The Different Impacts of Immigrant Homebuyers
Say Nashville, and most people think of country music and the Grand Ole Opry. But Music City U.S.A. is also home to one of the largest Kurdish populations outside the Middle East. The wave of immigration started after the first Gulf War in the early 1990s. Since then, the Kurdish community has swelled to more than 8,000 people, adding to a foreign-born population that's approaching 10% of the city's population.
More immigrants are purchasing homes, making them an important factor in the housing recovery. As a group, they increased their homeownership rate from 46.5% in 1995 to 53% in 2008, according to the think tank Pew Hispanic Center. And they'll likely continue purchasing. "When you have a 70% homeownership rate among [the] native born, they don't have as much upside," says Rakesh Kochhar, associate director for research at Pew. "Immigrants have room to grow."
The immigrant population has been a stabilizing force in Nashville, where mosques and markets occupy a stretch of Nolensville Road south of downtown. Already, housing is showing signs of life: Home sales topped 1,300 in April, up from 850 in January. And the fast-growing group of immigrants, like those in Columbia, S.C., and Raleigh, N.C., should help buoy prices in coming years.
An influx of immigrants can be a double-edged sword, however. Consider Danbury, Conn. During the housing boom, Brazilians flocked to the town, helping to revive the former hatmaking capital of the U.S. But many Brazilians in Danbury took out subprime mortgages. Now, 212 borrowers are in default or foreclosure, according to research firm RealtyTrac. That's a lot in a city with roughly 25 home sales a month. Meanwhile, some Brazilian residents are switching to rental properties or moving back to their home country, which will hurt home prices as well.
Toxic mortgages are less of an issue for Nashville's Kurds. They are forbidden by their Muslim faith from paying interest on a loan. Many potential buyers in the community are instead turning to Habitat for Humanity. The housing charity offers interest-free loans that require borrowers to pay only the principal. In Nashville, Habitat built Providence Park, a subdivision with 138 homes, more than a third of them occupied by Kurds. Kurdish immigrants Bayan Barwari, 34, and her husband, Deldar Muhammad, 35, pay just $385 a month for their house. "We fixed up the backyard. It's so big," says Barwari. "I feel like I'm in my country."
Not all Nashville residents have put out the welcome mat. Some locals had opposed the construction of Providence Park, predicting that the low-income home buyers would drag down home prices. But the immigrants have had the opposite effect: Overall property values in Providence Park have jumped significantly, boosting Nashville's tax coffers by $230,000 a year. Says Nashville Mayor Karl Dean: "The cities that are going to do well are cities that are attracting new people and reinventing themselves."
The city's Kurdish immigrants are helping to stabilize housing prices
2007 MEDIAN HOME PRICE
2008 MEDIAN HOME PRICE
Numbers reflect metropolitan area; Data: Fiserv