DS News

43 » VISIT US ONLINE @ DSNEWS.COM IMMIGRATION IMPACTS RENT, HOUSING PRICES MORE THAN LABOR Every year, the United State's real estate market is becoming more culturally diverse. According to Alex Nowrasteh, Immigration Policy Analyst at the Center for Global Liberty and Prosperity, the interest from foreigners alone will strengthen home sales activity and price. e National Association of Realtors (NAR) Danielle Hale, Managing Director of Housing Research, joined Nowrasteh at the 2017 Realtors Legislative Meetings & Trade Expo to discuss the current and future impact foreign buyers have on the U.S. housing market. According to Nowrasteh and the 2015 American Community Survey, of the roughly 321.4 million residents in the U.S., 278.1 million are native, and the remaining 43.3 million, made up of 20.7 million naturalized citizens and 22.6 million noncitizens, are foreign born. "Immigration affects rents and home prices far more than it affects the labor market," said Nowrasteh. "An expected 1 percent increase in a city's population produces a 1 percent uptick in rents, while an unexpected increase results in a 3.75 percent rise." According to Nowrasteh, most of the impact is felt where immigrants tend to reside: in low- and middle-income counties. Referencing NAR's 2016 Profile of International Activity in the U.S. residential real estate, Hale said foreigners view the U.S. as a great place to buy and invest in real estate. "A majority of foreign buyers in recent years are coming from China, which surpassed Canada as the top country by dollar volume of sales in 2013 and total sales 2015," Hale said. "Foreign buyers on average purchase more expensive homes than U.S. residents and are more likely to pay in cash." According to Hale, roughly half of all foreign buyers purchased in Florida, California, Texas, Arizona, or New York. MILLENNIALS MAY BE TO BLAME FOR THE HOUSING SHORTAGE e most pressing problem facing the housing industry today is the tight inventory, and according to Realtor.com, millennials may be partly to blame. As many young potential buyers move into cities and away from the suburbs, housing construction has been notoriously weak. Cities like New York, San Francisco, Boston, and Los Angeles have seen their suburban areas shrink. According to Jed Kolko, Chief Economist at the job-search site Indeed and Senior Fellow at the Terner Center for Housing Innovation at the University of California, the amount of young people living in the Washington, D.C., urban area increased by 8.6 percent between 2000 and 2014 as the preferences of young people evolved. e difference is younger generations are choosing better locations over better homes, according to BuildZoom Chief Economist Issi Romem. Builders are producing less housing overall as they shift from cheaper suburban areas to "trendy" urban markets. Builders have had to focus on high-end city housing for high earners, leaving young people just starting out behind. Realtor.com calls this "one of the most vexing aspects of the housing recovery." Prices for new homes are steadily rising even though there are fewer being built. But as millennials get older, starter home demand begins to bounce back. BuildZoom analysis shows that in metro areas where land is less expensive, and there are fewer land use restrictions, starter homes are on the rise. In Austin, Texas, new residential sales over 20 miles away from city center rose 12 percent between 2000 and 2015. Romem said this shows how looser land use rules lead to increased home sales, making it more economical for builders to construct starter homes. "Do you care about preserving things the way they are, so that only wealthy people can continue buying in, or do you want to [encourage more density], so that housing is more affordable for everyone?" Romem asked.

• Cover