The Potential Impact of Ongoing Illegal Migrant Crisis on First-Time Homebuyers

The ongoing illegal migrant crisis in the United States is not only a humanitarian issue but also has potential implications for the housing market, particularly for first-time homebuyers. With millions of illegal migrants crossing into the country since 2021, major cities in sanctuary states are struggling to cope with the surge of humanity. This crisis is not only impacting city budgets and quality of life but also real estate experts believe it will exacerbate the existing housing crisis.

Moises Agami, CEO of Valor Capital Real Estate Development, warns that the current migrant situation could result in a serious “houseless” problem, especially for potential first-time homebuyers. The influx of migrants, combined with the already scarce housing inventory, is driving up home prices and making homeownership even more unaffordable. According to a report from the National Association of Realtors, the median existing home sales price increased by 5.7 percent since February 2023, reaching $384,500. This marks the eighth consecutive month of year-over-year price increases.

Low inventory levels and high mortgage rates further compound the challenges faced by first-time homebuyers. Hannah Jones, a senior economic research analyst at Realtor.com, explains that buyers are grappling with high prices, low inventory, and historically low mortgage rates. Additionally, mortgage lender Freddie Mac reports that current mortgage interest rates are around 6.87 percent, deterring potential sellers who are currently enjoying lower interest rates from entering the market.

The entry of migrants into the housing market poses additional obstacles for low- and middle-income Americans who are already struggling to find affordable housing. Moises Agami highlights that migrants are unlikely to have significant financial resources or secure higher-paying jobs. As a result, they will be competing with American earners in the same income bracket, further straining the housing market for those seeking affordable options.

Another issue exacerbating the housing crisis is the slowdown in new construction, particularly in multi-family developments. Construction in this sector has declined by 30 percent from 2022, plummeting to $95 billion nationwide in 2023 from nearly $148 billion the previous year. Danielle Hale, chief economist at Realtor.com, explains that the US is facing a long-term housing shortage, with new home construction failing to keep pace with population growth. While multi-family housing starts may alleviate some of the shortfall, inflation is likely to drive up sales prices due to increased costs for developers, such as higher loan expenses and materials.

The impact of the migrant crisis on the housing market is particularly significant in the New York metropolitan area. Bianca D’Alessio of Nest Seekers International notes that the region already faces a supply shortage, leading to price hikes. The influx of illegal migrants is exacerbating these issues, overwhelming homeless shelters and even resulting in crowded subways filled with homeless individuals seeking shelter. The affordability crisis is further compounded by escalating rents and a lack of affordable housing options.

Despite the challenges faced by New York City and other affected areas, D’Alessio remains hopeful. She suggests that the government should offer incentives, such as tax rebate programs, to spur more development and create affordable housing options. Similarly, Moises Agami emphasizes the need for more programs and perks for developers to facilitate housing development. Currently, high housing costs are forcing individuals to spend over 50 percent of their income on housing, leaving little room for savings.

The impact of the migrant crisis extends beyond New York City. For instance, Florida experienced a massive real estate boom during the pandemic, with over 350,000 people moving there and home prices doubling. With the continual influx of illegal migrants nationwide, there is a severe shortage of housing options for millions of people. Moises Agami stresses the importance of organized and sustainable immigration policies, stating that a country without borders is not a country.

In conclusion, the ongoing illegal migrant crisis in the United States has the potential to exacerbate the existing housing crisis, particularly for first-time homebuyers. The surge of humanity is straining city budgets and quality of life, while also impacting the housing market. The scarcity of inventory, coupled with rising home prices and low mortgage rates, presents significant challenges for prospective buyers. The slowdown in new construction and the lack of affordable housing options further compound the crisis. Government incentives and programs are necessary to facilitate housing development and alleviate the affordability crisis. Without organized and sustainable immigration policies, the housing market will continue to face significant pressure.