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Housing market's future is linked to immigration policy


Donald Trump calls for building a wall along the U.S. border with Mexico, temporarily banning Muslins from entering the country and enacting policies that could force out as many as 11 million undocumented Hispanic residents.

Hillary Clinton says the U.S. should create pathways to citizenship for millions of immigrants living in the U.S. illegally.

Donald TrumpImmigration policy has been front and center during the presidential campaign. Housing policy has not, but the candidates opposite views on immigration could have very different outcomes on the future demand for housing, according to analysts.

Clinton pic“The key difference between the two candidates — which is very important for housing — is immigration policy,”  said Mark Zandi, the chief economist for Moody’s, in a recent interview with Scotsman Guide.  

“Housing is driven by households — population growth, household-formation growth — so Clinton's immigration policy is very pro-housing,” Zandi said. “Trump's immigration policy is very negative for housing.”

The estimated 11 million Hispanic undocumented residents could have a huge impact on housing, said Joseph Nery, president of the National Association of Hispanic Real Estate Professionals (NAHREP). About 3 million are potential homeowners, who could fuel as much as $500 billion in real estate transactions over five years, Nery said.

NAHREP has endorsed neither candidate, but supports deportation relief and policies that would lead to a pathway to citizenship. 

“Right now, people are living somewhat in the shadows if you will, just because they are concerned about establishing credit, whether they should purchase homes," Nery said."They are reluctant to do that until they get a better sense of their legal status in this country.”

Other housing analysts didn’t want to talk about the potential impact of the specific policies of the candidates, but would say that immigrants do play an important role in the housing market as buyers and renters of homes, and as key drivers of household formation.

“We see that as being a pretty large segment of overall growth in households or growth in demand,” said Daniel McCue, senior research associate for Harvard University’s Joint Center for Housing Studies.

Foreign-born residents have formed, on average, about 450,000 households per year between 1994-2015, which represents roughly a third of all household formations each year, the Joint Center estimates, citing U.S. Census Bureau data.

“If [the foreign born] are responsible for a third of all housing demand overall, that is going to have an impact,” McCue said.   

McCue said that immigrants have also played a key role in filling holes in demand for housing during periods of transition between generations. For example, during the 1990s, immigrants helped prop up the housing market when the Generation X cohort had not picked up the mantle from baby boomers.

"The added immigration really kind of smoothed over the post-baby-boom dip," McCue said. "It was kind of propping up the markets. In general, we see immigration as a major source of household growth."    

Foreign buyers, including both resident and nonresident immigrants, purchase more than 200,000 homes annually and spend more than $102 billion, according to the National Association of Realtors. Chinese buyers purchased the most homes between April 2015 and March 2016, followed by buyers from Canada and Mexico, according to NAR’s survey.

“It is pretty substantial dollars,” said Danielle Hale, director of housing statistics for the National Association of Realtors. “In areas where you have a more concentrated share of foreign buyers, they have a bigger affect on the market,” she added. “We do know anecdotally that major metro areas are places that are popular with foreign buyers, where you might see their activity affect the overall market — areas like San Francisco, Los Angeles, New York [and] Miami.”


 

Questions? Contact at (425) 984-6017 or victorw@scotsmanguide.com.

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