Could deportation have contributed to housing crisis?

by: BY DYER OXLEY, MyNorthwest.com Writer Updated:

The 2008 mortgage crisis was an economic event that sent shock waves throughout the nation — upsetting households, businesses, and banks.

Seattle-based Washington Mutual was one of those banks that fell apart because of the crisis. Washington state’s foreclosure rate shot up by about 72 percent over the previous year equating to 26,058 foreclosures. Nationally, it was a foreclosure record. Things got worse in 2009.

While many can point to the shifty practices of banks, there may have been another factor that contributed to the housing fallout — deportation.

Related: What Craigslist says about Seattle housing

“Some new research has shown that these deportations were happening at the very same time as the foreclosure crisis was unrolling in communities across America,” New York Times reporter Emily Badger told Seattle’s Morning News. “There’s evidence that suggests that communities that really embraced deportations that rounded up a lot of immigrants, primarily Latin-American men … that foreclosure rates were a lot higher in those communities than other communities that were not aggressively supporting immigration.”

According to Badger, there is evidence to suggest the increased deportations leading up to the housing crisis contributed to the mess. Considering the fact that when President Barack Obama came into office he deported more illegal immigrants than any other president, that could have made matters worse.

“A lot of people have given attention to the fact that during the Obama administration there were quite a lot of deportations happening,” Badger said. “There were a lot of deportations happening starting in 2000 and ramping up.”

“The idea here is that a lot of illegal immigrants in the labor market are living in owner-occupied households,” she said. “They are living in homes that have people with different legal statuses in them – you have undocumented people living alongside documented citizens and legal residents.”

The money earned by those undocumented immigrants goes toward the household and supports paying the bills, such as mortgages. So what happens when you suddenly remove a source of household income — like the deportation of an undocumented immigrant?

“What appears to be the case is that undocumented income is helping to support households that have purchased homes and paying mortgages,” Badger said. “And when they get deported it’s very similar to someone who is a contributor to a household losing their job and becoming unemployed.”

“One thing this tells us is that deporting illegal immigrants is a very destabilizing thing to do to households …” she added.

Now, people are concerned with statements made by President-elect Donald Trump which, if they become a reality, could place an emphasis on the deportation of illegal immigrants, even beyond the record-setting rates of the Obama administration. Could that spark another economic crisis?

Badger said that is unlikely, but such actions could have some effects. The landscape of the real estate market is much different than in 2008 which was saturated with sub-prime mortgages. But the effects of removing illegal immigrants and their income from a household is likely to be similar.

 

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