The United States is famously a nation built by immigrants. And according to a new study by the Urban Land Institute, Home in America: Immigrant Housing Demand, they are poised to play an increasingly large role in the real estate and housing industry in the next few decades.
The study analyzes nationwide data from the U.S. Census Bureau’s American Community Survey to provide broad, national trends as well as deep dives into five different cities (San Francisco, Buffalo, Houston, Minneapolis, and Charlotte). It makes that case that, due to the steady growth in immigration, immigrants and the success of the housing market are intertwined.
As the report cites, the Harvard Joint Center for Housing Studies estimated that between 2015 and 2025, the United States will add nearly 12.5 million households total; if trends hold, that means 3.5 million new immigrant households. Without sustained immigration, the report notes, “the housing market could weaken, and in many markets the impact could be dramatic.”
Here are some other key takeaways from the report, and how the immigrant population may impact real estate trends.
Immigrants could one day be “the primary driver of demand”
While the desire for immigrants to buy a home and achieve the American Dream has always been part of the stereotypical American story, stats on recent immigrant homeownership show a significant impact. According to ULI research, over the last two decades, 28 percent of all household growth in the United States, and nearly all the growth in households headed by someone under 45 comes from immigrant families.
Immigrants have also been crucial to the housing market’s recovery after the 2008 downturn. Even more telling, a 2014 study by the Bipartisan Policy Commission, a D.C. think tank, concluded that “if current birth rate trends continue, immigrants and their children will be the source of almost all U.S. population growth and, by extension, the primary driver of demand for new residential construction.”
Immigrants are increasingly moving to the suburbs
Since 2000, the shift in settlement patterns away from cities and towards jobs and more affordable housing in the suburbs, has been noteworthy. In 2000, just about half of the country’s foreign-born population lived in the suburbs. In 2013, it was 61 percent nationally, and in 20 major metropolitan areas, the suburban immigrant population has doubled.
According to the ULI, some of the regions with the fastest-growing immigrant populations were “remerging gateways,” which they defined as cities seeing a recent resurgence in new arrivals after a 20th century lull. Examples include Baltimore, Denver, Minneapolis, Seattle, and Tampa Bay.
The reports posits that new arrivals, and communities that seek to attract new immigrants, could be key to fueling the revitalization of economically challenged suburbs. The declaration that the suburbs are dead could be premature.
Homeownership is growing among the immigrant population
Immigrants do have a significantly lower rate of homeownership, 50.5 percent compared to 65.9 shown by the native-born population. But that gap continues to close, with the homeownership among foreign-born Americans increasing by 2.3 percent between 1994 and 2015 (the rate was unchanged for native-born Americans).
Cities should plan for growth
With a new influx of immigrants, especially in suburbs, municipal planning can be challenging, especially in areas with few supports in place [what does this mean?], or little history as immigrant centers. Investing in housing, retail, recreational, and cultural amenities now, including social and educational programs, can help areas benefit from the potential of their inevitable new neighbors.