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Donald Trump has officially started his second term. Throughout the week, Inman will be exploring the administration’s housing policies — from the privatization of Fannie Mae and Freddie Mac to the growing antitrust issues in the real estate industry. Join us tomorrow for part two, focusing on the economic outlook.
Donald Trump’s second presidential term begins on Monday.
During his campaign, Trump promised to reduce unnecessary building regulations, open federal land for new home construction, offer 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.
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Trump’s vision resonated with voters, leading to his victory in both the popular vote and the electoral college.
Many details of his housing plans remain uncertain, but Trump has been clear about his intention to begin mass deportations on the first day of his second term. This could disrupt housing starts, as undocumented workers make up a significant portion of the construction workforce, according to economists.
Additionally, a reduced workforce and increased tariffs on imported goods from certain countries may impede inventory growth and drive up prices.
“Anything that impedes the process of adding housing supply would worsen the housing affordability crisis,” noted 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’s specific plans remain unclear, he has been vocal about his immigration stance. He aims to undo President Biden’s executive orders, seal the U.S./Mexico border, and begin mass deportations of over 11 million individuals without legal or temporary status within his first 100 days in office.
The administration’s goal for mass deportations has varied, but Vice-President-elect J.D. Vance recently estimated a target of 1 million deportations per year, surpassing the 1.5 million deported during Trump’s first term. If successful, Trump’s total deportations over two terms would exceed those of Obama and Biden.
Tom Homan, a veteran Border Patrol agent and former Acting Director of ICE, will oversee the logistics of the deportation plan. Homan emphasized prioritizing the removal of individuals posing national security and public safety risks, though others without such risks may also be affected.
“We’re initially focusing on public safety threats. What mayor or governor wouldn’t want these threats removed from their communities? Assist us or step aside,” Homan stated in an interview with Dr. Phil. “If we’re forced into the community, we’ll find criminals. And if we find one, there may be others, leading to additional arrests.”
Homan highlighted that achieving Trump’s deportation goals hinges on Congressional funding and military support. He called for expanding ICE’s budget to increase detention center capacity and emphasized the need for additional ICE agents and military assistance.
Regarding the impact on children in mixed-status households, Homan explained that undocumented parents must decide whether to take their children with them or leave them with documented family members.
“Their child can stay with a relative, the other parent, or go with them. We don’t deport U.S. citizens. But they put themselves in this situation; we didn’t,” he clarified. “Having a child in this country doesn’t exempt you from our laws.”
Secretary of Homeland Security nominee Kristi Noem, currently South Dakota’s governor, expressed support for Homan’s strategy and pledged to expedite Trump’s immigration agenda if confirmed.
“I’ve stood against this invasion and deployed our South Dakota National Guard to the southern border eight times. This includes supporting Texas in preventing the flow of illegal immigrants,” Noem stated in a speech before her confirmation hearing.
Civil rights and research organizations have outlined the social and legal ramifications of Trump’s proposed immigration policies, such as ending DACA and tightening requirements for lawful permanent status.
Revoking green cards, reinstating a 2019 policy that requires asylum seekers along the southern border to remain in Mexico while awaiting court hearings, and ending temporary protected status for immigrants from specific countries like Venezuela, Afghanistan, and Haiti are some of the immigration policies being considered by the president-elect. Additionally, he has expressed interest in revoking birthright citizenship, which would involve changing the 14th Amendment.
The Brookings Institute has suggested that while the new administration may make visible anti-immigration efforts in the first 100 days, the actual impact of these policies may be limited. The Institute anticipates high-profile deportation raids, restrictions on travel visas, and changes to student visas, but notes that the actual deportation rates may not be as high as expected.
Housing experts and economists have raised concerns about the potential impact of these immigration policies on the housing market. They argue that deporting undocumented individuals could exacerbate the construction labor shortage, as immigrants make up a significant portion of the construction workforce. This could lead to increased costs and slowed development in the housing sector.
The president-elect’s proposed tariffs on goods from Mexico, Canada, China, and other countries have also raised concerns among economists. Tariffs are seen as potentially raising prices for consumers, as businesses may pass on the additional costs to customers. This could further strain the economy and impact the affordability of housing.
Overall, there is uncertainty about how these immigration and trade policies will impact the housing market and the broader economy. While there are concerns about potential negative effects, some experts believe that other economic policies could help offset some of the challenges posed by these changes. Regarding immigration enforcement policy, the big wildcard is how it will play out and the potential demand-side and supply-side effects it may have. On a positive note, there are expectations for an extension of the 2017 tax cuts, which will benefit businesses, including builders and remodelers. The conversation has shifted towards anticipating improvements in the regulatory environment that will aid housing supply, construction, and increase inventory.