How will mass deportations of undocumented immigrants affect California's housing market?

  • Negatively. (37%, 240 Votes)
  • They will have no impact. (33%, 214 Votes)
  • Positively. (30%, 190 Votes)

Total Voters: 644

President Trump recently characterized his deportation plans as a “military operation.” While members of his administration later clarified that no military force will actually be used, strong rhetoric like this, as well as memos directing law enforcement to deport any and all undocumented immigrants they encounter, make one wonder about the future of California, whose economy depends upon our undocumented immigrant population of roughly 2.6 million individuals.

This article does not address whether undocumented immigrants ought to be here in California or not. But it does examine what will happen to our state when deportations occur.

California’s agriculture, hospitality and construction industries all rely on the cheap labor supplied by undocumented immigrants to keep prices at the level that consumers demand. Mass deportations of undocumented immigrants will decimate these industries, the impact rippling throughout California’s economy — including our housing market.

Trump’s plan widens the net from the 1.4 million undocumented immigrants targeted for deportation under President Obama’s policies to nearly 8 million people nationwide, according to the Los Angeles Times. This includes any individual who has been charged for a crime (even those who haven’t been convicted) or who is believed to have committed an act that may warrant being charged for a crime.

How will more deportations impact the housing market? For the answer, a look back at recent history is required.

Deportations fueled the foreclosure crisis

A greater share of Latino/a homeowners lost their homes during the foreclosure crisis than any other ethnic group, according to the Center for Responsible Lending. While this was partly due to the shockwaves of predatory lending during the Millennium Boom — when lenders targeted minority homebuyers for subprime mortgage products — the full story is more complicated.

3.6 million individuals were deported from the U.S. from 2005-2013. The number of deportations steadily increased each year, with about two-and-a-half times as many individuals being deported in 2013 compared to 2005, according to the journal Sociological Science. This activity continued and increased throughout the recession and foreclosure crisis.

While about 66% of undocumented persons in the country are Mexican or Central American, a whopping 94% of these deportees were Mexican or Central American.

In a New York Times interview with the authors of the study in Sociological Science, they claim many Latino homeowners rely on at least one undocumented immigrant to provide for some or all of their expenses. About one-third of undocumented immigrants live in owner-occupied homes. Therefore, when that person gets deported, the household loses that income stream. When the household can’t make up the difference, a home sale or foreclosure is imminent.

The authors liken deportation to a divorce, death or other major life event that can lead to foreclosure. Further, as detailed in a Federal Reserve Bank of Boston study, the number one reason for a household to default on their mortgage is losing a major income stream.

The last foreclosure crisis dragged down home values, spread blight and caused other sectors of the economy to suffer. Future deportations on any large scale will only harm California’s housing market.

How many homes will be foreclosed upon if mass deportations occur in California?

Say Trump’s administration is successful at deporting the entire population of roughly 2.6 million undocumented immigrants in California — a most unlikely feat. Since one-third live in and contribute income to owner-occupied homes, about 860,000 homes would be at risk for foreclosure. For perspective, that’s about 12% of California’s 6.9 million owner-occupied homes.

The rest of the undocumented immigrant population — about 1.7 million individuals — lives in rentals. Mass deportations of these individuals will put landlords in a bind.

However, the administration is unlikely to be able to deport undocumented immigrants at the large scale their plan calls for. The government simply lacks the resources (or public support from the many industries that rely on undocumented, cheap labor) to do so.

Therefore, future deportations may make a dent on our economy and housing market, but the impact won’t be catastrophic. The size of the dent will depend on the magnitude and duration of deportations. Four years of consistently higher deportations will slowly eat away at California’s economy and housing market — unless our state acts to stop deportations from getting out of hand.

California is home to several “sanctuary cities” which refuse to cooperate with immigration officials, including Los Angeles and San Francisco. A new bill is currently moving through the state legislature which may turn the entire state into a sanctuary for undocumented immigrants. Senate Bill 54 continues to advance despite Trump’s threat to withdraw federal funding from sanctuary cities.

Whether or not this bill ends up becoming law, California will weather the storm. How do you see future deportations affecting California’s housing market? Share your thoughts in the comments below.

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