Likewise, the Urban Land Institute — in its annual 2014 Emerging Trends in Real Estate report — pointed to population and demographic shifts that will affect housing. They anticipate population growth in Border States like Texas and other Southwestern regions, triggering increased real estate growth. Total population growth, net migration, and growth in influential age cohorts will all shape the future real estate recovery.
The highest rate of population growth is expected in the Texas markets, where population growth is again expected to occur at a rate more than double the national average. The recovery in Las Vegas and Phoenix will get a boost from strong population growth as these two markets will have the highest rate of growth in the survey.
An estimated 11 million undocumented immigrants reside in the United States. According to the National Association of Hispanic Real Estate Professionals, if a path to legalization were enacted, an estimated new pool of three million home buyers would be created, generating $500 billion in sales and $233 billion in origination fees, real estate commissions and consumer spending associated with housing.