Immigrants and Rising Home Prices
A recent report from the Mortgage Bankers Association suggests that immigrants may be a factor in increasing home prices.
The June report noted a significant national housing shortage, estimating it to be between “1.5 million to 7.3 million homes,” and argued that demographic shifts resulting from immigration policies could decrease housing demand.
“In the future, demographic trends are undermining the fundamentals of housing demand,” the report elaborated. “Household formation is expected to decelerate in the coming decade due to an aging population, declining birth rates, fewer young people, and a reduction in immigrant numbers.”
Mike Fratanoni, the chief economist at the Mortgage Bankers Association, mentioned that “stricter immigration policies are a significant factor contributing to downward adjustments in population growth and household formation in the next several years. Over the medium to long term, the effects of lower birth rates will also have a considerable impact.”
Fratanoni further pointed out that “a slowdown in housing demand growth could have major implications for the mortgage industry, influencing mortgage originations, debt capital accumulation, and credit performance.”
The U.S. Department of Housing and Urban Development has yet to respond to requests for comments.
According to the association, home builders have been reacting to strong demand over the years, especially in the southern and western parts of the country, with a focus on multifamily housing.
“In recent decades, many young adults have increasingly thought about international migration, but that now seems unlikely due to the abrupt changes in immigration policy expected in 2025,” the report indicated. “Recent estimates anticipate that net migration may be negative for a few years at least.”
“These trends carry significant implications for homeowners and the mortgage sector, including risks related to mortgage origination, borrower equity, and credit performance,” the report noted. “Should construction continue to rise, supply growth could eventually outstrip demand growth, leading to potential decreases in home prices.”
Interestingly, it was reported that nearly 30% of Haitian immigrants in the U.S. on temporary visas own their homes, which is slightly more than the percentage of Gen Z Americans who are homeowners.
