Immigrants Can Have Substantial Impact on Housing Demand

A new research paper from NAHB Economics investigates how immigrants affect US housing demand.  The study analyzes recent data from the American Community Survey (ACS) that has detailed information on the country of origin, age, family status and housing choices of newly arrived immigrants. The data show that new immigrants are a young and diverse group of people. More than two thirds of them are under age 35. Close to 42 percent of newly arrived immigrants come from Asia and another 40 percent come from Americas. European immigrants account for additional 10 percent of newly arrived immigrants, and the remaining 8 percent are accounted for by other regions.

The study finds that compared to the native born population, immigrants are more likely to live with parents, other relatives or friends rather than establish their own households. These tendencies are reflected in immigrant headship rates that are lower across all age groups. However, the longer immigrants stay in the United States the more likely they are to establish their own households. In case of European-born and other immigrants, their headship rates eventually exceed those of the native born population.

Similarly, the study finds that compared to the native population, immigrants are more likely to rent than own and move into multifamily units.  However, as duration of their stay in the US increases, income rises and socio-economic status improves they are more likely to buy homes and move into single family houses. Europe- and Asia-born households register the highest homeownership rates among all immigrants, reflecting their elevated socio-economic status in the US.

To predict future housing needs of immigrants, the study further builds a model that takes into account age of newly arriving immigrants, region of their origin and length of stay in the United States. For purposes of illustration, the model is applied to the Census Bureau’s low-end 2010 projection of 1.2 million net immigrants. If net immigration of 1.2 million persists for 10 years, new immigrants are projected to account for close to 3.4 million US households (see Figure below). They are estimated to occupy more than 2 million multifamily units and more than 1.2 million single family homes. More than 900 thousand of these new immigrant households are projected to become home owners.