Would deporting illegals make housing cheaper?

I’m thinking yes, if you deport several million of them, simply because it would bring housing demand closer in line with housing supply.

That’s because America has a housing shortage, and if you reduce the number of people who need housing, you can end the game of musical chairs and bring rents and home prices down.

We have a housing shortage because Republican deregulation led to the subprime crisis of 2007-2008, which led to a suspension of housing construction while the population kept growing.

There’s lot of building now, especially apartments, but it will take several more years to catch up. The Barrons magazine edition of June 17, 2024, at page 8, estimated the U.S. currently is 2.2 million housing units short of needs.

An entitled Twitter user posted here on June 15, 2024, “I’m so sick of this administration. I’m 23 years old. I’m ready to buy a house and start putting my roots down, but I have to stick to renting because the house market is ridiculous. Vote for the convicted felon. This shit is getting old.”

I don’t know many people who bought houses at age 23. At that age, I was fighting a war in Vietnam; I bought my first house with a V.A. loan nearly a decade later, when mortgage rates were well above today’s 7.02%. In fact, anyone who took out a mortgage before 2001 paid higher interest than today’s mortgage rates (see chart here).

Of course, housing affordability is a function of more than interest rates. It’s also affected by incomes and home prices, and varies by local market. On a U.S. average basis, Goldman Sachs say housing is less affordable now than any time in the last 25 years (see graph here), and plenty of complaining by first-time and younger homeseekers backs that up.

Enter Sen. J. D. Vance (R-OH; photo at left), whose “solution” is to deport 20 million illegals (see story here), which is several million more illegals than are currently in the U.S. (see estimate here). His reasoning is, “Not having 20 million illegal aliens who need to be housed (often at public expense) will absolutely make housing more affordable for American citizens.”

Vance is fibbing about more than how many illegals are in the U.S.; he blames Biden for immigration and housing shortages, but both those problems predate Biden’s presidency by many years, and it’s not true that any significant number of illegals are housed “at public expense,” see debunking here.

Setting aside Vance’s falsehoods, there are several problems with his suggestion, starting with the impracticality and logistics of rounding up millions of people; and the impact that losing several million workers would have on the U.S. economy, plus you’ll lose the taxes they pay. There’s also the fact that many illegals live in farmworker housing which, if vacated, wouldn’t add to U.S. home and apartment inventories.

Vance is a cynical politician demagoguing the issue, and demonizing a group of people, to win over uneducated and low-information voters. In doing so, he’s dishonest, not ignorant; he’s a Yale-educated lawyer who knows the facts and understands how things work.

And, by the way, he’s a multimillionaire Silicon Valley lawyer whose Senate campaign was bankrolled by rightwing tech billionaire Peter Thiel who was born in Germany, grew up in South Africa, and loves to meddle in U.S. p0litics.

It’s really difficult to educate people about the reality, because reality is complicated. For example, the Federal Reserve sets a short-term lending rate that’s used as a policy tool to bring down inflation, but long-term lending rates like mortgages are determined by the free market. Most people don’t knowd that, nor do they understand where inflation comes from; deglobalization, increased military spending because of rising global tensions, and chronic worker shortages are key factors.

The government doesn’t directly affect housing costs. Rents and home prices are a function of supply and demand; and, apparently, technology-enabled monopolistic price-fixing (see article here). For the record, it’s not Republicans who go after price-gougers and monopolies; Democrats do that.

Here’s another wrinkle: A Washington D.C.-based think tank estimated in 2017 that as of 2014, that latest data then available, 3.4 million illegals or 31% of all illegals, owned their homes (see article here). You can’t make those homes available by deporting their owners, because they’d still own them, and confiscating them would violate the Constitution’s private property protections. Assuming similar numbers now, you have about a third of the total illegal population whose deportations would not free up any housing, and when you add in farmworker housing, maybe 1 of every 2 deportations would reduce pressure on the general housing supply.

That’s not insignificant, and if you can somehow deport all 11 million or so illegals, you probably can free up enough housing in places where people want to live to overcome the nation’s 2.2 million unit housing deficit. Of course, this would put builders out of business. And how many hundreds of billions of dollars would that cost, to identify and round up all of those people, house and feed them while in custody, transport them out of the country, and prevent them from coming back? Who’s going to pay for that, and make up for the sales, property, FICA, and income taxes the deported aliens are no longer paying?

Like I said, reality is complicated, and not amenable to the sort of pat answers Sen. Vance is peddling to naive consumers of political propaganda. But he has no intention of carrying through on deporting 11 million-plus people, and appropriating the huge budget expenditures required to do it. If he gets people to vote for him and his party by saying these things, his mission is accomplished.

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