Mass deportations will have very little impact on the housing market

Illegal immigration advocates attempt scaring policymakers with the specter of a housing crisis caused by mass deportations.


Advocates for dubious political policies often resort to scare tactics in hopes that policymakers will favor their policy prescriptions. For example, the advocates of fiscal austerity trumpeted the fear of rampant inflation while most economists stated increased stimulus would achieve a more positive effect. The austerity advocates resorted to emotional appeals and dubious reasoning that later proved wrong. Advocates of strict marijuana laws alarmed politicians with the dangers of legalization, but as more states decriminalized and finally legalized marijuana, very few negative side effects emerged.

The latest advocates to resort to dubious arguments are those opposed to deporting illegal immigrants. It’s difficult to argue in favor of illegal immigration. By definition, advocates favor behavior that breaks the law, a difficult position to justify. Therefore, advocates for illegal immigration generally must argue in a roundabout way often touting the advantages of allowing the illegals to remain. The argument that mass deportations will harm the housing market falls in this category.

First, illegal immigrants generally don’t own property in the United States. These are mostly low-wage workers that don’t earn enough to buy homes even if a lender were willing to provide them a loan. If they were all deported, it wouldn’t cause an influx of home supply to hit the market — assuming everyone thinks that’s a bad thing, which they don’t.

Second, the income earned by an illegal alien wouldn’t disappear from the economy if they were deported because some legal resident would do the work. In fact, since many illegals send their earnings out of the country, deporting them might actually increase the amount of money in circulation here in the United States. Trump’s supporters gravitated toward his idea of building a wall because many of them believe — rightly or wrongly — illegal aliens displace their jobs or suppress their wages.


Third, many illegal aliens live with legal residents and contribute to household income. Many of these households overextended themselves and require the undocumented income from the illegal to make their payments. If mass deportations cause more foreclosures among the overextended households, is this a negative? These households endure financial duress, and the loss of this income may finally put them out of their misery. While the legal resident who holds title may not like this outcome, remaining trapped in debt servitude isn’t a positive outcome either.

Fourth, even if mass deportations result in tens of thousands of foreclosures, so what? US lenders completed 6,324,545 foreclosures over the last ten years. At this point with foreclosures near historic lows, the market will easily absorb a few additional foreclosures.

The fact is that mass deportations will have almost no impact on the housing market. Advocates for illegal immigration might claim otherwise, but the facts don’t support their contentions.

Why More Mass Deportations Would Be Bad News for the Housing Market

Emily Badger DEC. 8, 2016

Right around the time foreclosures were starting to pile up in the housing crash, on their way to affecting nearly one in five homeowning Hispanic households, the very same communities took a second blow.

The federal government’s Immigration and Customs Enforcement agency, in partnership with local law enforcement, was increasing deportations of undocumented immigrants: more than three million in all between 2005 and 2013. About 85 percent of them were working Latin American men.

So despite how much the political left demonized Trump’s call to deport illegal immigrants, the Obama administration was deporting them by the boatload — literally.



New research now suggests that the deportations helped exacerbate foreclosures. …

Previous research suggests that Hispanic households, like black ones, were disproportionately victimized by subprime lending schemes that eventually pushed families into foreclosure. But the fact that foreclosure rates among Hispanics surpassed those among blacks points to something else going on.

Mr. Rugh and Mr. Hall note that Cuban immigrants and Puerto Ricans — two groups not targeted for deportation because of their special immigration protections and citizenship status — didn’t suffer the same high foreclosure rates. …

Such sizable effects are possible because of an often-overlooked dynamic in Hispanic households: Many undocumented immigrants live in — and contribute income to — households with legal residents. …

“It’s just so much higher than what people think,” Mr. Rugh said. “It’s a very interesting twist on the Latino incorporation story: Their tremendous increases in homeownership and other things — a lot of those gains are because they pooled resources across legal status.” …

We know that millions of subprime borrowers were given debts far too large for their incomes, and many, if not most, of these borrowers succumb to the pressure and lost their homes. Many others were offered loan modifications, ostensibly to allow the borrowers to keep their homes but really to keep them on life support until prices went back up and lenders could obtain more in a foreclosure.

The households where illegal immigrant income helped pay the bills suffered foreclosure at lower rates than those where the illegals were cleared out, delaying or preventing about 100,000 foreclosures over the last decade or so. Did that really do those households any favors?

These are people who really can’t afford their homes. They share their homes with an illegal alien to scrape by, and if that illegal alien leaves, they too would become a foreclosure. Is that any way to live? Are they really living the American Dream?


In a broader sense, this also means that mass deportations risk undermining gains that American citizens of Latin American descent have made in assimilating into the United States economy. The research also reveals the pressure that the deep-seated American suspicion of immigrants (which long predates Mr. Trump) exerts on the American value of homeownership and all its associated virtues like responsibility and stability.

Complete and utter bullshit. Mass deportations of illegal aliens will not prevent legal American citizens from assimilating into the US economy. The research fails to establish any causal connection between American attitudes about legal immigration and the deterioration of American values. As the spouse of a legal immigrant, I find the assertion insulting.

By deporting undocumented immigrants, in effect, the country may be making it harder for Hispanics to realize the American dream. And if that argument doesn’t convince you, Mr. Rugh and Mr. Hall propose a more self-interested appeal for the country’s coming debate over what to do about undocumented immigrants:

Homeowners need Hispanic buyers.

“This is the future,” Mr. Rugh said. “The Asian and Latino population are a big part of the future of the housing market. And people want to be able to sell their homes, right?

WTF? Without a few million illegal immigrants, nobody will be able to sell their homes? It’s such a laughably stupid suggestion, it’s impossible to take seriously.

Like most advocates, those who advocate for illegal aliens mean well. They fight a losing battle that just got even more difficult. I’m not surprised they resort to nonsensical scare tactics, but as I have a duty to the truth, I’m here to point out that their arguments don’t make much sense.