Immigration is a pressing matter for many Americans, though not always for the same reasons. Within the world of real estate, the topic of immigration has everything to do with future housing markets and developments.
For the next few decades, housing markets will fluctuate significantly as immigrant families choose where they plan to settle. The Terwilliger Center for Housing at the Urban Land Institute released a study regarding the impact of immigrant housing in the U.S., with special attention paid to the changes expected as more foreign-born persons move into and purchase property in suburban areas.
The study, entitled Home In America: Immigrants and Housing Demand, analyzes growth in urban housing that directly relates to United States immigration in the aftermath of the Great Recession. Contrary to what many people believe, the U.S. has seen more immigration from Asian nations than Latin America over the past seven years.
According to Terwilliger Center Executive Director Stockton Williams, “Immigrants have helped stabilize and strengthen the housing market throughout the recovery. Immigrants’ housing purchasing power and preferences are significant economic assets for metropolitan regions across the country. This suggests the potential for much more growth attributable to foreign-born residents in the years ahead.”
The most notable findings from the report include:
- The strongest housing markets in the nation, such as San Francisco, would not have experienced nearly so quick a recovery had it not been for the immigrant housing market.
- Weaker markets, such as Buffalo, NY, would have fared even worse if not for the foreigners who bought and rented property in the last decade.
- Suburban areas seem to have the strongest draw for foreign-born renters and buyers. This is true for both high-income and low-income families, as immigrants move to the suburbs in search of affordable housing, as well as employment and a more appealing lifestyle.
- Single-family homes are highly sought after by foreign transplants. The more time immigrant families spend in the states, the more inclined they are to purchase a home that offers more privacy. This is a solid indicator that persons immigrating to the U.S. will continue to affect the real estate market in a variety of ways.
- More often than not, immigrants looking to become homeowners tend toward buying existing homes. The market for previously occupied housing is mostly driven by baby boomers moving into smaller houses as they looked toward retirement.
- Immigrant housing demand is a large factor in the market’s current growth, just as it was instrumental in fending off the market’s collapse. Because of this, any laws passed in the U.S. that relate to immigration may directly influence the makeup and growth of both urban and suburban developments.
- It is in the best interest of the areas with growing immigrant populations to support and sustain this trend. Expansions in local retail, education, and other important amenities will allow communities to grow and reap the benefits of this important industry.
This study was conducted by assessing five metropolitan areas that are seen as current and former hubs for immigration. Foreign-born residents in these cities were asked about their preferences with regard to geographical location and housing style.
The subject cities were chosen to represent the various paths by which immigrants come to this country. For example, San Francisco was selected as a steady hub that has maintained its immigrant population for well over a century. In contrast, Buffalo was studied as a U.S. gateway that has seen less and less traffic as the manufacturing industries of the early 20th century have tapered off.
The other cities include Houston, which has experienced its most steady immigration in the aftermath of World War II; Minneapolis, a city that had seen a decline in immigration before re-emerging as a popular destination in the 1990s; and Charlotte, where immigration is a much more recent phenomenon that is actively changing the landscape of the city.
An important factor in this report is the outpacing of native-born population growth by the immigrant population from 2006 through 2014. That time frame is specific to the years just prior to and after the market crash and recovery. This trend applies to all cities except those that have only recently emerged as popular gateways.
The Home in America study also includes data regarding choice housing for immigrants. This portion focused on the popular suburban categories that RCLCO defined for the Urban Land Institute:
- Challenged suburban area
- Middle-income suburban area
- High-end suburban area
- Greenfield suburban area – lifestyle
- Greenfield suburban area – value
The top three categories have fairly simple distinctions. For an economically depressed suburb, there is limited population growth and homes are less valuable. Both the middle- and high-income suburbs have a variety of housing options and respectable locations, and the high-end housing is often closest to the top job providers.
As for the Greenfield suburbs, these are areas just outside larger cities. Greenfield lifestyle suburbs are typically near upper-class areas that have been established within the last decade or two, while value suburbs are generally more affordable and in closer proximity to economically disadvantaged areas.
Comparing the five different metropolitan areas included within the study allows real estate speculators to analyze how these trends might affect growth in similar locations in the coming years. In cities like San Francisco that have long been seen as foreigner gateways, one can expect immigrants to continue occupying all of the various suburban regions, with the most substantial number collecting in more depressed areas.
Meanwhile, the largest number of foreigners who have immigrated to Houston live in middle-income suburban areas, and Buffalo sees the largest percentage of immigrants living in the wealthier suburbs (in larger numbers than non-immigrants, in fact). Minneapolis and Charlotte, both cities with emerging immigrant populations, are at the other end of the spectrum – the majority of migrant families in these two cities live in economically challenged areas.
The Home in America study suggests that immigrant populations have clear potential when it comes to elevating local economies in the more depressed suburbs. The report also points toward immigration as a key stabilizer in middle-class suburban neighborhoods, and a catalyst for economic growth in high-end areas.
Quoting the report directly: “If recent shifts in immigration flows continue, an increase in higher income immigrants – including rising numbers from China and india – could accelerate the demand for homeownership among the foreign-born population. Without sustained immigration, the housing market could weaken and in many markets the impact could be dramatic.”
While this study indicates different things for different cities, it certainly makes clear the impact immigrating homebuyers can have on the real estate industry. No matter where you live, this is an ongoing development that will continue to affect the housing market in all metropolitan areas.
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