Q&A with ULI’s Lisa Sturtevant on Immigration and U.S. Housing Demand

The topic of immigration has dominated news headlines in the United States over the past year, with heightened rhetoric during the presidential campaign and a proposed post-election travel ban on refugees and immigrants from specific nations that is now tied up in the courts. Lost in the soundbites is a little-known fact: immigrants have been and will continue to be a major source of housing demand in the United States and were critical to the recovery of housing markets after the 2009 recession. These are among the noteworthy conclusions of Home in America: Immigrants and Housing Demand, a new report published by the ULI Terwilliger Center for Housing.

The report was written by Lisa Sturtevant, a ULI senior visiting fellow who comes to the Institute with more than 15 years of experience as an independent housing researcher and as a consultant assisting local governments with their housing plans and policies. Prior to working at ULI, Sturtevant served as vice president for research at the National Housing Conference and deputy director at the Center for Regional Analysis at George Mason University in Fairfax, Virginia. Urban Land spoke with Sturtevant about her research and what it means for cities, policy makers, and developers of residential real estate.

Urban Land: Welcome, Lisa. Your report’s conclusion that immigrants will fuel current and future housing demand in the United States suggests that this demographic will be key to the health of housing markets and the real estate industry. What do we know about immigrant communities and their housing preferences?

Lisa Sturtevant: Thanks for having me. It’s important to note that immigrants account for about one-third of household growth over the past ten years. Had immigrants not been contributing to housing demand, who knows how long it would have taken for the housing market to bounce back. We don’t talk about immigrants as much as we talk about millennials; immigrants in many ways are a missing part of the conversation about housing demand and the strength of local housing markets.

The immigrant population is diverse, and [immigrants’] preferences vary by region and across immigrant groups. What we do know is that there is demand not just for rental housing, but [also for] homeownership opportunities. Although the homeownership rate among native-born households is higher than it is among immigrant households, the gap is closing. Broadly speaking, immigrants want to buy homes. This is a population for whom immigrating to the U.S. and owning a home go hand in hand, and homeownership is an important milestone. In fact, the trajectory of the foreign-born population to homeownership can be faster than it is for the native-born population, depending on the circumstance. And what we’ve observed in this research is a desire for detached, single-family homes in suburban communities, more than townhomes and condos.

Urban Land: From a residential developer’s perspective, what does this mean for the housing product types available in the market?

L.S.: I think this population is going to be a pretty significant driver of demand for existing single-family housing—including suburban housing that is being vacated by baby boomers. There doesn’t appear to be a need to develop an entirely new housing product type for immigrant families. There’s been talk about developing more multigenerational housing to serve immigrants, but, based on this research, the demand for this type of housing is relatively small. There will be a small percentage of people from all different backgrounds who want multigenerational housing, but the vast majority of immigrants do not live in multigenerational families. In general, more housing across product types needs to be built, period—to serve people across the life cycle and income spectrum.

So, from a real estate provider’s perspective, the goal is not building new or different product, necessarily, but playing an active role in making their communities more hospitable to immigrants. It’s good for their bottom line that places be welcoming. Maybe that means having a bilingual staff or supporting a new community or cultural center or other amenities that serve immigrants. For cities, this means having the social infrastructure and cultural amenities in place to reap the long-term benefits from growing foreign-born population.

Related: Five Findings on the Future of U.S. Immigration and the Suburban Dream

Urban Land: Your report talks about the locational preferences of immigrants—urban cores versus suburban areas. You say that suburbs are increasingly attracting new immigrants. Is that because the housing is more affordable? What other factors are at play?

L.S.: In the early 20th century, immigrants located to cities and urban cores, where there were established ethnic enclaves—think Little Italy, Chinatown. After World War II, immigrants increasingly gravitated toward suburbs, which reflected a new trend. In the early 2000s, when I was working for Arlington County, Virginia—a Washington, D.C., suburb—I learned from census data that one out of every four residents in Arlington was born outside the U.S. and one out of three people spoke a language other than English at home. That really surprised me and got me interested in learning about the shift in the foreign-born population to suburban locations.

The suburbs are where most of the job growth has been in the past two decades. If you look at what happened in the 1990s and 2000s, a lot of the job growth was happening outside the big urban centers and outside of traditional immigrant gateways. Think places like Charlotte, Atlanta, and Phoenix—more suburban-style metro areas. Let’s say you were coming from Mexico to the U.S. for a job in the late 1990s: Charlotte, North Carolina, was a boomtown for residential construction jobs. But there was no ethnic enclave of Mexicans in the city of Charlotte. Immigrants went where the jobs were and where housing was affordable, and in the case of Charlotte and other new immigrant destinations, that was in the outlying areas of the city. So, it’s a desire for homeownership that is driving immigrants toward the suburbs, but it’s also where new economic opportunities have arisen over the past two decades.

Urban Land: The fact that immigrants are an important source of demand for existing housing is good news for suburbs—particularly as baby boomers downsize and move back to the city.

L.S.: It’s an interesting counterpoint to the so-called death of the suburb. The traditional cul-de-sac suburb is out of fashion right now, but when boomers start to downsize, there is a ready-made demand for this suburban style of housing. There’s not an automatic rejection of this type of housing among immigrants.

Urban Land: In other metro areas you analyzed, immigrants are still more likely to live in urban cores. Can you talk about some of the differences you found among immigrant groups and different types of immigrant gateways?

L.S.: While homeownership is a top aspiration for immigrant groups across the board, some achieve it sooner than others—depending on their tenure in the U.S. and whether they are in a high-skill, high-wage job or in a low-skill, low-wage job. What we found is that in continuous immigrant gateways such as San Francisco, housing costs have risen dramatically, pricing out not only many immigrants but also many native-born residents. In the San Francisco Bay area, Asian immigrants—who tend to have higher-skill, higher-wage jobs compared to immigrants from Mexico and Latin America—are more likely to be homeowners and are more likely to live in urban rather than suburban areas. Immigrants from Latin American and Africa are more likely to live in the suburbs in the San Francisco region.

In Minneapolis and Buffalo—what we call reemerging and former gateways, respectively—refugees make up a relatively large portion of the immigrant population. Many have located in urban neighborhoods through resettlement programs. In Buffalo, for example, there is a slightly higher concentration of immigrants in the city because that is where refugees—mainly from Burma and Bhutan—have been settled. Minneapolis, a city settled by German and Scandinavian immigrants in the 19th century, is a now magnet for recent immigrants (many also refugees) from Asia and Africa; the city has one of the largest Somali communities in the U.S. Here we see more of a disconnect related to homeownership rates between native-born and foreign-born populations, with immigrants less likely to be homeowners and more likely to be lower-income renters in urban areas.

For Buffalo and other Rust Belt cities, immigrants are critical to rebuilding population, stabilizing rents and housing markets, and making their cities more diverse. Without growth in the foreign-born population, the Buffalo region would have lost population since the recession. To the extent that Buffalo wants to continue its resurgence by attracting new businesses and younger workers, being welcoming to immigrants can be a part of that. Immigrants make a community diverse, inclusive, and interesting, which will help attract other folks.

Click here to download a copy of the new ULI Terwilliger Center report, Home in America: Immigrants and Housing Demand.