Report details immigration's impact on real estate.

Immigration is more than a hot political topic. Immigration patterns affect the economy in many ways, and are a critical component of the population growth that fuels real estate demand, as detailed by Leanne Lachman, managing director of Schroder Real Estate Associates, in her latest report "Immigration's Impact on Real Estate."

America's population is now growing by about one percent a year, and the growth rate is projected to drop to .82 percent annually by 2010. The report points out that about a third of the total population increase over the last 25 years is due to immigration, and immigrants play an important role in overall market demand, supporting housing, retail sales, and labor force expansion.

The effect of immigration on the economy is not evenly distributed. Immigrants tend to locate on the East and West Coasts and the US-Mexican border and in major cities. California, New York, Florida, Texas, New Jersey, and Illinois all have a high percentage of their populations from overseas.

Many cities faced by out-migration would have had to face more serious problems in terms of housing deterioration and reduced retail spending if not for recent immigrants. Older, working-class communities in several cities that have for many years been occupied by recent immigrants continue to house the latest groups and to be rejuvenated by them.

Los Angeles lost about 5 percent of its population in the 1970s; in the 1980s, it had a 17 percent population increase, and now has a foreign-born population share of 38 percent.

Clusters of immigrants have concentrated in certain Midwestern rural areas, such as Wausau, WI, (primarily Laotian Hmong refugees who were sponsored by local churches); Worthington, MN, a town of 10,000, with 20 percent recent immigrants; and Storm Lake, IA, a town of 8,800 where roughly 10 percent of the population now consists of persons from Southeast Asia and Mexico.

St. Louis has continued to lose population and has few immigrants: its population declined 27 percent in the 1970s and 12 percent in the 1980s. Its share of foreign-born population in 1990 was 1.2 percent.

The immigrant population is a major source of labor in manufacturing, retail trade and construction and personal services. In many areas, retailing has been rejuvenated by foreign-born people, as both customers and entrepreneurs. Many groups have specialized preferences for food, restaurants, personal services, and business services. Patterns have emerged of members of specific ethnic groups operating certain kinds of retail stores or other businesses:

* Many vegetable stores, delis, and dry cleaners are owned and operated by Koreans;

* East Indians have become a major force in the hotel industry, now owning 12,000 hotels - 26 percent of all lodging properties in the US;

* Caribbean and Central Americans are frequently involved with home improvement, house cleaning and lawn care services;

* Dominicans often operate small grocery stores, service and repair shops, and small garment factories;

* Chinese immigrants are often involved in the real estate industry as builders and developers.

Immigrants have been revitalizing sagging districts in many urban neighborhoods and small towns. They rent space for new businesses and purchase and renovate retail properties and other commercial space. Frequently beginning by serving the needs of their own groups, many grow to provide products and services for the general population.

The growth in population due to immigration also impacts housing demand. Many immigrants have larger families than native-born groups, and families may share dwellings, so at first they may occupy fewer units than the same number of natives. Over time, however, home ownership rates are similar to those of natives. Local builders need to be sensitive to the customs and perceptions of ethnic buyers for particular kinds of room layouts and floor plans.

The foreign-born population, now at an all-time high of approximately 25 million, comprises less than 9 percent of the population as a whole. The current share of total population born outside the country is no higher than it was in 1940, and well below the percentage from 1900 to the 1930s, when it was between 10 and 14 percent of the national total. Until 1960, the majority of immigrants were from Europe; since then, most come from Mexico, Asia, and the Caribbean.

The median age of foreign born residents is 37, higher than for native born residents, whose median age is 33. However, recent immigrants are much younger; and their households, younger than the general population, will be an increasing share of first-time renters and homebuyers. The education level of immigrants is at both extremes: more immigrants are college educated than the total population; and more never finished high school.

Projections suggest that future immigrants will continue to account for a third of population growth from 1995 to 2010. They will be a critical factor in the future growth of communities; major consumers of existing real estate; and they will contribute to demand for new housing and commercial buildings.