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Real Estate: Can America Afford To Lose 11 Million Immigrants?

Real Estate: Can America Afford To Lose 11 Million Immigrants?At the center of this year’s presidential debate is the question of how to treat our most-recent immigrants, especially those who have not gone through the formal application process. Are they “undocumented” immigrants or “illegal” immigrants? Are we willing to give up more than three million home sales to find out?

While the question of status has gotten a lot of attention you have to wonder if it’s the right question. Maybe the greater issue is this: Are we so wealthy that we can ignore the potential riches to be gained from today’s 11 million immigrants who live in the shadows? Rather than spending hundreds of billions of dollars to toss out our latest arrivals maybe it would be smarter to welcome them and the potential dollars they represent.

According to the conservative American Action Forum, “the federal government would have to spend roughly $400 billion to $600 billion to address the 11.2 million undocumented immigrants and prevent future unlawful entry into the United States. In order to remove all undocumented immigrants, each immigrant would have to be apprehended, detained, legally processed, and transported to his or her home country. In turn, this would shrink the labor force by 11 million workers and reduce real GDP by $1.6 trillion.”

That $400 billion to $600 billion has to come from somewhere so do we want to raise the money by increasing the deficit, raising taxes or some combination of the two? Can taxpayer dollars be better spent fixing roads, building schools or subsidizing healthcare costs?

And if we get rid of 11 million people — if we get rid of children born here and break-up families — then how many rental vacancies will suddenly emerge, how many new foreclosures will be placed on the books and how many billions in mortgage money will lenders lose? What will happen to shares on Wall Street as revenues decline and profits are lost?

Is New Immigration A Problem?

The Obama Administration has already deported 2.4 million people and in addition large numbers of immigrants are returning home. The Pew Research Center reports that between 2009 and 2014 approximately 1 million people who entered the US without paperwork returned to Mexico.

But before cheering such out migration, it might be worthwhile to consider the economic value of those who stay.

Between 2011 and the first quarter of 2015 Hispanic households purchased more than 1 million homes according to the National Association of Hispanic Real Estate Professionals (NAHREP). Hispanic households now own 7.3 million homes, up from 4.2 million in 2000.


Moreover, the Hispanic homeownership rate is 46.7 percent compared with the current national rate of 62.9 percent. We can expect about 2.5 million additional home sales from the current Hispanic community as their incomes and opportunities evolve to more closely resemble national averages,

“In just five years,” said NAHREP, “the purchasing power of Hispanics has grown from $1 trillion in 2010 to $1.5 trillion, an increase of 50 percent. Economists project Hispanic purchasing power to exceed $2.0 trillion by 2020.”

And 2020, it should be said, is less than four years away.

Reagan and New Immigrants

In 1986 President Reagan signed legislation giving legal status to 2.7 million immigrants. What would happen today if we repeated the Reagan initiative?

A 2013 NAHREP study found that legalization was likely to produce “three million homeowners and pump more than $500 billion in sales, income and spending into the U.S. housing economy.” Such transactions would generate “an additional $233 billion in origination fees, real estate commissions and consumer spending associated with homeownership.”

While today there is great debate regarding how to handle our new arrivals, it might make sense to look at the costs and benefits associated with various policy options. Do we really want to enlarge the government? Does spending as much as $600 billion to remove 11 million people from our midst make economic sense? Do we want to lose more than $1.5 trillion in new spending and the additional jobs and income such spending creates?

Instead, why not do the American thing and use the energy and intelligence represented by our latest arrivals to make the country richer? Who is against that?

(Photo courtesy of Dirk Sebregts)

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1 Comment on "Real Estate: Can America Afford To Lose 11 Million Immigrants?"

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  1. Ted says:

    “Today’s immigrants, many arriving with college degrees, are headed for other careers.”

    https://www.bloomberg.com/view/articles/2016-09-29/the-new-face-of-immigration-is-changing-the-housing-market

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