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By Hugh Cameron
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President Donald Trump's immigration policies could put additional strain on the U.S. housing market, according to financial services company JPMorgan Chase.
"By reducing immigration and lessening demand, Trump argues that housing costs can be reduced," the company's head of securitized products research, John Sim, wrote in a note published Monday.
"It's not that simple, though," he continued. "Approximately 30 percent of construction workers are immigrants, so there could be complex implications."
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Newsweek has contacted the White House via email regarding the potential impact of its immigration policies on housing.
Why It Matters
The U.S. housing market is in serious turmoil, with supply constraints resulting in higher costs for buyers across the country. Beginning with the COVID-19 pandemic, home prices have soared to historic highs as growing demand and inventory shortages were compounded by underlying price inflation.
In addition to the substantial challenges posed by ongoing economic uncertainty and climate change, the president's policies could further intensify the situation, potentially restricting development, altering affordability and shifting market dynamics in unpredictable ways.
What To Know
JPMorgan Chase's 2025 outlook, published Monday, says house prices are set to rise by 3 percent in 2025, with the market itself expected to remain "largely frozen" throughout the year.
The company pointed out that illegal immigration in the U.S. "could be ramping up housing demand more than figures suggest, resulting in a shortage of stock." One analyst noted that high interest rates have also created a "disincentive" for existing homeowners to sell, worsening the dearth of supply.
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JPMorgan Chase's report also pointed out the "exceptionally low levels" of housing demand. Combined with rising prices, it said, this indicates "that there are enough homes available, but these may not be the right type, in the ideal location, or at an affordable price point."
The COVID pandemic and the increasing adoption of remote working fueled a wave of de-urbanization across the U.S., with former city residents migrating to less dense suburbs and smaller cities as a result.
Beyond the potential impact of the administration's deportation plans on supply, JPMorgan Chase's report said that "several of Trump's proposals could, if implemented, lead to rising inflation, which is likely to result in higher mortgage rates that would further dampen housing demand."
Other analysts have issued similar warnings regarding Trump's other policies. In a recent report, real estate brokerage company Redfin said that tariffs on imported goods—particularly construction materials—from China, Canada and Mexico would have an "inflationary" impact, reducing housing supply and affordability.
What People Are Saying
John Sim wrote on Monday: "Cutting immigration would mean cutting labor supply in the construction industry, which could end up exacerbating the lack of affordable housing."
He added: "It's evident that numerous aspects of Trump's policy will impact the housing market. For now, though, all we can do is wait."
A Trump transition team spokesperson previously told Newsweek that the president would "deliver on his promise to make housing affordable again by defeating historic inflation and reducing mortgage rates."
The spokesperson continued: "President Trump will ban mortgages for illegal immigrants who drive up the price of housing, eliminate federal regulations driving up housing costs, open portions of federal land with ultralow taxes and regulations for large-scale housing construction. The cost of new homes will be cut in half, and President Trump will end the housing affordability crisis."
Housing market analyst Amy Nixon wrote on X (formerly Twitter) this past October: "We've added an estimated 4 million Illegal immigrants since 2021 with Biden and Harris in office. A recent Zillow report says the US is short 4 million housing units. No need for mental gymnastics on what is happening and why."
Carl Harris, chairman of the National Association of Home Builders (NAHB), said in a statement responding to Trump's proposed tariffs on two countries: "More than 70% of the imports of two essential materials that home builders rely on — softwood lumber and gypsum (used for drywall) — come from Canada and Mexico, respectively."
"Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices," Harris said.
The NAHB has previously warned of a serious lack of construction workers in the U.S. and estimated that the country will need "need to add 2.2 million new workers over the next three years just to keep up with [housing] demand."
What Happens Next?
As well as a 3 percent increase in house prices in 2025, JPMorgan Chase predicts mortgage rates will ease slightly to 6.7 percent from around 6.9 percent by the end of the year.
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