Could immigration be the main driver for the US housing market?

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A report by the Urban Land Institute has cast a very interesting light on the US housing market and its relationship with immigration and immigrants. There is a growing belief that immigrants will play a major role in the US housing market going forward. Even the most basic analysis of recent trends supports the belief that immigration is actually the main driver behind increasing demand for US housing. So, if immigration could be the main driver going forward how will Donald Trump’s immigration policy help?

Current trends

One interesting trend estimates that between 2015 and 2025 there will be an additional 12.5 million households in total. If the recent trend in immigration holds during this period then of the 12.5 million new households around 3.5 million will be occupied by immigrants. There is a growing belief that any reduction in the number of immigrants allowed into the US will have a detrimental impact upon the US real estate market going forward.

While historic trends and historic statistics do not necessarily replicate themselves going forward there are some rather astounding figures. Of all household growth in the US over the last 20 years a staggering 28% came from the immigrant sector. Indeed all growth in household numbers where the family is headed by somebody under 45 years of age came from the immigrant population. These are really astounding figures and do make you wonder how the US housing market will perform if extremely strict immigration policies are put in place by the Trump administration.

Home ownership

The native born US population have a homeownership ratio of 65.9% which falls to 50.5% for the immigrant population. Between 1994 and 2015 there was no change in the native born homeownership ratio although the immigrant element grew by 2.3%. Even though growth of 2.3% may not seem particularly high it does reflect an awful lot of houses over that period. The fact that homeownership in the immigrant population is the only one showing any growth will also shock many.

What we are also starting to see is a shift by the immigrant population from relatively expensive city centres into the suburbs. This is not only impacting housing prices in the suburbs but in some cases is putting a strain on both public services and the infrastructure. There will be an array of challenges for local authorities across the US in years to come because while many people are keen to control immigration it is extremely important in the long term.

Controlled immigration

Immigration was one of the major talking points during the recent presidential election campaign which Donald Trump won to become president of the USA. While many people are concerned about uncontrolled immigration there is less resistance to controlled immigration of those with various skills and experience which may be in short supply. Whether Donald Trump will be able to separate these different areas of immigration without causing problems remains to be seen but he certainly has a bee in his bonnet about this subject.

Many US citizens need to be careful about what they wish for because a significant reduction in immigration numbers would have a detrimental impact on the US housing market.

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