Mass Deportations Could Worsen the US’s Severe Housing Shortage

As Donald Trump gears up to assume the presidency and fulfill a major campaign pledge to deport immigrants, a looming question is its potential impact on the real estate market.

There is a nationwide shortage of housing across all types. A primary cause has been the significant drop in new home construction during the Great Recession, which continued to lag for several years afterward.

A large segment of the workforce in the construction industry consists of immigrants. The mass removal of these workers would severely disrupt the sector, in addition to causing profound social and emotional impacts, according to experts and advocates.

Major homebuilders such as Taylor Morrison, NVR Inc., KB Home, and Century Communities Inc. have opted not to comment. Similarly, there was no comment from D.R. Horton, Lennar Corp., PulteGroup Inc., Meritage, or LGI Homes.

Clayton Homes deferred inquiries to the Manufactured Housing Institute (MHI), where Dr. Lesli Gooch, the CEO, provided an emailed statement. “MHI is not concerned about President-elect Trump’s intention to uphold the nation’s immigration laws. Our factories and workers adhere to these laws, and we look forward to playing a key role in tackling the national housing shortage,” Gooch stated.

The National Association of Home Builders was another organization willing to comment. “Any large-scale deportation is bound to affect the economy. I believe the construction and housing sectors will experience disproportionately large impacts compared to other industries,” said Ken Wingert, the chief advocacy officer.

“We believe that a thorough and comprehensive approach to immigration reform is necessary and we hope that Congress will address this when they reconvene in January,” Wingert added. “We support efforts to integrate more workers into the workforce to help alleviate the current housing shortage we’re experiencing.”

The association has consistently highlighted the ongoing need for more construction workers. According to a recent report, “the construction sector sees about 723,000 job openings annually.”

The report also reveals that immigrants compose 25% of the overall construction workforce, and nearly one-third of those in construction trades. However, Wingert noted that the association does not have data on how many of these workers are in the country legally.

Legal Status of Workers

Francesc Ortega, an economics professor at Queens College in New York, has devoted years to studying this issue. By analyzing U.S. Census Bureau data within a demographic framework, Ortega estimates that about 15% of construction workers are undocumented.

It’s evident that the significant presence of immigrants, whether documented or not, has helped keep labor costs in construction much lower than they would be with a workforce composed predominantly of native-born workers. According to a recent analysis by the Labor Department, as of 2020, foreign-born workers generally earned less than their native-born counterparts. In the broader economy, immigrants earned about 12% less, but in construction, this disparity widened to 24% less.

“Ideally, the U.S. would maintain an immigration system that is humane and based on rule of law, and an economic system that does not rely on the exploitation of workers,” stated Michael Lukens, executive director of the Amica Center for Immigrant Rights, a national advocacy organization.

The Dire Impact of Mass Deportations on Housing

While it might seem that mass deportations would simply raise costs, research from Ortega and other scholars suggests the issue is more complex.

“In construction, documented and undocumented workers often perform different roles,” explained Ortega. “They complement rather than replace each other.”

This means that if construction companies were to lose their immigrant labor force due to deportations (or preemptive departures), it’s unlikely that native-born workers would transition from other company roles, like sales, to manual labor on construction sites, according to Ortega.

“You can’t just relocate people as you please. That’s not how it works,” Ortega noted.

Given the country’s need for millions more homes, as various estimates suggest, losing any portion of the workforce responsible for building these homes would only exacerbate the housing crisis.

“Mass deportations would devastate the construction and housing markets,” Lukens remarked. “It would also severely impact the agricultural sector, cost a fortune, and wreak havoc on the economy. It’s simply unacceptable, both from a human and an economic standpoint,” he concluded.