Below The Beltway

The Washington Post is running a story this morning which contends that the decline in the housing market in Prince William County is linked to the counties’ policies toward illegal immigrants:

Prince William County’s home prices and its Hispanic population rose in tandem during the first half of this decade, a result of a home-building frenzy that became a powerful magnet for immigrant laborers. They arrived by the thousands, sending housing values even higher.

Many did not come legally. But in the blur of swinging hammers and flying dollar signs, that detail was often overlooked. Illegal immigrants had little trouble finding jobs and not much trouble getting mortgages.

That arrangement has unraveled. Prince William has some of the highest foreclosure rates in the region, with a glut of unsold, depreciating homes. And its elected officials have embarked on one of the most ambitious efforts in the nation to drive out and deport illegal immigrants.

That combination — an excess of housing and new anti-illegal immigrant policies — is likely to exacerbate the county’s weak real estate market, agents and lenders say. Regardless of one’s views on immigration, they say, simple arithmetic dictates that if a lot of residents leave the county, the housing meltdown will only worsen.

“If I’m not welcome somewhere, I’m going to sell my house,” said Jose Luis Semidey, a real estate agent whose business in Prince William shut down in August when he laid off 40 employees and moved the company to Reston. The county’s anti-illegal immigrant measures, which he and a coalition of other Latino businessmen are fighting, “have accelerated the collapse of the real estate market in the minority community,” he said.

There are several things wrong with this entire hypothesis, but the most prominent one is the fact that the housing collapse in Prince William is more than a year old, while the Board of County Supervisors only passed the anti-illegal immigration ordinance in July. Any assertion that the ills affecting the housing market are caused, even in part, by an alleged crackdown on illegal immigration falls apart when you consider that simple fact.

More importantly, though, the hypothesis doesn’t account for this neat little fact:

In Prince William, an early indicator of the impact of the anti-illegal immigrant policies is likely to be seen in the real estate sector, and the county is a gloomy place in a grim regional market. In two years, from August 2005 to August 2007, home sales fell 66 percent in Prince William, 52 percent in Loudoun County and 49 percent in Fairfax County. The number of properties on the market in Prince William more than doubled, from 2,753 to 6,515.

If the immigration hypothesis were correct, one would think that the markets in Loudoun and Fairfax would actually be doing significantly better than Prince William’s as immigrants stream into neighboring counties. But that’s not happening.

And it’s not happening because the ills affecting the housing market have nothing to do with immigration and everything to do with simple economics:

Customers with little more than a tax identification number and a pay stub were able to secure 100 percent financing on mortgages. The lack of a driver’s license — let alone a green card — was hardly an obstacle to getting loans.

In other words, people who could not really afford a home were being given loans that they either didn’t understand or choose to willfully ignore. And when the market turned around and those no money down, no-interest loans turned sour, it came time to pay the piper.

That’s why the housing market is depressed, not because Prince William County is cracking down on immigration.

Update: Lowell at Raising Kaine has clearly bought into the Post’s bogus argument hook, line, sinker:

[T]he anti-illegal immigrant rhetoric by Prince William’s Republican-controlled county board (note, they’ve actually taken no real action on immigration, just spewed a great deal of hot air) is fueling a collapse in the county’s housing market.  Which means that if you’re a homeowner in Prince William county, your home value is being hurt right now, and potentially far worse in coming months and years, by the Republican county board’s foolishness

How, pray tell, do you explain the fact that the housing market was in collapse long before the BOCS took any action on immigration ? Perhaps it has something to do with the fact that, the Washington Post’s twisted logic notwithstanding, the two are entirely unrelated.

Update # 2: Greg Letiecq weighs in on this issue as well.