A perceived strain on government resources has caused some Americans to begrudge the country’s immigrant population. But Harvard researchers, in a new white paper released Monday, are saying that a slowdown in immigration could hurt the long-term real estate market.
In the 2009 State of the Nation’s Housing Report, Harvard economists say real estate remains under considerable strain due to rising unemployment, falling home prices and tighter lending standards. “The best that can be said of the market is that house-price corrections and steep cuts in housing production are creating the conditions that will lead to an eventual recovery,” says Eric S. Belsky, executive director of the Joint Center for Housing.
While the natural ebb and flow of family formations is expected to reinvigorate housing, the unknown variable, future immigration levels, “remain a wild card that could either dampen housing demand or lift production even higher.” Fewer people have been moving to the U.S. since job opportunities have slumped, and if this continues “a deep, prolonged recession would likely suppress immigration to levels that are never fully made up.”
Another silver lining: Due to major production cuts by home builders, the institute estimates that the 1 million- to 1.5 million-unit glut of new homes that existed at the beginning of 2005 fell to a technical shortfall of 100,000 to a half million units by 2009 based on long-term demand. “Progress in working off the oversupply is masked because the weak economy is driving household growth and second-home demand below long-run potential,” reads the report.
[Editors Note: “The State of the Nation’s Housing 2009” can be read or downloaded as a PDF document (with appendices) here.]