You're a homeowner or you'd like to buy a house. You're a teacher, nurse, accountant, doctor or any occupation that provides you with a steady income, so you can afford to make your mortgage payments. Unless you're involved in the construction industry, you might not understand how the immigration crackdown will affect the housing industries, and it's not pretty.
This article offers my personal opinions based on running a handyman business in southern New Hampshire for 8 years. I've also bought, refinanced and sold most of the 15 houses I've owned over the last 40 years (we bought our first house a month after we got married).
Fewer Immigrant Buyers Will Reduce Housing Prices
Bloomberg's article, Why Trump's Immigration Crackdown Could Sink US Home Prices, shares several stories about immigrants who were on the verge of buying a house … and stopped the process. More important, they provided this graph showing homeownership rates by immigrants (foreigh born) versus US born homeowners.
Other interesting statistics that were shared in this article include:
- In 2015, immigrant homeownership rates rose 2.4% while overall homeownership remained level.
- One third of the 11 million unauthorized immigrants in the US, live in a house that they or a family member own (Migration Policy Institute).
- An estimated 40 million immigrants add $3.7 trillion to total housing wealth in the US (University of Washington economist Jacob Vigdor).
- Future immigrants and their descendants will account for 88% of US population grown between 2015 and 2065 (Pew Research).
Immigration Crackdown Will Impact New Construction
The construction industry is just recovering from the recession caused by the banking industry. As the immigration crackdown reduces the total number of home buyers in the US, it will cause large production builders to slow down their development plans.
This housing cycle is the same for all types of homeowners. For example, I've got a Greek restaurant owner renovating a house he bought up the street from my house. With fewer immigrants participating in the homeownership cycle, it means that there are fewer buyers all along the home buying cycle.
Fewer Immigrants = Fewer Contractors
The housing industry lost about 30% of it's workforce after the housing market crashed, and many of those people have never returned. The median age of home maintenance and repair contractors is more than 50 years old, with 65% over 45 years old. There aren't enough Americans entering the industry, making it an ideal place for immigrants to get their start in the US. In fact many trades are dominated by illegal immigrants. For example, residential painters in the Boston area are mostly Brazilian.
Fewer Contractors = Higher Pay for Contractors
Remember the law of supply and demand. When business owners have difficulty finding employees, they have to raise salaries to attract more people. According to Monster.com's article, The Top 10 Hardest Jobs to Fill, skilled trades rank high among blue-collar jobs that are hard to fill. Carpenters, welders, plumbers, electricians and masons are in high demand.
Higher Home Repair & Renovation Costs
Wondering how this impacts you? You're going to find the cost of home repairs and remodeling projects going up. It will also be harder to get a plumber or electrician to respond quickly. That's why it's so important for you to build your home maintenance team now (read: Building a Team of Home Repair Contractors).
Put yourself in the shoes of these contractors. Would you respond faster to someone you know versus a complete stranger?