While it’s certain that lawmakers were aware that the new Arizona immigration law requiring everyone in Arizona to carry proof of U.S. citizenship would make some waves, it’s unlikely that they expected those waves to take the form of a foreclosure tsunami on the housing market in areas like Phoenix. However, that is just what some analysts are predicting[1].
The Arizona Republic reported yesterday that “several hundred thousand undocumented aliens [are] residing in Arizona,” and that if they leave, “both population and demand for housing will probably decline.” That is not the end of the matter, though. While you might assume that an illegal alien would be unable to obtain financing for a property, in reality “thousand if not tens of thousands” of illegal residents may have purchased homes in Arizona, according to housing advocates. And whether the fault lies with lenders that did not verify identity or with the homeowners who provided false identification, the situation is going to be extremely difficult to exit because lenders are unwilling to work with illegal homeowners on short sales and other options.
In 2008, the Department of Homeland Security reported that more than 100,000 illegal immigrants exited Arizona, causing a dramatic jump in apartment vacancies and home foreclosures. With an imminent mass exodus likely in the future now, these numbers will probably jump again. Furthermore, given that the homeowners in question leave little or no legitimate paper trail in their wake, recouping any type of losses could be quite difficult for lenders seeking to remedy the situation via pursuit of deficiency judgments.
Of course, right now all of this is still hypothetical. It is entirely possible that the law could actually attract people to move into the state in the same volume that they are moving out. Or it could end up having no net effect – or not much of one – at all. The fallout, for now, is still in the future, and we will have to wait and see if Arizona’s attempts to defend its borders has a positive or negative effect on its housing market.
Would you invest in Arizona? Live there?
Thank you for reading! Your comments and questions and welcomed below.
[1] http://www.azcentral.com/arizonarepublic/news/articles/2010/06/14/20100614arizona-immigration-real-estate-foreclosures.html
Similiar issues are occurring in New Jersey where a large Brazilian population (illegal) are exiting and in their wake are the empty houses. Amazing the banks gave these folks loans to begin with but then they allowed them large home equity lines. Their sceme was consistent. Get the mortgage, get the equity line, take the money , don’t pay the mortgage and then go back to Brazil and live like wealthy people. We wonder why the mortgage industry is in the shape its in.
I’m ready to move there.
Where there is pain there is also opportunity. Banks didn’t cross the “t’s” and dot the “i’s” and were in to big of a hurry to sell these mortgages and keep creating loans without due diligence. It created a mess for the banking system but alo created opportuity for real estate investors. There may be some short term pain, but in the long run when legal tax paying citizens move in these homes and keep there funds in the US, it will eventually stabilize. No need to rush in and buy now, there is still plenty of time to find bargains.
Proof of citizenship is not documented on any mortgage application. A loan officer is however required to ask a number of “declaration” questions, one of which is whether the borrower is a citizen, permanent resident alien or a foreign national. Loan officers rarely ask the question because answering “citizen” always floats right by – underwriters don’t question it. On the other hand, even if the question is asked, most people would simply lie about it.
Is asking for proof of citizenship too much to ask on a mortgage application? Is it too much to ask on a routine police check? Are we prepared to carry our proof of citizenship with us at all times? If a state has a problem with illegal aliens then they should be able to try to curtail the problem by asking for proof. How that affects the real estate market should have absolutely no bearing on the decision.
If Phoenix and other cities in AZ lose some real estate market value due to increased foreclosures and vacancies, so be it. It’s a small price to pay. True value can only be determined when the people that own the properties and rent the apartments are legally allowed to be there.
That said, if you are a buyer there right now would you also consider a nice Florida waterfront I have for sale?
Foreclosures are going to continue to occur whether these people leave or not and here’s why: During the “FRAUD” period, as I like to call it, 8 out of 10 purchases were made with stated income option ARM loans or other similar tricky loans, and these loans were given to anyone with a pulse. Real Estate Agents were salivating over these deals because it was damn near impossible to not get a client into a home, and it did not matter whether or not they could actually afford it as long as they signed on the dotted line, so to speak. Hispanic families are however, not the only people who purchased homes with the same loans. So you see, foreclosures will occur regardless of the Mexican mass migration out of AZ. whether we like it or not. The blame falls squarely on the Shoulders of Departments of real Estate and the Mortgage Banking industry. One more thing to note: As these people leave Az. one primary benefit will be a lower crime rate, as many Gang members are here illegally, so when they leave, they take their criminal activities with them. Az. will survive, and hell, I may just move there myself. Who knows. Keep up the Good Fight, Arizona. In the long run, you are doing what is right for all your citizens including those of Hispanic culture who are legal citizens.
Hmmm – no illegals draining the system, lowered crime, probably lower taxes too will be the result, AND lots of available foreclosed upon homes – AZ here we come!
For the next 6 months, the law will have a negative impact on housing and housing values. In 2011 the law will have a positive impact on housing values. Crime in Phoenix will drop significantly; children of illegal aliens will not be costing school districts millions of dollars per year and test scores will rise dramatically; traffic will improve; dui’s that kill Arizona residents will drop; citizens will be able to get treatment again at local hospital emergency rooms for the first time in years, and so on.
The point is that Arizona will become almost a safe haven for Americans and over the next 10 years possibly one million Americans will be moving to Arizona because it is a safe place to raise their children. New businesses will start and hundreds of thousands of new jobs will be created.
California will never pass an immigration law that enforces federal law, it is one big sanctuary city. Los Angeles County is over 50% Latino. Of the 6 to 7 million Latinos living in L.A. County, how many of them are legal since nearly all of them are foreign born? Arizona should start a big advertising campaign to attract Californians to move to Arizona, that will turn around real estate values even faster.
It is evident by many of the statements concerning Arizona’s enforcement of the Federal Immigration Law, the comments are reactionary and in large measure uninformed. Many informants, possibly the Arizona Republic journalist included, write as if they knew the new law, but in reality have never read the actual law.
I have informed my self about the law and find it to be a statement, informing illegal immigrants that if they brake a state law and are detained for a justifiable reason, at the same time they could also be charged for braking the Federal Law of Immigration. If I personally were in that category, I would be more cautious and try to obey all laws, rather than making a quick exodus from the state.
Your article points out that the numbers moving into the state could balance out the number of move outs, creating less impact on the housing market. I believe it will play out that way.
People look around who is harvesting the food in this country, working in the resteraunts and doing the jobs that few American citzens will do. It is interesting that I am running into more and more hispanics who are legalized citzens in this country as well as many non-hispanic Americans who are considering retiring in Mexico and other South American Countries, because they can live their less expensively from here. Why not provide the opportunity for thes illegals to become legalized and start paying taxes in their communities and what about the employers that hired these workers? How are they going to continue to make it? When they have to start paying the going wages and provide health care.
I am a realtor here in phx and in certain nieghborhoods they are leaving in droves. But not before they strip all the copper and cabinets they can sell.
One thing I have noticed is that the banks are regulating the amount of homes that they are releasing and allowing people up to two years before foreclosure. And every where you look there are adds for rentals . You would think the housing prices would have droped more then they have and rentals are real cheap but with the investors buying up all the properties alot of property values have leveled out and are starting to rise.
I have a real nice nich with investor buyers and have an assitant writing contracts right and left. The main thing you need to understand about investing in az is that you need to know the realtors to get a shot
Another reality check to our economy. Immigrants in this country have always been a positive effect to our economy. This country has always benefited from low wage workers, they are a necessary balance to our economy. The demand is there. We need to evaluate our immigration policies and allow more people into this country. Its all about supply and demand. Unlike some people that like to put the criminal tag on immigrants, It is my firm believe that the vast majority of immigrants that come to this country are here to work hard and actually contribute more to our society than they take. However, don’t tell that to the native indians of this country.
I always love these conversations because it brings out the closet rednecks who are too afraid to show their feelings of hatred towards minorities in public but are real brave behind a keyboard.
One need only look at the cities of Riverside, NJ or Hazelton, PA to see the future of AZ if this law goes into effect. Once bustling cities became virtual ghost towns when the backbone of their economy packed up and left. Businesses and homes were boarded up. Business owners who wanted to leave town were stuck because nobody wanted to buy a business in a dying town.
The people behind SB1070 in AZ are the very same people who were behind Prop 187 in CA, which was struck down as unconstitutional. Unfortunately SB1070 will face the same fate. I say unfortunately because I really want this law to go into effect. I want AZ to feel the consequences of their actions. (just as they did during the boycott over the MLK holiday) And lets drop political correctness and call AZ and this legislation what it really is, straight out racist.
The animals out there in the desert continue to insist this legislation has nothing to do with race, except they cant help themselves when they see a mural that was painted by children depicting themselves and other students who attend the school as they really are, non-white. The citizens of Prescott were ready to chase the principal of that school out of town with pitchforks and torches for allowing those non-white kids to paint the faces on that mural something other than white. They furiously demanded the principal re-paint those faces white. (seriously, this is no joke) They drove by the school as the children were painting this mural and screamed “Nigger!” and “Spic!!”
What a lovely way to show a good example to children Arizona, just lovely.
The backwards citizens of AZ claimed that there was a crisis of epic proportions that called for harsh new laws. The reality is that migrant workers were already leaving the state in huge numbers because the economy was faltering. There was no crisis. The real problem was that the Joe Dirts in AZ didn’t want their daughter dating a kid named Juan. That was the only ‘emergency.’
It is telling that so many people in AZ support a law which would violate the 4th amendment rights of American citizens of Hispanic descent. Rednecks are so quick to give up the rights of OTHER citizens to do their ethnic cleanse.
It is also telling that the people behind this law are all closely tied to white supremacist groups. Mr. Pearce for starters. The ILRI which is currently helping many other states to write similar law is funded by the Pioneer Fund, the same people who funded Prop 187 in CA in the ’90′s and the same group who supports groups like FAIR and CIS, both well known racist groups. The Pioneer Fund not only promotes and supports groups who promote eugenics, but they also funded a book called “The Bell Curve” which used pseudo science to ‘prove’ that blacks were intellectually inferior to white because their craniums were smaller. No joke.
Sadly, I think this law will be struck down by the courts. You’d think these groups would actually consult a Constitutional expert before putting this type of draconian law up for a vote. I guess nobody ever accused racists of being smart.
I say it’s sad because I really want to see the American boycott against AZ bring them to their knees again. Just as we did when AZ voted against something as harmless as a holiday for the late MLK, Jr.
The only way to get AZ to look at themselves in the mirror is to hurt their economy. But we all know they’ve done it to themselves. In the end, racists always lose in this country. Always. But will they ever learn?
Study after study shows that Mexican immigrants contribute more to the economy than they take in public services. They are always a net gain. They work harder than most American citizens, for less, and will do jobs American will never do. They are church-going family-oriented people who have a good work ethic.
Cheap labor affords us a very low cost of living in America. So be careful what you wish for Arizona.
Of course racists have always used the powerless as a scapegoat, and they always will. Because racists are cowards.
I heard a song on the radio the other day which reminded me of this conversation…
“Hey white America, got nothin better to do?
Why don’t you kick yourself out, you’re an immigrant too!
Who’s using who, what shall we do?
Well you can’t be a pimp and a prostitute too…”
LATINOLOANS . . .you are SICK. 33 % of all INMATES in County,State , + Federal Prisons are Criminal Illegal Alien Lawbreakers + Invaders .
Taxpayers are being HOSED for $ 50 K each in yearly incarceration costs.. This does not count Atty Fees i court costs. They commit
Rapes , Murders , + Gangbanging, Welfare +
other Gov.’t program FRAUD.
So since they are 33 % of all Criminals + they are a Minority of Society(not for long) that means the % of Illegals here that commit Crimes is way higher than the Legal Americans.
It is not only Latinos. We have Russian + Albanian , Chinese, other Asian Mafia here too.
There are over 5 Million Foreigners who are now Illegal , who simply overstayed their Work + Travel Visas. Nothing is done,
In FILTHYdelphia there are 50,000 Felons with Outstanding Warrants out on them.
In the HOLLENBECK DIV. ( a part of City ) there are 90,000 Hispanic Gang Bangers outnumbering the POLICE.
We only had 130 K Troops in Iraq ( which is the size of Cal ., not a part of LA )
All LIBERALS are either deceived or L I A R S !