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Donald Trump has officially started his second term. Throughout the week, Inman is delving into the details of the administration’s housing policies — from the privatization of Fannie Mae and Freddie Mac to growing antitrust concerns in the real estate sector. Join us tomorrow for part two, where we’ll discuss the economic outlook.
Donald Trump’s second presidential term begins on Monday.
During his campaign, Trump pledged to reduce unnecessary building regulations, open up unused federal land for new home construction, provide tax incentives for first-time homebuyers, and address the nation’s inventory crisis by deporting a significant number of undocumented immigrants over the next four years.
Trump’s vision resonated with voters, leading to his victory in both the popular and electoral college votes.
While many details of his housing plans remain uncertain, the president-elect has been clear about initiating mass deportations on the first day of his second term. These deportations could disrupt housing starts, as nearly a quarter of the nation’s construction workforce consists of undocumented workers, according to economists.
Additionally, a reduced workforce coupled with increased tariffs on imports from Canada, Mexico, and China could impede inventory growth and drive up prices.
“Anything that disrupts the housing supply process would worsen the housing affordability crisis,” warned Riordan Frost, a senior analyst at Harvard University’s Joint Center for Housing Studies, in an interview with the Texas Tribune.
The impact of mass deportations
While Trump has been vague about many of his plans, particularly on healthcare, he has been vocal about his immigration strategy. The president-elect plans to use his first 100 days in office to reverse President Biden’s executive orders, shut down the U.S./Mexico border, and commence the mass deportation of over 11 million individuals without legal or temporary status.
The administration’s target for mass deportations has fluctuated, but Vice-President-elect J.D. Vance recently estimated a goal of deporting 1 million people annually, surpassing the 1.5 million deported during Trump’s first term. Achieving a total of 5.5 million deportations over two terms would exceed the records set by Obama (4.8 million) and Biden (1.49 million).
Tom Homan, a veteran Border Patrol agent and former Acting Director of Immigration and Customs Enforcement (ICE), will oversee Trump’s deportation plan. Homan emphasized a focus on removing undocumented individuals who pose security and safety risks, but acknowledged that others may be affected in the process.
“We’re gonna concentrate out of the gate on public safety threats. What mayor or governor does not want public safety threats taken out of their communities? So again, help us or get out of the way,” Homan stated in an interview with TV psychologist Dr. Phil. “If you force us into the community, we’re gonna find a bad guy. There are probably others we’re gonna find, which means they’re gonna be arrested, too.”
Homan emphasized that the success of Trump’s mass deportation plan depends on Congressional funding and military assistance. He called for an expansion of ICE’s budget to increase detention center capacity from 40,000 to 100,000 beds, as well as additional ICE agents and military support for transportation to detention facilities.
“I don’t have a number. We want to arrest as many people as we can that are in the country illegally,” Homan stated. “If you’re here illegally, you’re not off the table. It’s a violation of the law; it’s a crime to enter this country illegally … We’ll be ready to launch the day of the inauguration.”
Homan addressed the situation of children in more than 4 million mixed-status households, noting that undocumented parents will face the difficult decision of taking their children with them or leaving them with a documented family member.
“Their child can stay and live with a relative, they can stay with the other parent, or they can take them with them. We don’t deport U.S. citizens. But they put themselves in the position; we didn’t,” he explained. “The bottom line is, having a child in this country does not make you immune from our laws.”
If confirmed, Secretary of Homeland Security nominee Kristi Noem, the current governor of South Dakota, expressed support for Homan’s strategy and pledged to expedite Trump’s immigration plans.
“As you know, I’ve taken a stand against this invasion,” Noem stated before her confirmation hearing on Jan. 17. “We’ve deployed our South Dakota National Guard to our southern border eight times. That includes five state deployments to support Texas’ work to stop the flow of illegal aliens.”
Civil rights organizations and research groups have outlined the social and legal consequences of Trump’s proposed immigration policies, which involve ending programs like Deferred Action for Childhood Arrivals (DACA) and tightening requirements for lawful permanent status.
The president-elect aims to implement strict immigration policies, including limiting the issuance of green cards, reinstating a 2019 policy requiring asylum seekers to stay in Mexico, eliminating temporary protected status for immigrants from certain countries, and revoking birthright citizenship by amending the 14th Amendment.
The Brookings Institute suggests that Trump’s immigration policies may have more bark than bite, with potential high-profile deportation raids and restrictions on travel visas. However, the impact on deportation rates may be modest if the interests of the business community prevail.
Experts warn that Trump’s immigration policies could worsen the housing shortage and affordability crisis in the United States. Despite claims that undocumented immigrants contribute to these issues, economists note that they represent a small percentage of households and do not significantly impact the housing market. Additionally, deporting undocumented workers could exacerbate labor shortages in the construction industry, where immigrants play a significant role.
Trump’s proposed tariffs on goods from Mexico, Canada, and China could increase building costs and further strain the housing market. Real estate agents fear rising material costs, reduced foreign investment, and a decline in skilled labor if these policies are implemented. The threat of tariffs on BRICS countries could also have economic implications, potentially impacting consumer prices and household finances.
While Trump sees tariffs as a solution to economic challenges, economists warn that increased import taxes could hurt American consumers by raising prices on goods. The National Association of Realtors and National Home Builders Association express concerns about the potential impact of Trump’s tariff and immigration policies on the housing and construction industries. Regarding immigration enforcement policy, the big wildcard remains uncertain in terms of how it will unfold. This could have both demand-side and supply-side effects on various sectors.
Furthermore, there is optimism around the extension of the 2017 tax cuts, which is anticipated to benefit businesses, especially builders and remodelers. The shift in conversation is also noteworthy, with expectations of improvements in the regulatory environment that will positively impact housing supply, construction, and inventory levels.
For further information, feel free to contact Marian McPherson.