Trump Ties Housing Relief To Mass Deportations – Experts Say Not So Fast

President-elect Donald Trump's proposal to deport millions of undocumented immigrants has stirred debate, particularly regarding its potential impact on the housing market.

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Trump claims that mass deportations would lower home prices, attributing rising housing costs to illegal immigration. On the campaign trail, he pledged to execute "the largest deportation operation in American history" to address housing affordability.

Experts, however, argue that the relationship between immigration and housing costs is more complex.

Undocumented immigrants often work in industries critical to housing supply, such as construction. According to Realtor.com, deporting many workers could exacerbate labor shortages, increase construction costs and delay new housing projects.

Reducing the population may lower demand for certain homes but could create unintended consequences for the overall market, such as regional imbalances in housing supply and demand.

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Trump's plan includes appointing Tom Homan, a staunch advocate for strict immigration enforcement, to oversee deportations. Critics suggest this approach could create more economic uncertainty, with ripple effects on industries reliant on immigrant labor.

The Department of Homeland Security estimates around 11 million undocumented immigrants live in the United States. However, Trump and his supporters claim the figure could be significantly higher – potentially double the official estimate.

Trump contends that deporting a substantial portion of undocumented immigrants would reduce housing costs for Americans by decreasing competition for available homes.

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However, economists and housing experts caution that mass deportations could have the opposite effect on new housing costs. With fewer workers in construction – a sector heavily reliant on immigrant labor – labor shortages could drive up costs, making new homes more expensive to build.

"Mass deportation would seriously dampen the residential construction labor force," Realtor.com senior economist Joel Berner said. "Not only would builders have to replace workers, which takes time and money, but they'd likely have to pay more for replacement labor.

"This, combined with the looming threat of tariffs on construction materials, would drive up construction costs considerably and make new homes more costly. Builders have been doing a good job of offering less expensive homes lately, but that positive development would be jeopardized."

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The construction industry employs the largest number of undocumented workers, with an estimated 1.5 million, according to the Center for Migration Studies of New York, a pro-immigrant think tank.

That statistic suggests undocumented immigrants comprise roughly 15% of the national construction workforce. In some states, the proportion is significantly higher. In Texas, for example, nearly half of construction workers are reportedly undocumented.

Most real estate economists attribute the U.S. housing affordability crisis to a severe shortage of homes. Residential construction activity plummeted during the Great Recession and has not returned to pre-2007 levels. Estimates of the housing shortfall range from 1.5 million to more than seven million units, underscoring the need for more construction activity to meet demand.

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The relationship between immigration and housing costs is nuanced. While some studies suggest higher immigration levels can contribute to rising rents in cities, the recent surge in post-pandemic home prices began before an increase in illegal immigration, complicating the narrative.

Undocumented immigrants in the U.S. are generally ineligible for conventional mortgages but can still buy homes using cash or alternative mortgage products.

According to the Urban Institute, between 5,000 and 6,000 such unconventional mortgages were issued last year. Even at the higher end, these accounted for only about 0.1% of all new mortgages issued during the year, highlighting their minimal impact on the overall housing market.

"The number of homes purchased by undocumented individuals is not even a blip on the radar," said Gary Acosta, CEO of the National Association of Hispanic Real Estate Professionals.

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