Former President Donald Trump’s return to the campaign trail has sparked renewed debate over his previous economic policies, especially their potential impacts on the housing sector. Observers, particularly those within California’s housing advocacy groups, are growing increasingly uneasy about what another term for Trump might mean for the already problematic housing market.
This discontent stems, at least in part, from Trump’s record during his first presidency and his current platform. While specific policy proposals remain somewhat nebulous, they signify potential challenges for low-income households, particularly among mixed-status families.
California is known for its housing crisis, with many residents citing exorbitant housing costs as their most pressing concern. Yet with rising tariffs and plans for mass deportations featured prominently among Trump’s economic agenda, there’s little reason for optimism among housing experts. For them, the next Trump presidency could lead to the exacerbation of both the housing crisis and overall market instability.
Senator Scott Wiener, representing one of the state’s more progressive viewpoints, voiced skepticism about Trump’s economic approach, stating, “Trump’s extremist economic agenda is going to tank the housing market and housing construction.” According to Wiener, the combination of Trump’s plans to deport immigrants and raise tariffs could have lasting effects on housing accessibility and availability, two issues incredibly pertinent to many living within the state.
An important backdrop here is the stark reality California faces: nearly half of all children have at least one immigrant parent. According to experts, mass deportations would not just take away homes and stability from families but would also create severe labor shortages, particularly for the construction industry, which depend heavily on immigrant labor.
Ben Metcalf, managing director at the Terner Center for Housing Innovation at UC Berkeley, noted, “If he’s going to go full bore on deporting everyone who’s not a citizen or green card holder, that's going to gut a construction workforce.” That workforce is already dwindling, and many current workers are aging, intensifying concerns over building new homes.
Statistics suggest the construction industry likely employs over 200,000 undocumented workers, comprising about 25% of the sector’s workforce. If policies were to remove these workers, the timeline for new housing development could slow significantly, pushing housing costs even higher.
Undeniably, the actual availability of housing is influenced by many variables, and simply removing workers wouldn’t guarantee lower costs. An examination from the Public Policy Institute of California indicates some counties might experience rising rental prices regardless of vacancy trends due to the shift toward higher-end developments aimed at wealthier renters.
This raises questions about how tariffs on construction materials could add another layer of obstacles. The tariff strategies proposed by Trump could lead to increased costs associated with housing production as suppliers face unexpected taxes on imported goods.
Traditionally, when faced with tariff costs, companies have little choice but to offset these with higher prices to consumers. A representative from the California Building Industry Association noted previously imposed tariffs had raised the average cost of new homes by $20,000 to $30,000. If new tariffs are instituted, McMillan’s fears about affordability and accessibility grow more feasible.
Indeed, tariffs on imported construction materials during the pandemic triggered supply chain disruptions, leading to skyrocketing production costs. Chris Hannan, president of the State Building and Construction Trades Council of California, commented on this reality, stating, “The costs went through the roof.”
At the same time, there are voices among policymakers who suggest Trump could also ease some existing regulations. Assemblymember Joe Patterson expressed hope for the GOP’s 2024 platform promise to cut unnecessary regulations, which could pave the way for faster home construction processes and reduce costs.
A less regulated environment might help alleviate some pressure on housing prices but also raises concerns about environmental sustainability and long-term urban planning. These policy adjustments would need careful balancing to avoid detrimental impacts on both the environment and housing affordability.
Experts such as Elaina Houser from the Los Angeles Business Council stress the unpredictability associated with Trump's economic policies. The potential for sudden changes, such as new tariffs or import bans, can make it difficult for business leaders and developers to plan effectively, leading to hesitation or reductions in housing projects.
“If Trump did nothing and let the Federal Reserve continue lowering interest rates and didn’t enact wild tariffs, things would improve for housing construction,” Houser remarked, highlighting how even subtle shifts could dramatically affect the housing industry’s momentum.
The impending election and every candidate’s proposed policies only serve to intensify conversations about housing. While Californians largely perceive high housing costs as their foremost concern—over 75% of adults view the issue as significant—the political atmosphere surrounding these issues is volatile.
Establishing long-term strategies to address California's housing crisis hinges on overcoming economic instability and evaluating the incoming federal policies' impacts.
The uncertainty is palpable, as potential changes could affect various areas, including immigration, tariffs, and housing construction, directly shaping California’s housing and economic landscapes for years to come.
Even as discussions mature and evolve, the challenges presented by rising costs, labor shortages, and uncertain political climates remain central to how development and construction can adapt to meet residents’ needs.
With this backdrop, California advocates continue to push for clarity and cooperation among stakeholders to attempt mitigating the impending housing challenges, even as they brace for what the new administration could bring.
The outcome of these decisions will resonate not just within California but potentially across the entire nation as foundations of economic strategy and housing policy continue to clash.”
