President-elect Donald Trump’s plan to deport millions of undocumented immigrants could threaten one of the few bright spots in housing over the past few years: new housing. Mass deportations will affect home builders and others in the construction industry due to labor shortages, as of late Redfin The report found that immigrants make up about 30% of the construction workforce, nearly half of whom are undocumented.
Gary Acosta, founder and CEO of National Association of Hispanic Real Estate Professionals (NAHREP) sees difficulties ahead.
“It’s going to have a negative impact, and possibly a negative impact, on construction workers’ groups in markets across the United States,” Acosta said. “The construction industry has been dependent on immigrants for a long time, that is well documented. They talk about coming to the workplaces and sweeping those markets. We know that that will have an impact on the work of people on the sidelines, perhaps despite plans to get their status legally.”
With mortgage rates rising, new home sales have outpaced existing home sales because builders have been able to lower prices to attract buyers – a key factor in an increasingly unaffordable housing market. A major change in the workforce could increase that profit.
Acosta said the fear of mass layoffs will make it difficult for construction companies to retain workers and hire new workers when new jobs become available. And Acosta says it’s not limited to the real estate and construction industries.
“It’s going to be the restaurant industry, the hospitality industry…I think the sad thing is that immigration is framed as a social policy issue and in an emotional way, when people talk about crime and murder and all these things that are imagined. There has been an influx of people from other countries, most of which I think are false in my opinion,” he said. “People don’t see it as something that affects the economy. They see it as a matter of social policy. And if they look at it from an economic point of view, I think their views will be different than what they are.”
Acosta says he looked at the issue from a mathematical point of view – “Maths don’t have an opinion,” he quips. In an environment of low housing availability and already low unemployment, mass evictions will only make matters worse.
“It will take years, if not decades, to retrain our workforce on this [job] spaces. There are about 11 million unfilled open jobs in the United States right now, and the only way those jobs will be filled is with an influx of smart people. It won’t happen through rebirth, it won’t happen because people just sit on the sidelines. We are short of workers, and increasing this shortage is not the right solution,” he said.
Stephen Kim, executive director and head of the Real Estate Research Team at the investment firm Evercore ISItalks regularly to housebuilders and says there is “no doubt in anyone’s mind that this could be a key factor in house production” by 2025.
Kim added that while contractors sometimes have to make sure that everyone on their team is a documented citizen, no one he spoke to is sure that no illegal immigrants are arriving at those work sites. “In addition, everyone I’ve talked to believes there is a reasonable number—not like 1 or 2%, but a reasonable number—of workers in the industry who are undocumented. Maybe they don’t do anything in their homes, but they are there and they are doing something.”
Kim says that at the same time, mass evictions will not have a significant impact on housing demand. “Immigrants usually live in big houses, and it’s a house that houses houses… I don’t want to sound unkind here, but if you had a house of seven people and two of them were evicted, there are still five people who need to live somewhere,” he said.
But, Kim admitted, it all depends on what actually happens if Trump is in office, meaning none of the builders mentioned have concrete plans to pull back on their construction jobs or be more cautious.
“If you see the authorities like a place for a construction or home building job and actually collect immigrants, I believe the word can spread quickly, and you will see many workers being more careful about showing up for the next job. day,” said Kim. “I don’t think you will find that people will simply stop and never come back. I think they need to work, but they will really notice…there [might] it will be a time when you won’t have them there…however, it will cause a delay.”
Mass evictions will affect housing in some states more than others. A recent NPR article noted that Texas — a home-building hot spot — had more than half a million immigrants working in the construction industry by 2022 and that nearly 60% of those workers were undocumented, double the state’s number. Surprisingly, Texas state officials have promised 1,400 hectares of land to build a new deportation center if Trump wants it.
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