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Unexpected Economic Consequences in Arizona’s Immigration Law

No one doubted Arizona’s new immigration law was going to have far-reaching repercussions – in areas ranging from law enforcement to unemployment. But as its implementation date approaches, some communities in the state are feeling new pains where their struggling economies may be least able to absorb it: their floundering housing markets.

The law, which grants local authorities broad powers in requesting proof of citizenship, is set to be implemented July 29 and is leading to an exodus of some immigrant communities around Phoenix, according to Patchwork Nation contacts there.

“We are getting to see more empty houses as the Mexican population is starting to leave. Not all of course, but quite a lot. I see it here in Surprise” writes Sylvia Rivera, who lives in the nearby town of El Mirage but owns a business in Surprise, Ariz. And that has impacts that reach beyond the immigrant community in town and the surrounding area.

Phoenix and most of its suburbs lay in Maricopa County, an Immigration Nation county in Patchwork Nation – places marked by a large Latino population. Those Immigration Nation locales are scattered around the United States, but are based heavily in Southwest and Mountain West.

A lot of them had a front-row seat for the housing boom at the beginning of the last decade and they have suffered harshly in the last few years. And Maricopa, the most populous county in Arizona, is an especially hard-hit case.

Bank Signs Galore

May data (the latest available) from the firm RealtyTrac, which monitors the U.S. housing industry, showed there were more than 11,000 homes in Maricopa in some state of foreclosure. That was one of every 137 homes. Drive the streets of the county and at its more distant reaches finished subdivision streets give way to lots with nothing more than poured foundations – sometimes less.

How has the departure of a good chunk of the Latino community worsened the situation? Many homes in Maricopa, particularly in places like Surprise and El Mirage, were actually group homes, rented out to immigrants who needed inexpensive places to stay that they could secure without documentation.

As they leave the area, landlords are finding their properties harder to keep afloat. One landlord who rented to immigrants in the city of Surprise told the Arizona Republic he had lost two buildings to foreclosure since May and that he feared losing more.

The story has become very familiar in Maricopa says Troy Corder, who works in public relations in the area.

“We are hearing tons of stories about local businesses closing up because they serve the immigrant community,” Corder writes in an email. “People are moving to California or other states with less stringent immigration enforcement. We have had a toxic mix of declining construction jobs and scared illegal immigrants.”

And as that has happened home prices have plummeted. The median home price in Maricopa County has gone from $260,000 in 2006 to less than $130,000 currently, according to website Trulia. In El Mirage, they have fallen from about $230,000 to less than $90,000.

In short, the net worth and buying power of area has taken a massive hit during the housing crash and the recession – and those things may dip further now as immigrants leave and houses empty.

Problems elsewhere

Maricopa may be an extreme example of the economic troubles the new immigration law may cause but it is by no means alone, particularly when looked at through the Patchwork Nation prism. If you look around the map of the most recent foreclosure data and you will see a large number of Immigration Nation counties that have a “very high” number of foreclosures (in the fifth of five quintiles).

Of the six Immigration Nation counties in Arizona, five have “very high” foreclosures. All 12 of California’s Immigration Nation counties are in the “very high” group, as are six of Colorado’s Immigration Nation counties.

In all those states now, the climate around immigration has grown more charged and is making immigrant groups nervous.

Supporters of the Arizona law will certainly note that the immigrants leaving counties like Maricopa legally should not have been there anyway. That may be true. But the experience in El Mirage is a sign of just how intertwined Immigration Nation counties like Maricopa have become in the immigration fight.

Like it or not, the illegal immigrants in those places have become a structural part of how their economies operate. And removing them, suddenly, may have consequences that will almost certainly go beyond what was intended.

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