Home Prices Fall Again - We Need Another Disaster

The Huffington Post reported, home prices fell AGAIN in the first quarter of 2011, with the biggest drop since 2008.  http://www.huffingtonpost.com/2011/05/09/home-prices-first-quarter-2011_n_859299.html

While that isn't a surprise for many home owners, it should be a wake up call for Georgia.  Both the House and Senate recently passed a new, anti immigration bill, HB87, which Governor Deal has said he will sign.  So now you're asking what falling home prices have to do with illegal immigrants.

Politicians are hoping to drive 425,000 undocumented immigrants, mostly those from South of the Border, out of Georgia because of complaints of "illegals" by their constituents.   Unfortunately their constituents can't tell the difference between an "illegal" immigrant and a born in the USA citizen.  Many, xenophobic residents, see "brown skin" and Hispanic surname and assume "illegal."  Then, they attach "criminal" to their set of labels as they judge others.  When I say, constituents it should be mentioned, that even law enforcement and the E-Verify system have trouble differentiating immigration status, and ICE is not infallible.  Rather than educate the public, that the population growth rates include many with Hispanic ancestry, many politicians are seizing the opportunity to capitalize on "Hispanic Hysteria" and turn it into a vote generating machine.  Is that creating a pandemic, pimping or pandering?  Hard to tell... call it what you will.

Back to why the two issues are connected:  Much of Georgia's housing was built with immigrant labor - undocumented labor that was lured here with (unfulfilled promises of gaining legal status) as well as construction jobs.  (Agriculture is a different story for another time.)  They SETTLED here, some bought homes while others rented; they became part of the community.  Home buyers benefited from the fruits of their labor, as did contractors, lumber & supply companies, real estate agents & brokers, mortgage lenders and the whole supply chain, including advertisers.  Those 425,000 people LIVE in dwellings that will become vacant if they leave the state.

"They" are often part of "mixed status" households; meaning some in the household are here legally.  One spouse may be an "authorized resident" (citizen by birth or naturalized OR legal resident alien,) while the other is undocumented.  Or maybe the Grandmother who babysits is the undocumented family member.  Whatever the household make up, it's estimated, that if Georgia is successful, some 100,000 residential properties could become vacant; most within a relatively short time frame. This will happen while we are in the midst of a foreclosure crisis which has already driven home values far below replacement costs.

MetroBrokers today says there are 110,000 active real estate listings in Georgia (remember all homes aren't listed - those still in the foreclosure process are part of the "unlisted" figures).  Now add 100,000 newly vacated properties that are likely to funnel into the foreclosure pipeline to the mix. 

Keep in mind, when 10% of a neighborhood becomes vacant the whole neighborhood is likely to become blighted.  Thieves arrive to "harvest" copper plumbing fixtures, HVAC units and anything else of value from the vacant properties.  The cost to rehab the home is more than the land value.  It's just about worthless.  Squatters and the homeless may take up residence.  More good residents will flee.  Neighborhoods begin to look like casualties of a war zone.

Government is funded by real estate property taxes.  As the value of homes fall; tax revenue collected falls.  Government no longer has adequate funds needed to maintain services such as fire, police, libraries etc.  Georgia currently has a AAA bond rating; but how long will that last with falling revenues?  There will be less sales tax collected as the population shifts or leaves.

It took Georgia some 100 years to recover following a devastating Civil War.  Then came the Civil Rights Era.  What has Georgia learned in the intervening years?   


The tornadoes which ripped through the Southeast recently left death, destruction and many homeless families in the wake.  We have another disaster in the making.  This one created by a law that drives residents from the state, separating families and vacating properties while devastating communities.  Yes, a natural disaster could save us by wrecking havoc, death and destruction while creating a need for housing. But is that something we really want to hope and pray for?

Are there other considerations?  Are real estate investors waiting for things to hit rock bottom so they can capitalize on the loss of others?  Will foreign investors sweep in and buy up homes and property after the economic devastation? 

It would be less painful - at least economically - for the majority of Georgians if Governor Deal vetoed HB87. Yes, some would have to become accustomed to "brown faces" and unfamiliar names, but the United States is a melting pot.  And Atlanta prides itself on being an international city.   

Let the Hispanic Hysteria subside.  No doubt a new target group will be found soon enough.