How Could Mass Deportations Impact the Housing Market?

Nov 21, 2024 By Noah Bell

Duewight Garcia, in his mid-30s, extended his tourist visa in the United States in 2019 due to safety concerns stemming from gang encounters and his involvement in student activism in Honduras. Since then, he has been employed in the demanding and occasionally hazardous fields of sheet rock and framing in the New York City area. "We undertake the tasks that others shun," Garcia explained to through a Spanish-to-English translation. He represents a significant demographic of undocumented workers in the American construction sector, who now face the threat of large-scale deportations under President-elect Donald Trump's administration.

Trump has attributed a portion of America's housing affordability crisis to undocumented immigrants. However, his deportation initiatives might inadvertently exacerbate the issue, potentially increasing the cost of home purchases. The influence of immigrants on the housing market has gained urgency as the cost of buying a home has skyrocketed, according to Riordan Frost, a senior research analyst at Harvard University's Joint Center for Housing Studies. Frost noted that both documented and undocumented immigrants contribute to housing demand, which could heighten competition for homes in specific U.S. regions. Conversely, they also aid in increasing the housing supply, given their significant presence in the construction industry.

"The role of immigrants in household growth is significant and cannot be overlooked," Frost emphasized. "However, the affordability crisis we've experienced since the late 2010s and throughout the pandemic has been predominantly driven by growth in native-born households."

The National Association of Home Builders (NAHB) estimates that at least 1.5 million new homes are required to satisfy the escalating demand. There is also a pressing need for additional construction workers, with 282,000 construction jobs unfilled as of September, as per the Bureau of Labor Statistics. Jim Tobin, NAHB's CEO, stated that immigrant labor has been crucial in filling these employment gaps. "Immigrant labor is vital for our capacity to continue constructing homes at affordable rates," Tobin remarked. "Any factor that impacts the labor supply, particularly the immigrant labor supply, raises concerns about our ability to meet the nation's housing requirements."

On Monday, Trump announced on Truth Social that he is prepared to declare a national emergency and employ "military assets" to deport millions of undocumented immigrants once he assumes office. According to Pew Research Center estimates, there were approximately 11 million unauthorized immigrants residing in the U.S. as of 2022. More than a third of the construction workforce are foreign-born, as indicated by the U.S. Census Bureau's 2023 American Community Survey. In certain states, this proportion is even higher: in California, New Jersey, and Texas, over half of the construction workers are immigrants. In New York, where Garcia is employed, 46% of construction workers are foreign-born.

"The majority of the construction workforce is Hispanic, and many lack documentation," Garcia commented on his experience in the industry. While the American Community Survey does not directly inquire about an immigrant's legal status, the National Immigration Forum, an organization advocating for immigration reform, estimates that undocumented workers constitute nearly a quarter of the construction labor force in the U.S.

Frost warned that a reduction in the workforce from 50% to a significantly lower percentage in states like California and Texas could have substantial repercussions for the housing market. However, any deportations under Trump would likely be a lengthy process. Edward Pinto, co-director of the Housing Center at the American Enterprise Institute, a center-right think tank, believes that the overall impact on housing might be overstated. "Labor is not a significant driver of volatility in home construction and its costs," Pinto stated. "From our perspective, the impact of these deportations is expected to be relatively minimal, especially at the initial levels."

The construction industry already struggles to find workers. Home builders surveyed at the end of last year identified the skilled labor shortage as their top challenge in 2023 and the anticipated top challenge for 2024, according to the NAHB/Wells Fargo Housing Market Index. Stan Marek, CEO of MAREK, a construction company in Houston, expressed difficulty in finding legal employees to fill open positions at his firm. "We have to rely on immigrant labor, but we need legal labor; otherwise, this workforce shortage will worsen," Marek said.

In an October interview with The New York Times, Trump's running mate, Ohio Sen. JD Vance, argued that deportations would not disrupt the housing market if more Americans entered the industry. "People claim Americans won't do these jobs. Americans won't do these jobs for off-the-books wages, they won't do these jobs for non-living wages," Vance stated. "But people will do these jobs. They will just do these jobs at certain wages."

However, Frost pointed out that there is currently a labor and skills mismatch that would make it challenging to fill some construction jobs with American workers. "The pipeline from skilled trade schools into these trades is not as robust as it should be, which is why the construction industry is increasingly reliant on foreign-born labor for these roles," Frost explained. Marek attributed the labor shortage in construction to an aging American-born workforce and a lack of vocational training in high schools. "Even if today's youth had vocational training, they would likely still not enter the trades because they have too many easier options," he said. "The only people who want to do this work are immigrants."

Marek stated that he supports securing the southern border but disagrees with Trump's plan for mass deportations as a viable solution. "Deporting people would devastate the residential housing industry," Marek said. Many construction companies depend on the H-2B visa to legally bring in seasonal and temporary workers from abroad. However, there is a strict cap of 66,000 visas per fiscal year, making the process competitive and challenging. This year, the U.S. made exceptions for an additional 64,716 visas.

Garcia believes he could have been granted asylum had he applied in time, allowing him to work legally in the U.S. "I was told by my lawyers that it wasn't possible because the deadline had passed, so I decided to stay, continue working, pay taxes, and see what happens," he said. While proponents of mass deportations argue that undocumented immigrants harm job prospects for American workers, a recent study found that in construction, this may not be the case. "Evidence suggests that undocumented labor complements domestic labor: an indirect outcome of deporting undocumented construction workers is net job loss for U.S.-born workers, especially in higher-skilled occupations," according to a study published by three housing economists in March.

Jennie Murray, CEO of the National Immigration Forum, said a policy of mass deportations would be "short-sighted." "People who went to the polls cared about the economy and immigration. But those two are inherently linked," she said. As for Garcia, he expressed hope that Trump would consider the contributions of undocumented immigrants to the economy once he takes office. "If they deport a million workers, construction will slow, and housing prices will rise. We're helping keep the economy balanced," he said. "That's why we get up every morning to work hard. That's the American dream. If the country is fine, we're fine."

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