It’s no secret that President-elect Donald Trump made a lot of promises on the campaign trail and was pretty controversial while he did it. One of the biggest things that he promised voters was that he would take a hard stance on immigration policy; specifically, that he would start deporting undocumented individuals residing in the country illegally. In response to Trump’s election and widespread concern about the possible effects of a strict immigration and deportation policy on the national economy, Cornell University researchers evaluated the effects of deportation on Latino homeowners. The results, they said, indicate that deporting illegal immigrants could lead to a huge spike in foreclosures in the Latino community, which could have negative effects on the national housing market and economy as a whole.
According to the study, nearly one-third of undocumented Latinos live in homes owned by legal residents of the United States, who also live in those homes. For example, a married couple legally residing in the States may also have an undocumented cousin staying with them. Those undocumented household members usually are contributing to the household income and, as a result, if those members are removed from their households, a large segment of the population could find itself short on monthly mortgage payments and bills.
Matthew Hall, a professor of policy analysis at Cornell, warned that strictly enforcing immigration policy could “not only destroy families…but harm communities and local economies as well.” Readers should note: the report did not factor in the population of undocumented residents renting from legal-resident property owners and by extension potentially holding responsibility for the entirety of a property’s mortgage.
The research team identified the link between deportations and foreclosures by analyzing 107 counties in the United States. Of these counties, 40 applied for and received permission to implement a federal law that would give state and local law enforcement officers “broad latitude” in detaining and deporting undocumented immigrants. The other 67 counties applied for permission to implement the law but were denied. Thus, all 107 counties theoretically had basically the same level of interest in enforcing immigration law, but 40 had extra leverage with which to do so. After receiving permission to ramp up enforcement, deportations and foreclosures in Latino households in the 40 enforcing counties spiked. In the other 67 counties, levels of both remained about the same.
The researchers who conducted the study speculated that if President-elect Trump ramps up immigration law enforcement, this effect would expand on a national level. However, one flaw in this assumption lies in Trump’s stated plans on this topic. Before dealing with any other portion of the undocumented population, he has said that he will deport incarcerated illegal immigrants who, by nature of their incarceration, are likely not presently contributing income to any households anywhere. According to U.S. Sentencing Commission data on federal incarcerations, just over a third of all federal criminal convictions were handed down to individuals illegally in the United States in 2014. That’s a large population to start with, and it seems unlikely that removing this portion of the undocumented population will have the foreclosure effect worrying the Cornell research team.
The president-elect has vowed repeatedly to be “tough” on immigration, but at present we don’t really know exactly what that will look like (other than the potential wall, of course!). Stated plans such as e-verification for future hires will certainly affect undocumented residents’ ability to find employment, but measures like this will also not be as abrupt as a nationwide “crackdown” on otherwise law-abiding residents, which seems unlikely in any case. In the event that the Latino population of homeowners and the greater home-owning population as a whole is affected by a wave of deportation-related foreclosures, the real issue specifically for real estate investors will be how to best work within that new market environment in order to provide housing, solve problems for distressed homeowners and create productive, profitable business strategies for their real estate investing businesses. In short: business as usual.
You can get more of Carole VanSickle Ellis’ coverage of this topic and others online at www.sdiradio.com.
About the Author
Carole VanSickle Ellis is the host of Real Estate Investing Today, a daily nine-minute investing podcast, and the editor of the Bryan Ellis Investing Letter. Contact her at editor@bryanellis.com or visit www.investing.bryanellis.com.
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