Immigrants from Central America pay more and more to live in the United States

2022-07-27 12:02:21 By : Mr. Zhaozhong Guo

Home prices and rents have been rising steadily in key US cities with the largest presence of immigrants from Guatemala, El Salvador and HondurasThe US population and immigrants leave large cities like California to settle in other cities with a more affordable cost of living.(Bloomberg/David Paul Morris)San Salvador — Home, expensive home!The price of homes in the United States rose at a double-digit rate from December to 2019 and immigrants from Central America are beginning to feel the effects, in a market in which they have also been hit by historical inflation.In Miami, renting a three-bedroom house can be around US$3,000 a month, when before the Covid-19 pandemic it was around US$1,500 to US$1,800, says Sonia Martínez, a Guatemalan migrant.“If 10 people rent it for US$3,000, they have to pay US$300 each;I know people who live like this, they put bunk beds and sleep four in each room”, says the Guatemalan.The increase in rental payments is pressured by the rise in housing prices.Buying a middle-class home went from costing $250,000 in December 2019 to $354,165 as of June this year, an increase of 41.6%, according to data from the Zillow Home Values ​​Index.But the costs in strategic cities for the diaspora of El Salvador, Guatemala and Honduras are well above the national standard.For example, Los Angeles requires a disbursement of US$1 million, an increase of 36% compared to December 2019.The real estate sector has had a decade of sustained price increases.The behavior is due to a housing deficit in the United States, indicated the National Association of Realtors (NAR).The increase in prices has accelerated in recent months, fueled by the Covid-19 crisis, the interruption of supply chains and inflation, which marked 9.1% nationwide, in figures as of June 2021, the highest pace in 40 years.The median home price in the United States has risen by 42% from December 2019 to June 2022, according to data from the Zillow Home Values ​​Index.How has the housing landscape changed for Central Americans residing in the United States?To answer this question, Bloomberg Line measured the temperature of the evolution of prices in the most critical urban centers for Salvadorans, Guatemalans and Hondurans.A 2017 Pew Research Center study sheds some light on the geographic distribution of immigrants, as it identified the 10 metropolitan areas with the greatest presence of the aforementioned nationalities.From the investigation, Bloomberg Line selected five metropolitan areas: Los Angeles, Washington DC, New York, Miami and Houston, which in turn are broken down into a total of 15 cities.Price developments were tracked using figures from the Zillow Home Values ​​Index.As part of the findings, it was found that Central Americans have traditionally settled in more expensive cities than the US average, attracted by the best job opportunities.The budget to buy a median-priced home has increased significantly.At the end of 2016, US$350,000 could buy a property in 7 of the 15 cities with the largest immigrant settlements in the region;today, only Houston is below that line.The Los Angeles Metropolitan Area, which includes cities like Anaheim and Long Beach, California, has been rising rapidly, with median prices ranging from $837,000 to $1 million.It has already taken the first places from the East Coast, particularly from Arlington, in Virginia, New York and Washington DC, the latter with values ​​between US$700,000 and US$833,000.In terms of variation in dollars, houses in Los Angeles increased by US$365,000 in the last five years and its metropolitan area also increased by over US$300,000;those of Houston were the ones that increased the least in price (+US$97,000).In percentages, the ones that increased the most in the last five years were Newark (+92.5%), West Palm Beach (+88.6%) and Fort Lauderdale (+66.2%);those with the lowest variation: Washington DC (24.6%), Arlington, in Virginia (24.6%) and New York City (+26.6%).It is the area that has become more expensive in the last five years and the largest receptacle for immigrants from Guatemala and El Salvador, in data as of 2017. Data from the Census Bureau indicate that the county of California is the one that lost the most population in 2021 by a phenomenon of internal migration to other cities.This metropolis is the second area most inhabited by Salvadorans and the third in preference for Guatemalans in the United States.Houses have become more expensive at a slower rate, 25%, from the end of 2016 to June 2022.This metropolitan area is in the top 3 of Central American migration, as it receives the largest number of Hondurans in the United States, it is the second most important for Guatemalans and the third for Hondurans.Housing in Newark doubled its cost in the last five years.The Miami area is the second most preferred by Hondurans to live;the fourth for Guatemalans and the ninth for Salvadorans.In the last five years, houses in West Palm Beach have increased in value by 88.6%;and in Fort Lauderdale, 68%.Real estate in this metropolis today costs between 42% and 56% more than five years ago;Despite this, Houston has the cheapest price among the 15 strategic cities for Salvadorans, Guatemalans and Hondurans.With current price levels, buying a home in the United States becomes “impossible,” says Martínez, the Guatemalan migrant.What other options are left?“The mobile homes – she answers – but they are at US$100,000, it is still very expensive”."The situation is very sad, there are people whose salary is not enough and they live like little mice, piled up," she laments.What options do migrants have in this environment?Most of those interested in buying are postponing her decision;For others, access becomes even more prohibitive with the recent upward adjustments in interest rates, analyzes Óscar Chacón, executive director of Alianza Américas.“At the end of last year you could find 2.5% interest mortgages;you are currently talking about 5% upwards, depending on your credit history.When you combine the increase in the cost and the increase in the mortgage interest rate, we have a logical conclusion that people decide better to wait for –perhaps– a better moment in the future to dare to buy a house”, reflects Chacón.Central Americans are also riding the wave of "the great internal migration."The same Americans are leaving the big cities to settle in smaller ones, with a more affordable cost of living."There is a constant flow of population leaving the big cities, such as Los Angeles, San Francisco, New York, Boston, Chicago and Miami, who are looking to relocate to areas that offer them the possibility of obtaining more for their purchasing power" , describes.To which cities do nationals relocate?Chacón regrets that there is a lack of precise information on the situation of immigrants from Central America in the United States, but notes that Salvadorans, Guatemalans and Hondurans are immersed in this new reality.“Salvadorans do not live in a strange bubble, divorced from the reality of the rest of US society, but rather we are also part of many of these processes in this sense,” he commented.Chacón observes that Texas is receiving a large part of the migratory flow of Central Americans, but they are also arriving in other non-traditional states for migration, such as Oklahoma, Alabama, North Carolina or Georgia.“When you compare the change in average home prices in a city like Los Angeles, with 1 million dollars you buy a huge ranch with a lot of land and a house already included – and for much less money – in the state of Texas.Not necessarily in the traditional areas like Houston, Dallas, or San Antonio, but in secondary cities,” he estimates.Immigrants face the dilemma between earning more money in high-value cities or economizing their lifestyle.“Even if you clean dishes, you will earn more in New York than you would in Ledbetter, Texas, which is a small town, where there is a growing community of Salvadorans,” he illustrates.The United States Census Bureau detected a change in internal migration patterns in the United States during 2021, where small cities gain prominence by receiving new settlers.Los Angeles County leads the large cities that lost residents, as it saw 59,621 people leave, although it continues to be the most populous in the country, with 9.8 million.Some 334,424 residents left four counties in New York State (New York, Kings, Queens, Bronx);Meanwhile, Miami-Dade said goodbye to 38,990 people.Within California, the population of San Francisco (-58,764), Santa Clara (-50,751), among others, also decreased.Of the 10 counties with the highest repopulation last year, five were in Texas, the Census Bureau noted: Collin, Fort Bend, Williamson, Denton and Montgomery, which received 145,663 new inhabitants.Also in the top 10 receiving counties are Maricopa, Arizona (+58,246 residents);Riverside, California (+35,631);Polk (+24,287) and Lee (23,297), both in Florida;and Utah (+21,843).And the Central Americans?The Census Bureau does not delve into this detail, but instead measures the population of Hispanic origin, which increased by 767,907 people (+1.2%) in 2021, in the United States.Its largest presence is in the states of California, Texas and Florida.“New York (-1.1%) and the District of Columbia (-2.5%) were the only states and equivalents that experienced a decrease in their Hispanic population in 2021,” the Census Bureau reported.In contrast, Maine and Montana counties saw a 5.4% increase in Hispanic presence.In terms of volume, Riverside, in California, received 34,289 Hispanics, 2.8% more than in 2020.The new migratory trend is transforming the very face of the country.“If we leave the strictly political sphere and enter the economic, social and cultural sphere, migration is an absolute blessing both for the United States and for the countries of origin,” says Chacón.He also poses new challenges, such as reaching an increasingly dispersed immigrant population.Given this, he proposes to rethink consular services."We should have already evolved, at a minimum, to an effective and practical scheme for the integration of consular services between the three countries: Honduras, Guatemala and El Salvador, so that we would have a more numerous and better distributed consular network."This development must be accompanied by an evolution of the same services, with education programs, health windows and legal services for migrants, says the representative of Alianza Américas.Despite the adverse real estate scenario, the impact is less severe due to a compensating factor: the labor shortage presents them with more employment opportunities and, in this way, they have improved their income after the pandemic.“Ironically, along with the affirmations that the United States is even headed for a potential economic recession, we see an abundance of employment in the labor market, and this means that many Honduran, Guatemalan, Salvadoran people are working today more than ever, they have up to three jobs,” says Chacón.This is reflected in the increase in family remittances.According to data from the World Bank, in 2021 these money contributions rose 35% in Guatemala, 29% in Honduras and 26% in El Salvador.However, this year they continue to rise, they begin to show signs of a slowdown for the Salvadoran economy.Remittances contract in almost half of the departments of El Salvador in JuneOther dynamics also drive the increase in remittances: on the one hand, a better social position of migrants;and on the other, that immigrants continue to arrive in the United States, analyzes German Morales Martínez, a partner at Grant Thornton in Costa Rica.“Our countrymen who go to the United States achieve better and better positions, perhaps not the figure of the American dream, but they are positioning themselves better and better, they are improving their jobs, their income and adapting a little more to the conditions of the United States. United," says Morales.If the United States enters an economic recession, the real estate landscape will change with a decline in house prices, which would be accompanied by an increase in rental prices, predicts Guatemalan Rodrigo Blanco, CEO and founder of Diversified Portfolio.“When the United States enters a recession, what is going to happen is that people are going to stop buying houses and rents are going to go up.Whenever there are recessions or economic depressions, you can clearly see the direct correlation with the increase in income”, Blanco predicted.A rise in rents would last for the duration of the recession, about three years, the Guatemalan predicted.In addition, it would occur in a generalized way, both in large cities and in small cities.The background of the real estate dynamics originates from the housing deficit in the United States, estimated at some 6 million homes, which, combined with the supply crisis, has caused the real estate market to skyrocket.Both home sales and prices fell in June, but the long-term phenomenon is far from over, warned Lawrence Yun, chief economist at the National Association of Realtors (NAR).Existing homes posted a median price of $416,000 in June, an annualized increase of 13.4% according to the NAR;while sales fell at an annualized rate of -14.12% compared to June 2021.In a hearing before the US Senate Committee on Banking, Housing and Urban Affairs in late July, Yun anticipated that sales could weaken and inventory will increase in some cities, but that will be insufficient to meet market needs.“Historic supply shortages in the market, combined with continued demand, will likely drive ongoing affordability issues for many Americans,” Yun stated.© Copyright, Bloomberg Line |Falic Media© Copyright, Bloomberg Line |Falic Media