May 31, 2006

FLASH: Fortune Magazine: Immigration reform could kill the housing boom

Remember the trolls who would complain when HP would post articles on the illegal immigration problem? Remember when people would complain that the housing bubble and immigration have nothing to do with each other?

Guess what. These two subjects have EVERYTHING to do with one another.


My question is, why aren't we arresting or fining the employers knowingly breaking the employment and tax laws of the United States? My other question is, aren't you sick of the Dems and Reps pandering to the illegals, simply because they want the (future) votes of these illegals and their kids? Now, they won't want to deport them because it'll hurt home prices. Unreal.

For the home building industry, the immigration debate raging in Washington is anything but abstract. It's the biggest issue nobody wants to talk about.

Frank Fuentes, president of the Hispanic Contractors Association, queried his 20 largest member firms about speaking with FORTUNE, and not one was willing.

"They're scared to death of being raided," says Fuentes.

By FORTUNE's estimate, up to 40 percent of new-home construction in the U.S. is being done wholly or partly by undocumented immigrants. Fuentes suspects the percentage in his home state of Texas is closer to 80 percent.

According to a study by the Pew Hispanic Center, 36 percent of insulation workers, 29 percent of roofers, and 28 percent of drywall installers are "unauthorized workers."

Big builders don't employ construction workers, legal or illegal. They hire subcontractors that in turn hire the workers who do the actual sawing and hammering.

"The entire home building business is outsourced," says A.G. Edwards analyst Greg Gieber. It's unclear whether this setup will protect builders should the feds start enforcing immigration laws more vigorously.

18 comments:

foreclose_me said...

The connection is why I wonder just what is going on with the duelling bills: One for amnesty, one for deportation. One to destroy the United States, one to export the unemployment as the crash unfolds.

Who will win?

Anonymous said...

According to a study by the Pew Hispanic Center, 36 percent of insulation workers, 29 percent of roofers, and 28 percent of drywall installers are "unauthorized workers."

B.S. These numbers are *low*. Walk by any construction site and look for a white face swinging a hammer...

>>>Big builders don't employ construction workers, legal or illegal. They hire subcontractors that in turn hire the workers who do the actual sawing and hammering.

"The entire home building business is outsourced," says A.G. Edwards analyst Greg Gieber. It's unclear whether this setup will protect builders should the feds start enforcing immigration laws more vigorously.

Didn't WalMart get nailed this way? Why don't we go after these builders? I am sure a lot of sub's are not here legally as well. As a business, you don't check immigration status.

Timba said...

You keep one white face. That's all you need. That way if there is any questons. You have a white faced answer guy. Most big companies do that. If there real progress and proactive....they get a black faced answer guy! It's racist and greedy. We as people have to stop finding cheap brown poeple to do are work for us. Lincoln freed the slaves. Why do we keep getting more

Anonymous said...

I disagree with that one sided presentation. They should look at both sides of the coin.
Even illegal immigrants have to live somewhere. Deport them and you free up a lot of rental housing. The lack of demand means lower rents. When rents go down, more people decide to rent rather than own, and there is less demand for new housing...

Los Angeles Friends In Deed said...

Anonymous said...
I disagree with that one sided presentation. They should look at both sides of the coin.
Even illegal immigrants have to live somewhere. Deport them and you free up a lot of rental housing. The lack of demand means lower rents. When rents go down, more people decide to rent rather than own, and there is less demand for new housing...


IMHO people may decide to rent.

Because as demand for rentals decreases, and rents begin to drop, so too does the cost of the real estate. Thus, people then can decide to buy the lower cost real estate instead of renting.

I think renting is an option for people who need the flexibility of relocating, during times of transition, etc.

And perhaps renting is an option for people who are unable to take on the responsibility of owning real estate.

Anonymous said...

I watched some people building a house in Mesa the other day. It is disturbing to know that these houses are built by mostly unskilled individuals legal or not. I hardly saw a tape measure. Nails were driven in bent. And in one instance , where my friend was thinking about buying , the A/C unit had been placed on the wrong side of the house. Ventilation duct work re-routed to accomodate the error. Condensate drain was now dripping to the walkway. And now they want to sell this pile of stucco and wood built by people who barely have HS diploma and trained on the job to hold a hammer for $500,000
These are all a bunch of overpriced shit boxes that you could not give me. What a joke.

Anonymous said...

For years all the Suits were against Union Construction Workers and thought they were smarter and more important than the tradesman.
The Suits were happy making $80,000 a year while begrudging the skilled tradesman 40,000 a year. The end result, no new American apprentices that invest 4-5 years of trade school and who deliver a top notch job compared to the crap you're buying now.
Add insult to injury, the monkeys are probably using your stolen SS number.
Get out and VOTE

Anonymous said...

is there a 'White Contractor's Association'? oh no, i forgot, that would be racist.

why is it accepted that minorities can discriminate with their 'single race' associations?

Tom DC/VA said...

"My question is, why aren't we arresting or fining the employers knowingly breaking the employment and tax laws of the United States??"

Because businesses run the country for their interests via the politicians they control using campaign contributions. Duh.

Anonymous said...

KEITH,
the reason i think this blog would be better off without discussing immigration problem is that this isssue sometimes tends to bring out the worst sentiments in people like racism and xenophobia.
Please do not equate people, many of whom risk their life to come here and work as a desperate attempt to feed their family with their employers who use them to cheat the system and make money off them.
I do not see anything wrong with Dems and Reps thinking about the votes, future or current. This is how this country works, one man, one vote. Illegals do not vote, but their children, brothers and sisters do, and will in ever greater numbers. I do see a real serious problem, however, when you find a 100 K in a freezer of a House Representative or in that clown Jack Abramoff, but this is just my point of view.

Los Angeles Friends In Deed said...
This comment has been removed by a blog administrator.
Los Angeles Friends In Deed said...

Anonymous said...
the reason i think this blog would be better off without discussing immigration problem is that this isssue sometimes tends to bring out the worst sentiments in people like racism and xenophobia.

I think the topic of immigration is important to include in the discussion, of the many facets, and how they play a role in how real estate bubble's form, etc.

Regarding people making racial attacks, is not helpful in the discussion of real estate or real estate bubbles.

However, critiquing actions, behaviours can probably be helpful in getting a better understanding the current real esstat situation we are in.

Los Angeles Friends In Deed

austingal said...

It's rude to call illegals "monkeys". If they are using a s.s. number, it would only benefit the rightful owner of that number. The income for that year, would show up as more, and the owner of that number would get more money when they retire. Those guys are getting exposed to hazardous substances, and sustaining uncompensated work related injuries. I agree the houses are POS, but it's not the illegals fault. It's all the greedy americans, sitting in the front office, that are laughing all the way to the bank. Drywallers get paid to do as much work as possible, in the shortest time. There is no "quality control". They work without breaks, and they work from sun-up, to sundown.

bgmanofid said...

A crackdown on undocumented workers would shrivel an already tight construction labor market. Lee Wetherington of Lee Wetherington Homes in Sarasota, Fla., estimates that 70 percent of the workers employed by his subcontractors are Hispanic immigrants.

"If for any reason we lose that work force, you're going to see the time required to build a house double or triple and the cost of new homes increase 30 to 40 percent," Wetherington says.

If developers find they can't pass along those costs, they may pull back on construction - and fewer new homes could ultimately boost prices of existing homes.


Hmm... in other words, if I'm reading this correctly, it appears that clamping down on illegal immigration would keep the realtors and flippers in business for a little while longer.

Looks like Tancredo et al. should solicit NRA for lobbying help.

road hog courier said...

The big secret reason that illegals are so widely used in construction is two words:

Tax avoidance

Construction business is done by Independence contractors /DBA's. This form of business organization is a perfect system to minimize or avoid paying taxes. In construction work it would be almost foolproof as the I/C's and subcontractors are not operating from fixed business locations. The i/c could provide a P.O address and still operate legally.

One General licenced above ground I/C could hire green card/illegal alien subcontractors who would in turn pick up a dozen or so illgals off the street and pay them cash.

The Original green card subcontractor can also write off enough in expenses so as to not pay any taxes, even if he pulled in $100,000 in yearly gross.

All parties avoid paying mandated state disabily. work comp and income taxes. The original General contractor will not have to file any taxes at all for the ilegal=alien crew thru an independent contract agreement madw with the green card/illegal alien subcontractor .

By this means contractors can keep their operating costs down to the benefit of Flippers and home remodelers.

State tax agencies will not come out to the work sites to check papers of all contractors.

road hog courier said...

To add to the discussion about illegals doing inferior work on home construction. I knew someone who added a room to his existing house. This gent was a very skillfull jack-of -all -trades, did entire house electrical wiring, was very well-read and knowlegeable in the homebuiding crafts. As I said he added a room, did everything: pouring the concretefoundation, laying the beams and crossbeams, diagnonal sawing and chiseling of the mouldings, floor tiling, drywalling and stuccoing, ect. Did an almost perfect job except for one small detail. He used untreated wood for the job: did not bother to use termite green or other wood preservative with the result that now his wood frames are being eaten away by termites and they have worked their way throughout the rest of his house.

I suspect that an awful lot of recently built homes or remodels done by ill-trained illegals are going to have serious contruction flaws, many in just a few years.

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