What Happens to American Cities With High Immigrant Populations

From Our CEO

What Happens to American Cities With High Immigrant Populations

Cityscape
Image via Reynermedia on Flickr

This country’s most intense debate in fifty years is happening today about immigration and our economy. National-security concerns are one element of this debate, but the anxiety over immigration from a broader set of countries beyond the Middle East is almost entirely economic: with wages stagnant until last year, and millions of jobs being lost to globalization and automation, Americans have asked how many immigrants we should continue to admit rather than taking better care of the people already here.

We often discuss this as a tradeoff between our melting-pot ideals and our pocketbooks, and speculate on how our economy will absorb different levels of immigration over the coming decades. But why speculate? 353 U.S. cities with populations of immigrants that vary from 1% of the population in Huntington, West Virginia, to 40% in Miami can tell us what the economic impact of immigration has already been.

And it turns out there is no tradeoff: taking the simplest, most sensitive economic indicator of household wealth as the value of the house itself, immigration is correlated with rising rather than falling wealth levels. U.S. Census Bureau data on immigration and home prices show that for the 20 metropolitan areas with the highest home-price appreciation from 2012 to 2015, immigrants constituted nearly 20% of the population. For the 20 metropolitan areas with the lowest home-price growth, immigrants constituted about 5% of the population.

Now of course home prices aren’t the only measure of economic health, particularly during debt-fueled housing bubbles when, for example, strawberry-pickers once bought California McMansions. But the reforms of the past eight years have made it far more difficult to buy a home without a well-paying job, and other measures of civic well being like crime rates are closely correlated with differences in home prices from one area to another.

Anyone who has spent much time studying the relationships between home affordability, government policy and local economies becomes convinced that it’s nearly impossible for a city to prosper without seeing home prices appreciate, or for home prices to appreciate much without prosperity.

For Redfin, a technology-powered real estate brokerage that makes it easier and less expensive for people to move, this data reinforces our founding premise: an open society, in which labor can easily migrate to the areas of greatest opportunity and employers can compete for talent around the world, is a more prosperous society.

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