June 20, 2013

The housing crisis has claimed more than five million American homes—about 10% of all homes with a mortgage. It began in lower-income neighborhoods and has spread to some of the most exclusive addresses in the United States. Many experts believe that the mortgage meltdown started years ago when banks, discovering the high returns from selling bundles of securitized mortgages, relaxed lending standards and originated millions of adjustable-rate subprime mortgages (ARM). These loans were designed to allow just about anyone to get a home loan.

During the real estate bubble years, Hispanics accounted for more than half of the U.S. population increase, exceeding estimates in most states as they crossed a new census milestone: 50 million, or 1 in 6 Americans. Many Hispanic families had multiple wage earners working multiple cash jobs, but had no savings or established credit history to allow them to qualify for traditional loans.

The Latino community appeared to be a a largely untapped demographic in the U.S. housing market. For years, immigrants to the U.S. have viewed buying a home as the ultimate benchmark of success, yet in 2003 the national Latino homeownership rate was 47%, compared with 68% for the overall population. Low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, and mortgage lenders and brokers all were pushing hard to increase homeownership among Latinos.

In 2003, the Congressional Hispanic Caucus created Hogar to work with industry and community groups to increase mortgage lending to Latinos. Members of the caucus, who received donations from the lending industry and saw their constituents moving into new homes, pushed for eased lending standards, which fueled the subprime phenomenon among Latinos.

Between 2000 and 2007, as the Hispanic population increased, Hispanic homeownership grew even faster, increasing by 47%, to 6.1 million from 4.1 million, fueled by "non-prime" mortgages, which often don't require solid credit ratings or documentation of employment. (Over that same period, homeownership nationally grew by 8%.) In 2005 alone, mortgages to Hispanics jumped by 29%, with expensive nonprime mortgages soaring 169%.

Hispanics’ increasing numbers in the so-called “sand states” had a lot to do with the bubble’s disproportionate influence in those regions. When the interest rates for subprime borrowers' low capital, easy-credit, subprime ARM loans started climbing, many borrowers began falling behind on their payments, leading to the first wave of defaults.

Without the large levels of Hispanic immigration over the past decade, the bubble may still have happened but it seems unlikely that it scale would have been quite so huge and the wave of defaults quite so numerous.

CENSUS: 42 States Info Released, Hispanic Population Accounts for 54% of All Growth

Hispanically Speaking News
March 21, 2011

Based on the aggregation of the population residing on the 42 states released thus far by Census:
  • Hispanic population growth is exceeding the most recent Census estimates by 4.3 percent.
  • More than 45 million Hispanics in the 42 states released as of 3-17-11.
  • Hispanics contributed 54 percent of the overall population growth in those states.
  • From Census 2000-2010, the Hispanic population in these states grew by 45 percent.
  • Hispanics are growing four times faster than the total U.S. population.
  • More than 14 million “new Hispanics” were added to the population of the 42 states released by Census, compared to 11.8 million “new non-Hispanics” added to the residents of the 42 states released by Census in 2000.
The Census 2010 figures are showing the Hispanic population is less concentrated than 10 years ago. In 2000, 56 percent of the Hispanic population residing in the 42 states released by Census resided either in California or Texas. By 2010, 52 percent of Hispanics reside either in Texas or California.

The latest figures released for Florida, Georgia, Montana, New Mexico, Kentucky, Alaska, Minnesota, North Dakota, and Tennessee show:
  • Hispanics contributed nearly 55 percent of the population growth in Florida. The Hispanic population is growing six times faster than non-Hispanics in the state.
  • The Hispanic population in Georgia grew 96 percent in the last decade. Hispanics are the fastest growing demographic in the state.
  • In Montana, the Hispanic population is growing seven times faster than non-Hispanics in the state. In the last 10 years, the Hispanic population in the state grew 58 percent.
  • Hispanics in New Mexico accounted for 78 percent of the growth.
  • The Hispanic population in Kentucky more than doubled in the last decade.
  • In Alaska, the Hispanic population grew about 52 percent since Census 2000. Among Hispanic population growth in the state, Adults 18 plus accounted for 66 percent of Hispanic growth in the state while Hispanics under 18 contributed the remaining 34 percent of the growth.
  • In Minnesota, the Hispanic population grew nearly 75 percent since Census 2000.
  • The Hispanic population in North Dakota grew 73 percent since Census 2000. 1 out of every 5 individuals added to the total population in the state is of Hispanic origin.
  • In Tennessee, the Hispanic population more than doubled in the last decade.
“With the data for 42 states revealed, we have a real snapshot of the new face of our nation being driven by the explosive demographic growth of U.S. Hispanics,” said Elizabeth Ellers, executive vice president, Corporate Research, Univision Communications Inc.
Published in Notitas de Noticias

New Census Milestone: Hispanics Reach 50 Million

The Associated Press
March 24, 2011

Hispanics accounted for more than half of the U.S. population increase over the last decade, exceeding estimates in most states as they crossed a new census milestone: 50 million, or 1 in 6 Americans.

The first results from the 2010 Census are in, and the U.S. population stands at 308,745,538. That represents 27.3 million more people than in 2000, or 9.7 percent increase in the U.S. population. The number of people added to the population between 2000 and 2010 was lower than it was during the 1990s (32.7 million), and the percent change was the lowest since the 1930s. Population growth continued to shift to the South and West, while the Northeast and Midwest lagged far behind. The District of Columbia, which had lost population during the 1990s, grew 5 percent—the first increase since the 1940s. [Source]
Meanwhile, more than 9 million Americans checked two or more race categories on their 2010 census forms, up 32 percent from 2000, a sign of burgeoning multiracial growth in an increasingly minority nation.

The Census Bureau on Thursday released its first set of national-level findings from the 2010 count on race and migration, detailing a decade in which rapid minority growth, aging whites and the housing boom and bust were the predominant story lines.

Analysts said the results confirmed a demographic transformation under way that is upending traditional notions of racial minorities, political swing districts, even city and suburb.
"These are big demographic changes," said Mark Mather, an associate vice president at the nonprofit Population Reference Bureau. "There is going to be some culture shock, especially in communities that haven't had high numbers of immigrants or minorities in the past."
"By 2050, we may have an entirely new system of defining ourselves," he said.
According to data released Thursday, Americans continued their decades-long migration to fast-growing parts of the Sun Belt. Their move to big states such as California and Texas as well as fast-growing Mountain West states pushed the nation's mean center of population roughly 30 miles southwest to a spot near the village of Plato, Mo.

African-Americans in search of wider spaces increasingly left big cities such as Detroit, Chicago and New York for the suburbs, typically in the South. Both Michigan and Illinois had their first declines in the black population since statehood as many of their residents opted for warmer climes in the suburbs of places such as Atlanta, Dallas and Houston.

The smaller numbers were a surprise to some city officials, including New York Mayor Michael Bloomberg, who questioned the census count of 8.2 million for his city and suggested immigrants may have been missed.
Census director Robert Groves said the agency had not yet received any formal complaints about the census count and that overall indicators showed high accuracy in 2010 compared to 2000.

After initial fears of low participation, the 2010 count of the Hispanic population came in 900,000 higher than expected, matching or surpassing census estimates in 37 states, according to the Pew Hispanic Center, a nonpartisan think tank.

Many of the biggest jumps were in the South, including Alabama, Louisiana, North Carolina and Louisiana, where a small but fast-growing Hispanic population was fueled by an influx of immigrants during the housing boom.

Multiracial Americans now make up 2.9 percent of the U.S. population, a steadily growing group — even if it did not include President Barack Obama, who identified himself only as African-American on his census form. Obama's mother Ann Dunham, a white woman from Kansas, married his father, the Kenyan native Barack Obama Sr.

The vast majority of multiracial Americans lived in California, Texas, New York and Hawaii. The most numerous race combinations were white-American Indian or Alaskan Native, white-black and white-"some other race." In some cases, white Hispanics may be opting to list themselves as multiracial in the "some other race" category, which would put the actual number of multiracial Americans lower than the official tally of 9 million.

In all, racial and ethnic minorities made up about 90 percent of the total U.S. growth since 2000, part of a historic trend in which minorities are expected to become the majority by midcentury.
"Hispanics and immigrant minorities are providing a much needed tonic for an older, largely white population which is moving into middle age and retirement," said William Frey, a demographer at the Brookings Institution who analyzed many of the census figures. "They will form the bulk of our labor force growth in the next decade as they continue to disperse into larger parts of the country."
Among census findings:
  • The number of non-Hispanic whites, whose median age is now 41, edged up slightly to 196.8 million. Declining birth rates meant their share of the total U.S. population dropped over the last decade from 69 percent to roughly 64 percent.
  • In about 10 states, the share of children who are minorities has already passed 50 percent, up from five states in 2000. They include Mississippi, Georgia, Maryland, Florida, Arizona, Nevada, Texas, California, New Mexico and Hawaii.
  • Asians grew by 43 percent over the last decade. They were tied with Hispanics as the fastest growing demographic group. For the first time Asians also had a larger numeric gain than African-Americans, who remained the second largest minority group at 37.7 million.
The race figures come as states in the coming months engage in the contentious process of redrawing political districts based on population and racial makeup. The new political maps — which will also change each state's electoral votes — will take effect by the 2012 elections.

Many of the states in the South and West that are picking up House seats are Republican leaning, such as Texas and Florida. But most of their growth is now being driven largely by Hispanics, who tend to vote Democratic, which could put those regions in play.

In Texas, which picks up four House seats, the chair of the state Senate's redistricting panel has acknowledged that at least one House seat in north Texas could be a "minority or Hispanic influence district." Republicans are also rejecting the notion they can't appeal to Hispanics, who accounted for two-thirds of the state's population gains from 2000 to 2010.
"Our legislators represent all their constituents," said Texas Republican Party spokesman Chris Elam. He and others noted that the party picked up — narrowly — two heavily Hispanic congressional seats from Democrats in South Texas.
In New Jersey, Republicans are forming an unusual alliance with some Hispanics, who just surpassed African- Americans as that state's largest minority group. Both groups are looking for a political map — in this case, involving legislative districts — that offers a more competitive edge.

New Jersey must have its map completed by April 3, with legal challenges all but certain to follow.
"For us, it's not about parties, it's about whether Latinos are going to have Latinos in the Statehouse," said Martin Perez, president of the Latino Leadership Alliance of New Jersey, who said he has met with Republicans.
In large metropolitan regions, U.S. suburbs are becoming more politically competitive because of their fast growth and changing demographics, said Robert Lang, a demographer at the University of Nevada-Las Vegas. He noted that minorities are increasingly moving from cities to nearby suburbs, while more conservative whites living in far-flung suburbs known as exurbs were moving closer to cities due to a spike in gas prices and the housing bust.
"That's the new contested space," Lang said, noting that Democrat Obama was able to win many suburban areas in 2008 before Republicans reclaimed much of the turf in the 2010 elections. "They grew the fastest in the last decade without resolving which way they will vote."
According to census, the 10 fastest-growing cities over the last decade were actually suburbs of major metropolitan areas. They included Lincoln, Calif.; Surprise, Ariz.; and Frisco, Texas, all of whose population more than tripled since 2000.

In all, U.S. metropolitan areas grew more than 10 percent over the last decade. It was also home to a record share of 83.7 percent of the U.S. population, with much of the growth in suburban areas.
"We expect this to continue," Groves said.
California Rep. Joe Baca has long pushed legislation he said would "open the doors to the American Dream" for first-time home buyers in his largely Hispanic district. For many of them, those doors have slammed shut, quickly and painfully.

Mortgage lenders flooded Mr. Baca's San Bernardino, Calif., district with loans that often didn't require down payments, solid credit ratings or documentation of employment. Now, many of the Hispanics who became homeowners find themselves mired in the national housing mess. Nearly 9,200 families in his district have lost their homes to foreclosure.

Foreclosure Crisis Hits Hispanics

The Wall Street Journal
January 5, 2009

Congressional districts with large Hispanic populations often feature heavy nonprime lending. See how different districts break down in terms of prime and nonprime home loans.

For years, immigrants to the U.S. have viewed buying a home as the ultimate benchmark of success. Between 2000 and 2007, as the Hispanic population increased, Hispanic homeownership grew even faster, increasing by 47%, to 6.1 million from 4.1 million, according to the U.S. Census Bureau. Over that same period, homeownership nationally grew by 8%. In 2005 alone, mortgages to Hispanics jumped by 29%, with expensive nonprime mortgages soaring 169%, according to the Federal Financial Institutions Examination Council.

An examination of that borrowing spree by The Wall Street Journal reveals that it wasn't simply the mortgage market at work. It was fueled by a campaign by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, who all were pushing to increase homeownership among Latinos.

The network included Mr. Baca, chairman of the Congressional Hispanic Caucus, whose district is 58% Hispanic and ranks No. 5 among all congressional districts in percentage of home loans not tailored for prime borrowers. The caucus launched a housing initiative called Hogar -- Spanish for home -- to work with industry and community groups to increase mortgage lending to Latinos. Mortgage companies provided funding to that group, and to the National Association of Hispanic Real Estate Professionals, which fielded an army to make the loans.

In years past, minority borrowers seeking loans were often stopped cold by a practice called red-lining, in which lenders were reluctant to lend within particular geographical areas, often, it appeared, on the basis of race. But combined efforts to open the mortgage pipeline to Latinos proved successful.
"We saw what we refer to in the advocacy community as reverse red-lining," says Aracely Panameno, director of Latino affairs for the Center for Responsible Lending, an advocacy group. "Lenders were seeking out those borrowers and charging them through the roof," she says.
Ms. Panameno says that during the height of the housing boom she sought to present the Hispanic Caucus with data showing how many Latinos were being steered into risky and expensive subprime loans. Hogar declined her requests, she says.

Housing Push for Hispanics Spawns Wave of Foreclosures

The Wall Street Journal
January 5, 2009

When the national housing market began unraveling, so did the fortunes of many of the new homeowners. National foreclosure statistics don't break out data by ethnicity or race. But there is evidence that Hispanic borrowers have been hard hit. In part, that's because of large Hispanic populations in areas where the housing bubble was pronounced, such as Southern California, Nevada and Florida.

In U.S. counties where Hispanics account for more than 25% of the population, banks have taken back 6.7 homes per 1,000 residents since Jan. 1, 2006, compared with 4.6 per 1,000 residents in all counties, according to a Journal analysis of U.S. Census and RealtyTrac data.

Hispanic lawmakers and community groups have blamed subprime lenders, who specialize in making loans to customers with spotty credit histories. They complain that even solid borrowers were steered to those loans, which carry higher interest rates.

In a written statement, Mr. Baca blamed the foreclosure crisis among Hispanics on borrowers' lack of "financial literacy" and on "lenders and brokers eager to make a bigger profit." He declined to be interviewed for this story.

Easy Credit

But a close look at the network of organizations pushing for increased mortgage lending reveals a more complicated picture. Subprime-industry executives were advisers to the Hogar housing initiative, and bankrolled more than $2 million of its research. Lawmakers and advocacy groups pushed hard for the easy credit that fueled the subprime phenomenon among Latinos. Members of the Congressional Hispanic Caucus, who received donations from the lending industry and saw their constituents moving into new homes, pushed for eased lending standards, which led to problems.

Mortgage lenders appear to have regarded Latinos as a largely untapped demographic. Many were first or second-generation U.S. residents who didn't own homes. Many Hispanic families had multiple wage earners working multiple cash jobs, but had no savings or established credit history to allow them to qualify for traditional loans.

The Congressional Hispanic Caucus created Hogar in 2003 to work with industry and community groups to increase mortgage lending to Latinos. At that time, the national Latino homeownership rate was 47%, compared with 68% for the overall population. Hogar called the figure "alarming," and said a concerted effort was required to ensure that "by the end of the decade Latinos will share equally in the American Dream of homeownership."

Hogar's backers included many companies that ran into trouble in mortgage markets: Fannie Mae and Freddie Mac, both now under federal control; Countrywide Financial Corp., sold last year to Bank of America Corp.; Washington Mutual Inc., taken over by the government and sold to J.P. Morgan Chase & Co.; and New Century Financial Corp. and Ameriquest Mortgage Corp., both now defunct.

Hogar's ties to the subprime industry were substantial. A Washington Mutual vice president served as chairman of its advisory committee. Companies that donated $150,000 a year got the right to place a research fellow who would conduct Hogar's studies, which were used by industry lobbyists. For donations of $100,000 a year, Hogar offered to provide news releases from the Hispanic Caucus promoting a lender's commercial products for the Latino market, according to the group's literature.

Hogar worked with Freddie Mac on a two-year examination of Latino homeownership in 63 congressional districts. The study found Hispanic ownership on the rise thanks to "new flexible mortgage loan products" that the industry was adopting. It recommended further easing of down-payment and underwriting standards.
Representatives for Hogar declined repeated requests for comment.

The National Association of Hispanic Real Estate Professionals, one of Hogar's sponsors, advised the group, shared research data and built a large membership to market loans to Latinos. By 2005, its ranks had grown to 16,000 agents and mortgage brokers.

The association, called Nahrep, received funding from some of the same players that funded Hogar. Some 22 corporate sponsors, including Countrywide and Washington Mutual, together paid the association $2 million a year to attend conferences and forums where lenders could pitch their loan products to loan brokers.
While home prices were rising, the lending risk seemed minimal, says Tim Sandos, Narhep's president.
"We would say, 'Is he breathing? OK, we'll give him a mortgage,' " he recalls.
Nahrep's 2006 convention in Las Vegas was called "Place Your Bets on Home Ownership." Countrywide Chairman Angelo Mozilo spoke, as did former Housing and Urban Development Secretary Henry Cisneros, a force in Latino housing developments in the West.

Lenders' Contributions

Countrywide and other sponsors contracted with Nahrep to set up regional events where they could present loan products to loan brokers and their customers. Mr. Sandos says his organization doesn't get paid to promote particular lenders.

At the height of the subprime lending boom, in 2005, banking and finance companies gave at least $2.3 million in campaign contributions to members of the Hispanic Caucus, according to data from the Center for Responsive Politics.

In October 2008, a charitable foundation set up by Mr. Baca received $25,000 from AmeriDream Inc., a nonprofit housing company and Hogar sponsor. Mr. Baca has long backed AmeriDream's controversial seller-financed down-payment assistance program. AmeriDream provided down-payment money to buyers, a cost that was covered by home builders in the form of donations to the nonprofit.

New housing legislation last fall outlawed the program. Mr. Baca is cosponsoring a bill that would allow AmeriDream and similar nonprofits to resume arranging seller-financed down-payment assistance to low-income Federal Housing Administration borrowers.

Such seller-financed loans comprise one-third of the loans backed by the FHA, and have defaulted at nearly triple the rate of other FHA-insured loans, according to agency spokesman William Glavin.

In a news release, AmeriDream said the donation to Mr. Baca's foundation was intended to fund the purchase of gear for firefighters in his district. Local news reports say the foundation gave away $36,000 in scholarships this year.

Internal Revenue Service records indicate that Mr. Baca's son, Joe Baca Jr., has an annual salary of $51,800 as executive director of the Joe Baca Foundation, which is run out of the congressman's home. Joe Baca Jr. says he currently is taking only about half that listed salary.

Mr. Baca's office declined to comment on the AmeriDream contribution.

Mr. Baca remains opposed to strict lending rules.
"We need to keep credit easily accessible to our minority communities," he said in a statement released by his office.
Mortgage lending to Hispanics took off between 2004 and 2007, powered by nonprime loans. The biggest jump occurred in 2005. The 169% increase in nonprime mortgages to Hispanics that year outpaced a 122% gain for blacks, and a 110% increase for whites, according to a Journal analysis of mortgage-industry and federal-housing data. Nonprime mortgages carry high interest rates and are tailored to borrowers with low credit scores or few assets.

Between 2004 and 2007, black borrowers were offered nonprime loans at a slightly higher rate than Hispanics, but the overall number of Hispanic borrowers was much larger. From 2004 to 2005, total nonprime home loans to Hispanics more than tripled to $69 billion from $19 billion, and peaked in 2006 at $73 billion.

Tricks of the Trade

Mortgage brokers became a key portion of the lending pipeline. Phi Nguygn, a former broker, worked at two suburban Washington-area firms that employed hundreds of loan originators, most of them Latino. Countrywide and other subprime lenders sent account representatives to brokerage offices frequently, he says. Countrywide didn't respond to calls requesting comment.

Representatives of subprime lenders passed on "little tricks of the trade" to get borrowers qualified, he says, such as adding a borrower's name to a relative's bank account, an illegal maneuver. Mr. Nguygn says he's now volunteering time to help borrowers facing foreclosure negotiate with banks.

Many loans to Hispanic borrowers were based not on actual income histories but on a borrower's "stated income." These so-called no-doc loans yielded higher commissions and involved less paperwork.

Another problem was so-called NINA -- no income, no assets -- loans. They were originally intended for self-employed people of means. But Freddie Mac executives worried about abuse, according to documents obtained by Congress. The program "appears to target borrowers who would have trouble qualifying for a mortgage if their financial position were adequately disclosed," said a staff memo to Freddie Mac Chairman Richard Syron.
"It appears they are disproportionately targeted toward Hispanics."
Freddie Mac says it tightened down-payment requirements in 2004 and stopped buying NINA loans altogether in 2007.
"It's very hard to get in front of a train loaded with highly profitable activities and stop it," says Ronald Rosenfeld, chairman of the Federal Housing Finance Board, a government agency that regulates home loan banks.
Regions of the country where the housing bubble grew biggest, such as California, Nevada and Florida, are heavily populated by Latinos, many of whom worked in the construction industry during the housing boom. When these markets began to weaken, bad loans depressed the value of neighboring properties, creating a downward spiral. Neighborhoods are now dotted with vacant homes.

By late 2008, one in every nine households in San Joaquin County, Calif., was in default or foreclosure -- 24,049 of them, according to Federal Reserve data. Banks have already taken back 55 of every 1,000 homes. In Riverside, Calif., 66,838 houses are owned by banks or were headed in that direction as of October. In Prince William County, Va., a Washington suburb, 11,685 homes, or one in 11, was in default or foreclosure.

Gerardo Cadima, a Bolivian immigrant who works as an electrician, bought a home in suburban Virginia for $330,000, with no money down.
"I said this is too good to be true," he recalls. "I'm 23 years old, with a family, buying my own house."
When work slowed last year, Mr. Cadima ran into trouble on his adjustable-rate mortgage.
"The payments were increasing, and the price of the house was starting to drop," he says. "I started to think, is this really worth it?" He stopped making payments and his home was sold at auction for $180,000.
In the wake of the housing slump, some participants in the Hispanic lending network are expressing second thoughts about the push. Mr. Sandos, head of Nahrep, says that some of his group's past members, lured by big commissions, steered borrowers into expensive loans that they couldn't afford.

Nahrep has filed complaints with state regulators against some of those brokers, he says. Their actions go against Nahrep's mission of building "sustainable" Latino home ownership.

These days, James Scruggs of Northern Virginia Legal Services is swamped with Latino borrowers facing foreclosure.
"We see loan applications that are complete fabrications," he says. Typically, he says, everything was marketed to borrowers in Spanish, right up until the closing, which was conducted in English.
"We are not talking about people working for the World Bank or the IMF," he says. "We are talking about day laborers, janitors, people who work in restaurants, people who do babysitting."
Two such borrowers work in Mr. Scrugg's office. Sandra Cardoza, a $28,000-a-year office manager, is now $30,000 in arrears on loans totaling $370,000.
"Her loan documents say she makes more than me," says Mr. Scruggs.
Nahrep agents are networking on how to negotiate "short sales" to banks, where Hispanic homeowners sell their homes at a loss in order to escape onerous mortgages. The association has a new how-to guide:
"The American Nightmare: Strategies for Preventing, Surviving and Overcoming Foreclosure."

Foreclosure Crisis Hits Minorities Hard

Subprime lenders aggressively marketed their high interest and high fee loans to minorities. Research by Committee for Responsible Lending (CRL) found that about 17% of Latino homeowners and 11% of African American homeowners have already lost their home to foreclosure or are at imminent risk of doing so. The percentage among non-Hispanic white borrowers is 7%. [Foreclosure Crisis Hits Minorities Hard, DailyFinance, June 18, 2010]

According to the Fraud Files Blog:

A discussion of the fact that minorities are being foreclosed on at higher rates than whites is meaningless unless we have other information, namely:
  • What circumstances surrounded the home purchases?
  • How much of the borrower’s income did the home purchase eat up? (i.e. Could the borrower really afford the home?)
  • What prompted the foreclosures?
  • What kind of credit histories do the buyers have?
  • Did the homeowners attempt to avoid foreclosure? By doing what?

‘Flashback: Buyers Waiting for Prices to Fall’ in Florida

Comment by bashfullbill, The Housing Bubble Blog
October 9, 2006

Off the topic but fascinating just the same, I saw something this weekend that was mind boggling: Real Estate being sold at the flea market. There are 2 flea markets out here in Oakland, one near the collisium, and one near a small community college. Of the vast majority of the shopper that go there, around 75% are hispanic.

In the last few months I’ve noticed a weird phenomenon. Brightly colored tents with reams of printed listings hang from ropes running back and forth accompanied by “open house” signs began showing up at both flea markets. At first there was maybe one two. This last weekend I counted around 15 at one, and 5 or 6 at the other. Almost every company was represented: Century 21, Caldwell banker, etc etc.

All the houses listed were in prime ghetto country; West Oakland, Richmond, as well as listings 50-60 miles out of town in places like Manteca. The prices were all in the 350-500k range, which for bubbly California sounds ” cheap” compared to the median, but not when you consider that most of the people looking at these houses were likely burger flippers, janitors, and leaf blowers who had just come across the border.

I wish I had brought my camera. It is astonishing. I couldn’t help myself when I walked into one booth and said: ” it must be a sign of how well RE is doing when houses start showing up for sale at flea markets” -- needless to say the agent wasn’t amused…

Immigration and the Housing Bubble

April 18, 2009

There clearly were many factors in the housing bubble, all of which aligned to create a perfect storm of sorts: higher levels of leverage among investment banks, a trade imbalance, reliance by institutional investors on misleading ratings by ratings agencies, inflationary monetary policy, conversion of housing assets into opaque financial instruments, reduced lending standards, the pressures of the Community Reinvestment Act, the mystique of home ownership, business models that invited fraud, and a pervasive mania of speculation.

But one factor that seems increasingly undeniable is the Bush administration’s belief that Hispanics were “natural Republicans” and that the best way to get them into the fold was to give them a stake in the “ownership society” through various housing subsidies.

Hispanics’ increasing numbers in the so-called “sand states” had a lot to do with the bubble’s disproportionate influence in those regions, and these subprime borrowers’ low levels of human capital and earnings eventually led to the music stopping as payments were unmade and new borrowers could not materialize to prop up the inflated housing prices.
I mean, throughout the boom, no one said, “Does it make sense a sheetrocker from Chiapas making $11/hour can afford a $400K McMansion in Anaheim?”
This is what may be called an “overdetermined” event. In other words, without large levels of Hispanic immigration and Bush’s obsession with cultivating Hispanic political support, the bubble may still have happened. But it seems unlikely that it scale would have been quite so huge and the wave of defaults quite so numerous in the absence of the low-skill Hispanic immigration wave the U.S. has undergone since the 1986 amnesty. A million people per year is a lot of people.

As the chart above shows, subprime lending tripled in the boom and the bulk of that expansion was increasing lending to blacks and Hispanics. Even more important, as shown in the second chart, blacks and Hispanics–according to the Boston Fed–have default rates nearly two times higher than white subprime borrowers.

Of course, the media, the Democrats, and the Republicans don’t want to discuss such things; it’s not considered polite, and, thus, the greatest demographic and social change of the United States since the Civil Rights movement is thoroughly and deliberately under-analyzed and misunderstood by well-meaning (and not-so-well-meaning) political elites.

All States Household Size By Race

September 12, 2006

Per Census Bureau data, Hispanic households are about 1.4 times the size of the average US household.

Majority of the immigrants of the last few years are of hispanic origin.

Due to bigger sizes, housing units fewer than the US Average are required to house them. Fewer by a factor of 1.4.

Following Table based on 2000 Census Data Obtained from the Census Bureau.

State Average White Black Asian Hispanic
UNITED STATES 2.592.432.743.113.62
District of Columbia2.161.752.341.992.98
State Average White Black Asian Hispanic
New Hampshire2.532.522.672.843.14
New Jersey2.682.512.803.243.45
New Mexico2.632.292.612.752.97
New York2.612.422.753.133.29
North Carolina2.492.382.653.103.87
North Dakota2.412.372.702.622.97
State Average White Black Asian Hispanic
Rhode Island2.472.372.713.183.42
South Carolina2.532.402.782.893.51
South Dakota2.502.422.752.803.13
West Virginia2.402.402.352.502.62
Puerto Rico2.982.733.083.042.99

Historical populations
Census Pop.
1790 3,929,214
1800 5,236,631
1810 7,239,881
1820 9,638,453
1830 12,866,020
1840 17,069,453
1850 23,191,876
1860 31,443,321
1870 38,558,371
1880 49,371,340
1890 62,979,766
1900 76,212,168
1910 92,228,496
1920 106,021,537
1930 123,202,624
1940 132,164,569
1950 151,325,798
1960 179,323,175
1970 203,211,926
1980 226,545,805
1990 248,709,873
2000 281,421,906
2010 308,745,538

Obama tackles immigration reform to woo Hispanics for 2012
Napolitano defends ICE immigration memo (June 28, 2011)
Department of Homeland Security Secretary Janet Napolitano rebuffed accusations from Republican senators that the Obama administration is attempting to bypass Congress to secretly allow young illegal immigrants to stay in the country.
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