Arizona’s Vanishing Phoenix, Home Values

One of the most sacred Rights for Americans is the right to property. It is indeed an essential tenet of conservatism that holds that most men just want to labor and live in peace and be masters of their property. Conservatism holds that “The mixing of his hands and labor moved the property from the state of nature and  made man the rightful owner of property“. Unfortunately, the new SB1070 law is causing serious damage to Arizona rightful owner of property” and Arizonans are now quickly realizing the new law, and currently in litigation in federal court, is rapidly pushing down the value of their hard-earned property. The value of their homes are plummeting owning to a ill-intentioned law that was drafted for mere political spectacle. As an editorial article in the Arizona Central newspapers points out, as the impact of Arizona’s tough new immigration law is rippling through the state, Gov. Brewer remains oblivious to the looming economic tragedy and the financial collateral damage on properties of Arizonans caused by SB1070.

The new law, if ever enacted, will push immigrant and first generation of Hispanics–citizens and legal residents–out of Arizona because they will feel unwelcomed by incendiary rhetoric espoused by some far-Right Republican legislators and  Gov. Jan Brewer. Moreover, Arizona is among hardest hit state in the country by the housing crisis,  48% of homes in Arizona are underwater or had been foreclosure. The new law could most immediately add more foreclosures, empty homes and apartments in large metropolitan areas like Phoenix.

The intent of the law is to prevent illegal immigration, or to force those already in to leave. However, the laws is adversely encouraging first generation of Hispanics an immigrant to think twice before buying a house due to uncertainty caused by anxiety about new law. Thus, new law in fact, deters potential new buyers or residents–people who are afraid of what might happen to them or who simply object to the law, or don’t want to be perceived as second-class citizens.  Moreover, and even for people who don’t care about the law, among the principle attractions for older American to move to the state is that their principal investment will be assured by holding  the same value of the house, or gain value. However, that is not even a guaranteed today. People from outside Arizona considering buying a vacation or investment home here may change their minds, not to boycott the state but out of concern the law will negatively impact the housing market and home values.

Furthermore, the new law also defies any logical financial residential market for sellers and buyers. Demographic trends suggest that the US will have many new home buyers in the coming decade. That’s one core conclusion of a report released by Harvard University’s Joint Center for Housing Studies. A key reason: Immigrants and their native-born children who are already in the US are filling out the ranks of the “baby bust” and “echo boomer” generations, so that each of those groups will now rival the baby boom generation in size. In Arizona for example. 83% elders are whites, and 85% of Hispanic resident are under 18. Under the logic of the Harvard study, the new generation of native Hispanic-Americans and immigrant are supposed to “fill out” the need of the housing market in Arizona. However, the new law is adversely pushing the native born and immigrant out of the state, and thereby, increasing foreclosures, vacant apartments, and minimizing taxes revenues for the state, and thus pushing home values even lower.

Jan Brewer has not destroyed the current economy, but has hindered any future recovery hopes with the the housing industries. Demographic factors reveal some light in the housing-market tunnel. “Even if immigration falls to half the Census Bureau’s currently projected rate, household growth will still average about 1.25 million annually,” says the study, conducted by multiple Harvard, but now in Arizona–if the new generations and immigrants leave the state.

Americans have more than $6 trillion in equity in their homes. But that’s down roughly 50 percent from the peak level in 2005, and brings inflation-adjusted housing wealth back to where it stood for much of the period from 1985 to 1997. Younger generations will fuel demand. Due to immigrants and their children, the so-called baby-bust generation–born in 1966-85 and the expansion of the Hispanic population in the south west, in which 65% average is 25 years of age–nearly outnumbers the baby-boom generation, the report says. The echo-boom generation is also moving toward home-buying age. Boomers themselves are expected to boost demand for senior housing–retirement communities and nursing homes. Despite the recent home-price declines, many older owners still can sell at a gain because they bought their homes years before the boom and bust. But even if they want buy, the want to protect their investment where they will not lose value or have an immigrant population to care for the elders.

As some people leave, then both population and demand for housing will probably decline. Thousands if not tens of thousands of people who are not legal residents have purchased houses here. Damage to the housing market might appear, housing analysts say, is in foreclosure filings. Large numbers of homes falling into foreclosure, with owners who have Hispanic last names.

More telling about the Harvard report is that foreign-born immigrants in 2008 that had spent more years in the U.S. and were more likely to be a U.S. citizen and own property. Those factors, strongly associated with higher rates of homeownership, appear to have mitigated recent troubles in the housing market among immigrants. Thus, while the current housing crisis had affected native buyers, long-time immigrant appeared to have been protected. But the new law in Arizona may push immigrants outside to other states where they feel will welcome.

Additionally, in Arizona the most striking factor to negatively affect to home values is that 83% of elders are whites, and 85% of Hispanics are under 18. Id the new generation leave, who is to buy the houses from 83% older whites and boomers. In a Pew analysis, in 2007, 27.6% of home purchase loans to Hispanics and 33.5% to blacks were higher-priced loans, compared with just 10.5% to whites that year.   Overall, the homeownership rate in the U.S. dropped from 69.0% in 2004 to 67.8% in 2008, a loss of 1.2 percentage points. Over the same period, the homeownership rate for black households decreased 1.9 percentage points, from 49.4% to 47.5%, reversing four years of gains.

The homeownership rate for native-born Latinos peaked a year later in 2005. But since then it has fallen from 56.2% to 53.6%, a loss of 2.6 percentage points in just three years. Also, as noted by the Harvard analysis, Immigrant households did not experience similar losses in homeownership. Nation wide, homeownership among Hispanics increased more quickly and for a longer time than homeownership overall. The Latino homeownership rate peaked at 49.8% in 2006, compared with 42.1% in 1995. It was unchanged in 2007 and fell to 48.9% in 2008. If the analysis is accurate, immigrant householders are more likely to be homeowners than those who are native-born. Concinnity, the new law precisely will push those long-time immigrants with their young first generation out of Arizona.

While the homeownership rate in the U.S. dropped from 69.0% in 2004 to 67.8% in 2008, Immigrants, however, appeared to fend off declining prospects of ownership in the housing market. The most notable of these states—California, Nevada, Arizona and Florida—which are also home to large numbers of immigrants

It is fact that the illegal immigration issue, like it or not, is already entwined in our economy and social fabric. Also, and it unfortunate that it is being now used by politician to passed laws that are hurting home value and that are likely to hinder any prompt recovery in Arizona. While 70% of Arizonans may support the new law–I assume the other 30% that opposes it is the population of Hispanic Arizonians–they are not being told by Republicans politicians, like Russell Pearce and Jan Brewer–that in supporting this new law they are simultaneously prompting a devolution of their properties.

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