Deportations Could Affect the Construction Workforce
President-elect Donald Trump has said that his plan to deport millions of undocumented immigrants will solve the nation’s housing crisis. However, housing industry experts say the reality is more complicated.
On the campaign trail, Trump repeatedly pointed to illegal immigration as the cause of high housing costs, vowing that his plan to carry out "the largest deportation operation in American history" would lower home prices. Following his election victory last week, Trump announced his plan to appoint Tom Homan as his "border czar" in charge of deportations.
Homan, the former acting director of Immigration and Customs Enforcement during Trump’s first term, has made clear his tough stance in favor of widespread deportations of people living in the U.S. illegally. Trump also signaled his seriousness about carrying out an immigration crackdown with his selection of Stephen Miller as deputy chief of staff for policy.
Deportations Could Make New Homes More Expensive
The Department of Homeland Security estimates that there are about 11 million unauthorized immigrants residing in the U.S., although Trump and his supporters argue the number is much higher, possibly as much as double the official figure. Trump has argued that deporting many or all of those people will reduce housing costs for Americans, by reducing competition for homes.
However, economists and housing industry experts warn that widespread deportations could make new homes more expensive, by driving up labor costs. "Mass deportation would seriously dampen the residential construction labor force. Not only would builders have to replace workers, which takes time and money to do, but they’d likely have to pay more for replacement labor in the future," says Realtor.com senior economist Joel Berner.
Construction Industry Relies on Undocumented Workers
Construction is the industry that employs the most undocumented workers, at 1.5 million, according to estimates from the Center for Migration Studies of New York, a pro-migrant think tank. If accurate, that would mean undocumented immigrants account for about 15% of the national construction workforce.
In some states, that share is much higher, with half of construction workers in Texas reportedly undocumented, for example. Construction is an appealing sector for people without legal work status primarily because it relies on vast networks of subcontractors, who frequently pay workers in cash as independent contractors.
The Root Cause of the Nation’s Housing Affordability Crisis
Most real estate economists agree that a dire shortage of homes is the root cause of the nation’s housing affordability crisis. Residential construction activity plunged after the Great Recession, and has never recovered to the peak levels seen before that crisis began in 2007. Now, various estimates put the total shortfall of housing units in the country at 1.5 million to more than 7 million.
"Anything that provides a shock to the labor force could have significant implications on the home building industry and our labor supply, and add to housing affordability challenges," says Jim Tobin, CEO of the National Association of Home Builders.
Conclusion
While there is reason to believe that higher immigration levels can drive up local rents in a city, the recent post-pandemic surge in home prices began before illegal immigration levels jumped. Undocumented immigrants living in the U.S. are not qualified for conventional mortgages. However, they can purchase homes with cash or use an obscure, unconventional type of mortgage.
The evidence that immigration is a major factor in housing costs is mixed. While there is some evidence that undocumented immigrants, who are more likely to be renters than homebuyers, can affect local rents, there is little evidence to suggest that they have a significant impact on the overall housing market.
Frequently Asked Questions
Q: How many undocumented immigrants live in the U.S.?
A: The Department of Homeland Security estimates that there are about 11 million unauthorized immigrants residing in the U.S.
Q: How many homes do undocumented immigrants purchase?
A: According to estimates, between 5,000 and 6,000 mortgages of unconventional types are issued to undocumented immigrants each year, which accounts for about 0.1% of all new mortgages issued for the year.
Q: What is the impact of deportations on the construction industry?
A: Widespread deportations could make new homes more expensive by driving up labor costs, as the construction industry relies heavily on undocumented workers.
Q: What is the root cause of the nation’s housing affordability crisis?
A: A dire shortage of homes is the root cause of the nation’s housing affordability crisis, which is due to a lack of construction activity following the Great Recession.
