As the politicians of the country grapple with pending immigration reform (and the Senate debates the topic this week), there are other implications far beyond green cards and a path to citizenship. There exists a potential to create three million new homeowners over the next five years, with a potential spending on housing, consumer spending and closing costs totaling $500 billion over the next five years, according to a study updated by the National Association of Hispanic Real Estate Professionals (NAHREP).
Demographically speaking http://www.infoplease.com/spot/hhmcensus1.html , Hispanics are the largest minority group in the U.S. and made up 16.7 percent of the total population of the country in 2011. Hispanics accounted for more than 1 of every two of population growth from July 1, 2008 to July 1, 2009. The U.S. Census Bureau forecasts that Hispanics will make up 30 percent all people in the U.S. by 2050. The real effect, however, is likely to be in the housing arena where 63.1 percent of the Hispanic households included a married couple and 61.1 percent included a married couple and children younger than 18—prime targets for future homeownership. Hispanics are young, with the median age of 27 years old in 2012 compared to 36.9 years of age for the U.S. population as a whole.
The original NAREHP study was completed in 2004, and was updated to reflect changes in demographics. Their findings which span the next five year period include:
- Based on prior home purchase trends among foreign-born households, up to 50 percent of the six million undocumented immigrants that are anticipated to pursue legalization will buy a home
- Based on an typical $40,000 household income, three million of these foreign-born households could afford a $173,600 home
- These number of sales would result in $500 billion in new loan originations and $25 billion in mortgage origination and refinance income
- An added $180 billion of consumer spending will occur at the local level, based on typical consumer spending per homebuyer of $60,000, according to the National Association of Realtors®, as reported in 2012
The bottom line is that the ability to have a path to legalization also opens the doors for homeownership for potentially millions. If the three million total sales number over a five-year period is correct, then existing home sales would be vaulted almost instantly to 5.5 million existing homes sales per year—a gain of 10 percent, literally back to the level seen in the last normal home sales period in 2002.
To read the entire NAHREP press release on pending housing impact from immigration reform, click http://nahrep.org/press and click the press release on Immigration Reform.