Housing Crisis Solution For U.S.: More Immigration?
An interesting op-ed in the Boston Globe last week from Nicholas P. Retsinas, director of the Joint Center for Housing Studies at Harvard University. The premise: baby boomers had better embrace immigrants, because they’re the ones who are going to buy their homes.
Retsinas makes a strong supply and demand argument, citing that “the cornerstone of housing robustness is strong demand, and the foreign-born constitute a major segment of that demand.” He throws out some strong numbers; like that 40% of net new household formation in the first five years of this century was foreign-born, up from only 15% in the 1980s.
I get it, but is this really the argument we want to be making as a solution to the nationwide downturn in housing sales and prices? I don’t know that I want to jump into the immigration debate, but here goes: this feels something like the outsourcing argument. If we can’t support our own housing industry, then should we just bring in more foreigners to save it?
Retsinas doesn’t actually go so far as to say the U.S. should increase immigration quotas, or help those who are here illegally to stay right where they are. But from the force of the argument, it certainly feels like that’s the conclusion he’d like us all to draw. He suggests that the housing industry should “be sending out the welcome wagon,” to immigrants, the bulk of them Hispanic.
Look, I’m all for the American dream of home ownership and the American dream of immigrants finding a better way of life. My great grandparents came over from Russia way back when, and I’m pretty psyched they did, given what went on over there in the years that followed their exit. I’m just thinking that this is kind of an easy-way-out argument.
The housing crisis we’re seeing today was caused by several unique factors: historically low interest rates, new loan products from historically aggressive lenders, a fury of speculative investment, and pressure from Wall Street--which took an unprecedented liking to mortgage backed securities. The housing boom had nothing to do with immigration; it had to do with greed. Greed on all sides of the equation.
The solution, therefore, should be a touch of housing hubris; builders should cut back to a realistic scale, lenders should have lunch with reality (not realty), and home buyers should understand that houses are not free. As for Wall Street, I’m not even going to go there. Yes, immigrants will ease some of the pain, but let’s not start making our immigration policy arguments based upon mistakes made right here at home.
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