Immigration Policies Under Trump Administration Threaten DFW Economy

Immigrant

Second only to California, Texas hosts largest immigrant population in the United States. And in Dallas-Fort Worth alone, more than 1.2 million immigrants make their homes, hold jobs, attend schools, and participate in local communities. An integral part of the DFW economy, immigrants contributed $8.4 billion in taxes and over $25 billion in spending power in 2014 alone, according to a recent study.

But action of late by the Trump Administration, including discriminatory travel bans, ramped-up deportation raids, and even wall-related rhetoric are forcing many to reassess their places here, particularly when it comes to buying property.

An article published last month in The Guardian cited a 2013 study which put, in stark terms, the potential national impact anti-immigrant action could have on real estate.

[Dowell Myers, director of the Population Dynamics Research Group at the University of California] estimated that in this decade, immigrants nationwide will account for 32.2% of the growth in all households, 35.7% of growth in homeowners and 26.4% of growth in renter households.

The study found that the volume of growth in foreign-born homeowners has increased each decade, rising from 0.8 million added immigrant homeowners in the United States during the period from 1980–1990 to 2.8 million in the current decade.

“It’s pretty clear what will happen,” warns Myers. “One way that people afford houses is by pooling incomes. So if you were to deport one of the three mortgage payers, that can destabilize the whole rest of the household. Immigrants are so interwoven into many communities that when you unravel one thread, you can destabilize it entirely.”

Could DFW experience that kind of destabilization? Possibly.

Ike Brannon, Ph.D. is a Senior Fellow with the Texas Public Policy Foundation, a research institute based in Austin. He co-authored a study last March that analyzed the fiscal impact of immigrant populations on the state. One particularly poignant piece of data stood out: In 2010, the state of Texas collected $178 million in property taxes from unauthorized immigrants. That statistic ignores contributions from legal immigrants who, also according to the study, make up more than half of the immigrant population in Texas.

Immigrant contributions to property tax revenues are crucial to the Texas economy. What happens if an entire population drops out of home-buying market?

Immigrants Face Fear and Uncertainty

One real estate agent, who spoke to us anonymously, said fear among immigrants has already impacted home sales. Immigrant home owners and potential buyers alike suffer from fear and uncertainty.

“People are getting powers of attorney for their properties,” she said. “They’re getting ready, the ones that already have properties, to have someone here just in case they are deported.”

She feels the harshness of this new reality personally.

“It’s hard,” she said. “It’s hard to give them any advice — you just listen to them, but many are afraid. They just want to wait and see what’s going to happen. It’s a big investment, buying a house, and they don’t want to take that step unless they know that they’re going to be okay. And at this point, they don’t know that.”

While he also sees some hesitation among immigrant home buyers, Diego Giraldo, a mortgage loan officer at Texas Bank Mortgage, chooses to remain optimistic. “I’ve heard of some clients decide to put off [buying a home],” he said. “But I believe that’s only the fear of uncertainty. I feel hopeful that in a month or two, when things calm down, those holding off until there’s more certain information will come back to the market.”

Arizona: a Cautionary Tale

And if they don’t? Well, Arizona may give us some idea of what’s to come. When anti-immigration legislation SB 1070 and Legal Arizona Workers Act passed in 2010, the impact was sudden and fierce. Alex Nowrasteh, a policy analyst for the Cato Institute said, via The Guardian:

“Two hundred thousand people left because of those immigration laws at the same time as we had a housing collapse. So Phoenix suffered more than any other city except for Las Vegas,” Nowrasteh says. “We saw a huge increase in rental vacancies and a decline in home prices immediately after these laws were passed.”

It’s no stretch, then, to say that national anti-immigration policy (like, a giant wall) could greatly jeopardize DFW’s economic future.  It’s only a matter of how long it will take.

 

10 Comment

  • Amen. Immigrants are so interwoven into the housing (and employment) economy of Texas that disruption will impact home prices and property values. You’d think our lawmakers would understand that simple equation as they whine about killing sanctuary cities and not having enough money to fix things. But they’re politicians and brains were never a requirement to hold office.

  • How can you write an article like this without noting that that the sub-prime fiasco that led to the greatest financial crisis since the Depression was rooted in government encouragement of immigrant home ownership? Consistent with some of your arguments, economic growth rates leading up to the Great Recession would have been lower without the government policies pumping up a housing bubble. But, without immigrant homebuyers and their lottery ticket mentalities, there never could have been a resi-led financial crisis in the first place.

    • How’s this for your ‘lottery ticket mentality,’ sir: Immigrants in the US are almost 20% more likely to hold graduate degrees than folks born here. 25% of doctors, 30% of psychiatrists, and almost 20% of nurses in Texas were educated abroad and here to practice medicine because we don’t have enough to support our aging population. Immigrant home buyers did not cause the collapse. Your idea of immigrants as uneducated opportunists taking advantage of the US is glaringly out of step with the facts. And labeling immigrants as having ‘lottery ticket mentalities’ is frankly, offensive, and your prejudice is sad.

      • Your “reply” is non-responsive. I did not say that immigrant home buyers caused the collapse.
        I opined that without them a residential real estate led financial crisis could not have occurred. Someone had to actually take out the mortgages for the system to fail. Your examples of well-educated immigrants are irrelevant to the discussion as they represent a small percentage of the total and are/were unlikely to default on their mortgages. I am more referring to literally entire Hispanic neighborhoods being wiped out through foreclosures as a result of scammers convincing
        immigrants to take out mortgages that they could not afford on the false hope that further spikes in home prices would allow for keeping the mortgages current through refinancings.
        Further, the sub-prime phenomenon driven by lowered Fannie Mae and Freddie Mac lending standards by definition involved attracting new cohorts of homeowners/borrowers like immigrants so that the GSEs could meet their quotas and the politicians could brag about historically high home ownership rates. The result was that by 2006 45% of new homebuyers provided no downpayment.
        A no down payment mortgage is the financial markets equivalent of a lottery ticket and the society got lottery like returns on investment for engaging in this stupidity. What is really sad – aside from
        FactCheck’s appalling ignorance and inability to comprehend – is that Hispanics suffered so disproportionately from the financial crisis as a result of being drawn into an insupportable political scheme that represented the worse politician abuse of both the marketplace and the most vulnerable elements of the general population.

        • Wow. Without immigrants “a residential real estate led financial crisis could not have occurred.” So without the victims (plenty of whom were non-immigrants and who you call “most vulnerable”), the (unprosecuted) crime couldn’t have been perpetrated? You have truly unlocked the solution to the world’s ills. Without senior citizens there’d be no telemarketers to prey on them. Without women there’d be no female rape. Without the poor there’d be no hunger. Yes, I’m being absurd, but saying that without victims there’d be no one to prey upon them is equally absurdist logic. At some point we must all trust others. Brain surgeons don’t pull out a drill and a mirror to DIY their own tumor removal on the kitchen table.

          Also, this article isn’t a history lesson. It’s telling us that a significant portion of the Texas real estate market consists of immigrant owners who, if due to fear of the current administration pull out in large numbers, will negatively impact the Texas housing market which will trickle down to lower property tax revenue.

          • A far better analogy is that, without the enfranchisement and registration of minority voters in the South, Jimmy Carter would not have broken the streak of wins by incumbent presidents in 1976. The recent residential real estate led financial crisis was not a naturally occurring phenomenon. It resulted from a bipartisan effort to boost home ownership rates in general and minority home ownership rates in particular. The Community Reinvestment Act begat ever increasing low income mortgage quotas at the GSEs to the point where low income disproportionately immigrants and minorities were drawn into the mortgage market by the siren song of low or no down payments, ever rising home prices, and the ability to refinance. The fact that Hispanics were disproportionately hurt as the
            author underscores with her Arizona and Las Vegas references points to the unavoidable fact that they were disproportionately drawn to the scam. The fact that the Hispanic population is disproportionately immigrant supports my point
            that immigrant mortgagees were at the tipping point of the crisis just like new
            minority voters tipped the 1976 election away from the historical norm. The fact is that the subprime crisis was much more of a Hispanic-centric phenomenon than the government will admit or that people in general want to discuss because of the political incorrectness of the subject matter.

  • Not recognized in this opinion article is the fact that the policies being debated are focused on illegal immigrants, not all immigration. I guess I just don’t get what part of “illegal” immigrant people don’t understand….

    • We understand. We also understand that legal or not they’re here, they’re living in either rental or purchased homes and that were they to change their buying/renting habits or location quickly, Texas would be in a world of hurt. According to February 2017 Pew research, nearly 10% of the estimated 11 mil. illegal immigrants reside in Dallas (475K), Houston (575K) and Austin (100K). Houston and Dallas are only behind LA and NYC in total numbers. Factor in the rest of the state and we’re well over 10%. They’re not all living in the same apartment. If a significant portion of Dallas’ 475K illegals leave, Toyota isn’t going to pick up the slack. Add in the knock-on effect of legal immigrants not feeling welcome and it’s glaringly obvious there is a ton of risk in the Texas housing market. What part of that don’t you understand?

      • Renato, seriously? 1976? And actually, the large numbers of foreclosures in Florida, Nevada and Arizona (retirement states) had less to to with immigrants (Hispanic or otherwise) and more about unbridled flipping and the second home ownership fever of the time. It was a house of cards of investors selling to investors. Middle America was sold on the easy money and cheap homes in sunshine states just waiting for their golden years. Also, again back to Pew, their research shows that whites and blacks were hurt disproportionately MORE than Hispanics. As a group Hispanic homeownership has historically been quite low (mid-40%). In fact in 2004, Hispanic homeownership was at 48.1 and dropped just 2% by September 2016 to 47%. During the same 12 year period, white homeownership dropped 5% while blacks dropped 16%. By your reasoning, I guess we should have left the blacks at home beginning in the 1400s, to spare ourselves their disproportionately high losses in the housing bubble?

        • Bold of you to come out in favor of the trans-Atlantic slave trade at this late date. I am a descendant of Pocahontas, have just read two books about Jamestown, and have no clue what you are talking about. To clarify, I can come up with five factors without which I do not believe the financial crisis would have occurred: (1) the globalization of financial markets, (2) the slicing and dicing of mortgage derivatives , (3) the gutting of Fannie Mae and Freddie Mac by the politicians, (4) the existence of the mortgage interest deduction, and (5) increased immigration to the U.S. The final factor has two dimensions: (1) direct participation in the subprime market by immigrants with the encouragement of the government and (2) the substantial contribution of immigration to the population increases that I believe were a necessary condition to the sustaining of the recent residential real estate bubble. The author is entitled to her opinion, but I think that the article would have been better and more balanced if she had considered these latter two points.