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PulteGroup, Inc. (PHM), Zillow Inc (Z): Will Printing More Green Cards Be Good for Homebuilders?

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There’s a looming major policy shift on U.S. citizenship for undocumented immigrants as provided in the Border Security, Economic Opportunity, and Immigration Modernization Act passed by the Senate recently. This can bring a new fillip to the rebound in the home market, and another breakout for housing equities can’t be discounted. Notably, the Senate’s vote on this Obama-backed bipartisan measure was a decisive 68-32.

If passed in toto at the House, this legislation would open American citizenship to 11 million undocumented immigrants in the U.S. The measure also seeks to overhaul the U.S. visa system so that American farmers and high-tech companies will have easier access to foreign labor. Viewing immigration as an economic growth driver, President Obama is encouraging business leaders to press for the bill’s approval in the House.

PulteGroup, Inc. (NYSE:PHM)

Boom akin to fireworks on the 4th of July seen

Quite apropos, the Senate vote came on the heels of this year’s 4th of July week, a celebration wherein among the oft-cited rhetoric was on immigration being one of the building blocks of the country’s nationhood more than two centuries ago. On a more contemporary note, the data is more definitive.

According to the Americas Society/Council of the Americas and the Partnership for a New American Economy, immigrants totaling 40 million have boosted the U.S. home market by $3.7 trillion from 2000 to 2010. Separately, a study by the National Association of Hispanic Real Estate Professionals (NAHREP) estimates that the passage of the comprehensive immigration reform bill shall create a new pool of 3 million home buyers. This, in turn, shall potentially generate $500 billion in real-estate related transactions and an additional $233 billion in origination fees and real estate commissions, plus household spending.

A fresh look at homebuilders

The NAHREP reading eventually panning out even by just half should help fuel another breakout for PulteGroup, Inc. (NYSE:PHM), which traded for the most part of June at about 20% below its 52-week high of $24.47 set this May 15. This company started strong this year with its first-quarter net income’s significant improvement to $82 million, or $0.21 per share, from a $12 million net loss, or $0.03 per share, in the 2012 quarter.

In particular, the Centex unit of the PulteGroup, Inc. (NYSE:PHM) stands to gain from a final imprimatur on the comprehensive immigration bill. Starter homes at base prices pegged from below the $100s upward to the $400s are the focus of Centex real estate developments. Centex has 122 communities across the U.S., some of which are flourishing in the most affordable housing markets identified in the recent reading of the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

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