Trump keeps home builders guessing on affordable housing

BridgeTower Media

Housing policy emerged as a key issue in the race between Donald Trump and Kamala Harris in the 2024 election. Trump hasn’t shared clear plans to boost the nation’s housing supply before his return to the White House. However, Trump’s promises for two other key issues could cause uncertainty for contractors and municipalities working in affordable housing construction.

On the campaign trail, Trump pledged mass deportations for people who live in the country illegally. JD Vance, soon to be vice president, said undocumented immigrants were the culprit behind affordable housing in the U.S.

However, one of the largest construction associations pointed out the industry’s reliance on immigrant labor.

Two “wild cards” for the industry’s ability to build affordable housing were tariffs and workforce, the latter largely sourced by immigration, said Brian Turmail, the vice president of public affairs and workforce for the Associated General Contractors of America.

The bulk of AGC members working on housing primarily work on multifamily projects, Turmail said. Both issues could drive up labor and materials costs for contractors building multifamily buildings and boosting the housing supply, he added.

“There are a lot of wildcards out there in terms of the industry’s ability to build the kind of housing everyone agrees we need,” Turmail said. “The two big wildcards are the workforce and tariffs. For workforce, the big question is to what extent and who will be targeted by the incoming administration for deportation. There’ve been mixed messages coming out about the scope of who will be deported under the Trump administration,” he added.

If the Trump administration only expels people who are involved in criminal activity, it will be less of a challenge for the industry, Turmail said. If the scope is broader, it will cause a problem for an industry already experiencing labor shortages and make housing projects more expensive and take a longer time to build, he added.

“The two main costs of construction are what you pay people to build and what you pay for materials to use,” Turmail said. Depending on what items the administration places tariffs on and how high, it will increase the cost of construction and make it harder to build housing that is affordable, he added.

Some regulation implications won’t go as far for other parts of the industry, like single-family homes. Some items for houses already have tariffs on them, but contractors are able to pass the cost along, said Chris Fisher, a principal at consultant Ducker Carlisle.

“There have been tariffs in place in products already, in metals and steel products, cabinets and wood products,” Fisher said. “Our industry has been able to pass that along or handle that. The issue is around if it creates a disruption in supply,” he added.

A brand-new home typically takes six months to build and most of the products used to build can be sourced from Canada, Mexico and the U.S., Fisher said. Many products such as cement, foundation, wood-framing and even cabinets can be locally sourced, he added.

“There are some areas of risk, but when you think about new construction and anything infrastructure related, a lot of that has a Made in America requirement in the design specifications,” Fisher said.

Uncertainty regarding how Trump’s tariff and immigration policies will affect housing supply is paired with setbacks for government-subsidized affordable housing funding at the local level.

In the San Francisco Bay Area, housing authorities in August pulled a proposed $20 billion affordable housing bond measure for nine Bay Area counties.

In announcing the withdrawal from November’s ballot, the Bay Area Housing Finance Authority stated that “recent developments have led the board to conclude that the wise choice is to look ahead to another election season for a regional housing measure when there is more certainty.”

In Portland, Oregon, local authorities have begun discussions to replace a $652.8 million regional bond approved in 2018 and a $258.4 million city bond approved in 2016. Funds from the two bonds are nearly exhausted.

In Wisconsin, Milwaukee County used federal funding to boost the affordable housing supply. Working with the new administration will be crucial to continuing to secure future infrastructure investments, said David Crowley, the county executive.

“It’s going to be my administration’s job to build that relationship and bring resources back to Milwaukee,” Crowley said. “This county may not have come up for (Trump) but it benefits the state of Wisconsin. If you want to make sure those across the state benefit, it will be hard to do that without investing in places like Milwaukee,” he added.