Could Immigrant Homebuyers Spark New Growth For The Housing Market?
President Obama’s recent Executive Order on immigration reform isn't without its political controversy but his action may have a positive influence on an area of the economy that many haven’t thought about: The housing market.
Up to this point, immigrants have generally been perceived as a marginal audience for home buying due to the uncertain status of many. Enter the President’s Executive Order granting legal resident status to children who enter the U.S. and work authorization to the parents of that child if they have been in the country for at least five years.
Now, with millions of undocumented immigrants potentially finding much greater certainty associated with their situation, it could pave the way for a significant number of them to choose home ownership.
There are some challenges that may mean the pace of new immigrant home ownership is more gradual and steady than an overnight explosion of the segment. For one, understanding all the details of purchasing a home can be difficult for anyone – combine a more complex cultural component in some cases and real estate professionals who can’t readily explain the process of home buying to that audience and you've got a potential disconnect waiting to happen.
In addition, in a process where established good credit certainly plays a factor in obtaining a mortgage, it may be more difficult for some immigrants to have such a credit history in place.
That said, it’s hard to ignore a study made by the Research Institute for Housing America last year, which examined the role of immigrants in home ownership over the last decade. The findings? Nearly 40% of the growth in households between 2000 and 2010 were attributed to immigrants. In other words, the perception that immigrants aren't contributing heavily to new home ownership doesn't quite mesh with reality. With a new piece of immigration reform to encourage more of this audience to explore residential housing, the market could pick up steam.
In turn, a re-energized housing market fueled by additional immigrant buyers could mean big things for a variety of professionals who are influenced by greater real estate activity – from real estate agents and builders to remodelers.
We’ll want to keep a close eye on how the President’s actions on immigration reform play out politically and in practicality, but if it takes hold, its biggest supporters see an impact that will propel the housing market and the economy forward.
Read the complete report by the Research Institute for Housing America.