Timothy Pratt, Las Vegas Sun, May 13, 2009
Counties with high foreclosure rates also tend to have large immigrant populations, according to a Pew Hispanic Center report released Tuesday.
The study ranked Clark County sixth nationwide in foreclosure rates last year with 8.9 percent of the valley’s houses in the courts. Nearly 1 in 4 heads of household locally were foreign-born, much higher than the national rate of 4.7 percent. Half of those immigrants were Hispanic.
But the study’s main author, Rakesh Kochhar, cautioned that focusing on those factors can lead to a “chicken and egg situation.”
“The two things appear together, but is there a causal relationship? Not necessarily,” he said.
Kochhar noted that jobs building houses drew many immigrants to the Las Vegas Valley in the past two decades. An unknown number of those workers bought homes.
The report also shows that Hispanics, blacks and minorities in general entered subprime mortgages at higher rates than the rest of the population. Nationwide, for example, 27.6 percent of home loans to Hispanics in 2007 were high-priced and a third of loans to blacks were in the same category. Only 1 in 10 loans to whites were high-priced. So areas with higher shares of minorities tend to have higher numbers of homeowners with loans at risk of entering foreclosure.
Kochhar’s report, titled “Through Boom and Bust: Minorities, Immigrants and Homeownership,” shows that counties with high foreclosure rates exhibit other factors, including rising unemployment rates and sinking home values.
Clark County’s unemployment rate for March was 10.4 percent, tenth-highest among major metropolitan areas nationwide. The Pew report looks at unemployment rates only for 2008 as a whole, which in Clark County was 6.5 percent. The construction sector is among the hardest-hit in terms of job loss. And home values in Las Vegas dropped 31.7 percent in 2008, second most in the nation behind Phoenix, according to a recent Standard & Poor’s report.
So there are several factors related to high concentrations of immigrants, each somehow related to another.
As Kochhar wrote, “the presence of immigrants in a county may simply signal the effects of a boom-and-bust cycle that has raised foreclosure rates for all residents in that county.”
[Editors Note: “Through Boom and Bust: Minorities, Immigrants and Homeownership,” by Rakesh Kochhar, et al., can be read on-line here.]