Housing Bubble and Hapless ImmigrantBy Philip Dominguez Mercurio
All these words have now become synonymous with the frantic US housing market.
Looking at all the media reports, there isn’t any consensus, either from those in the real estate business to the government itself, where any of this is going.
Some claim that a collapse is eminent, perhaps within a year or two, citing studies that suggest incomes and job growth have not kept up with the housing demand. Handwriting on the wall points to weaker condo prices in Chicago, growing inventories in Washington and San Diego, and lower rents in Phoenix.
Then, there are others who suggest the housing market is fine and would slow down to a reasonable level but not totally collapse. They point to continued strong demand for homes as well as the low interest rates, which have led to another record of 7.3 million units sold over the last three months.
Then there are still others who suggest that there isn’t any bubble at all because the higher prices are simply the result of inflation and that added to maintenance fees and property taxes, the return on one’s property is actually vastly smaller than what the price of the house entails.
Newspaper reports reference similarities between now and housing bubbles of yesteryears to prove either case.
They resurrected memories of the Northeast and California housing market collapse 15 years ago where condo prices in Boston plummeted as much as 50% along with the Texas market.
And who can forget 1920’s Florida where people where are said to have chained themselves to their doors so they wouldn’t lose their property, some of which were actually under water.
Then there’s the case of Australia, where prices have reached astronomical levels for the last five years but dipped recently due to higher interest rates and imposition of special taxes on mortgages to discourage speculation. But unlike much of the other cases, there was no impact on the economy. As of now, it has remained sound.
Who knows whether the chorus of a housing bubble is meant to scare potential buyers so that speculators can cash in on the resulting housing glut, or those trumpeting the soundness of the market are actually dumping their houses. Only time will tell.
But one thing does bother me. Around Phoenix, my girlfriend’s parents noticed many For Rent signs, an indication that there was a demand for rentals. They concluded that the influx of undocumented workers, streaming in from the southern deserts, provided a new market.
It suddenly became like instant, free money. Once you get a property and rent it, not only will your property appreciate every month but your mortgage would be paid off and if you charged higher than your monthly mortgage payments, you’d even get extra money on the side. It’s a landlord’s paradise.
Along with the housing boom, came the creation of jobs and in fact, over the past two years 40% of the jobs created in the U.S. was due to construction alone.
With the Pew Hispanic Center claiming that 25% of the entire construction workforce is undocumented many of whom are finding more stable incomes at a mere $400 a week, only a few of them would be needed to pool their money together to rent a nice house. So indeed, this has been a windfall for investors who realize these workers can’t buy a house with no legal documentation but they need a roof over their heads.
But I think what these investors have forgotten is that, these are migrant workers who are constantly on the move.
Some are newcomers, but others were once agricultural workers who found the construction business provided a more consistent and better paying job. Their employers appreciate the skills and hard work they bring to the industry.
All is not well, however, in the construction front with reports that some foremen are corrupt and physically abusing their workers.
Police in certain cities have been known to harass day laborers, charging them with jaywalking and littering in places where they gather after work.
This is all on top of the militarization of the border and the so-called minuteman who act as vigilantes out to round up foreigners crossing the borders illegally.
Such a love-and-hate relationship parallels what Mexican and Filipino farm workers went through a century ago.
Strangely, Americans appreciated these workers for their cheap labor, creating affordable houses we could buy and then rent out to these same workers to create more affordable houses, which we again buy. But we still want them out, accusing them of taking jobs and bringing drugs and gangs to our towns. Are Americans hypocrites?
At any rate, we better hope the market sustains its construction whirl because if it does stop spinning, that workforce will move on -- and so will the renters -- and maybe even those low-interest mortgages. - PDM
See this article,"The Housing Bubble and the Hapless Immigrant" in Philippine News. Click here