Passive Impact: Real Estate Investing & Special Needs Housing
Welcome to "Passive Impact: Real Estate Investing & Special Needs Housing," where we explore how real estate investment can generate passive income while making a positive difference. Join host Robert Flowers as he shares strategies, success stories, and opportunities for investors looking to create financial stability and meaningful community impact.
Passive Impact: Real Estate Investing & Special Needs Housing
The Perfect Storm: How Immigration and Tariffs Are Reshaping Housing Costs
Housing costs face a perfect storm as immigration policies and global trade tariffs converge, potentially driving up both labor and material expenses for anyone buying, selling, or renovating a home.
• Immigration policies could significantly impact construction labor pools
• In states like Texas and California, immigrants make up over 50% of construction workers
• Undocumented workers represent 13% of construction workforce nationally
• Average construction wages ($25/hour) often insufficient in high-cost metropolitan areas
• Americans largely believe immigrants take jobs citizens don't want
• Over 26% of construction industry relies on immigrant workers
• Proposed tariffs include 25% on Canadian and Mexican goods, 10% on Chinese imports
• Approximately one-third of US construction materials come from overseas
• Essential materials affected include cement, lumber, steel, insulation, and electrical equipment
• Manufacturing employment has declined 35% since 1979, losing 6.7 million jobs
• Economic challenges affect homebuyers, with outdated properties selling for $500,000+
Okay, so you know you guys have sent in some really interesting stuff for us to look into this time and you know I think this time it's all about housing, yeah, and you know all the things that might be coming to kind of shake things up when it comes to you know, buying or selling or building a home, or even just like the cost of you know doing renovations and stuff like that.
Speaker 2:Yeah, you know this is something that affects you, whether you are a homeowner or not. Like if you're renting, you're going to see the cost of renting going up. If you're a homeowner, obviously home values are tied to the cost of construction as well. So you know this affects us all.
Speaker 1:Yeah, absolutely, and I think the thing that's so fascinating about this particular set of you know sources and everything that you guys sent in is that it kind of brings together two really big areas that you know people are talking about a lot right now, which is, you know immigration policy and you know global trade and things like tariffs.
Speaker 1:Right, so it's like, how do these two things kind of you know, play into the cost of housing? And it's so fascinating, so we've got this transcript here from a Saks Realty YouTube video and it's called Housing Market Prepares for Higher Costs from Tariffs and Mass Deportation.
Speaker 2:Oh, wow.
Speaker 1:So I mean, they're not really mincing words, right. They're just kind of coming right out and saying, you know, like hey, there's some big changes coming and this is how it could potentially affect the cost of housing.
Speaker 2:Yeah, the title is definitely attention grabbing.
Speaker 1:It is. Yeah, it is. It's definitely attention grabbing and, and you know, what I really appreciate about the way that they approach it in the video is that you know they kind of break it down into two really key areas. And that's what we're going to do in this deep dive is we're going to look at, you know, what could happen to labor costs and how that could affect housing if we see some of these. You know, immigration policy changes come to fruition, and then also what happens to materials. You know, if we see, you know trade wars and tariffs and things like that. So let's start with labor, because I think that's the thing that people are talking about the most right now. It's just like, you know, is there going to be enough people to actually like build houses and do renovations if, you know certain immigration policies are implemented?
Speaker 2:Right, and this is something the video does a really good job of diving into.
Speaker 1:Yeah.
Speaker 2:You know, they cite a Wall Street Journal article and I believe this is from December 3rd and it points out that in states like Texas, oh wow. California, new Jersey, yeah, and even DC. Immigrants make up more than half of the construction trade workers. Wow that immigrants make up more than half of the construction trade workers. Wow, that's huge, that's a big number, that's a lot. Yeah, I mean, that just shows you how reliant the construction industry is on immigrant labor.
Speaker 1:Yeah, it's not even just a little bit, it's like more than half. It's pretty significant and the video also brings up some research from Rae Wynn Frost at the Harvard Joint Center for Housing Studies and they're kind of echoing this point about the reliance on immigrant labor in these key areas.
Speaker 2:Yeah, and I think what's also interesting is this video points out a Pew Research Center estimate that suggests undocumented workers alone make up something like 13% of the construction industry nationwide.
Speaker 1:Thirteen percent.
Speaker 2:Just undocumented, just undocumented workers, and that's more than double their share in the overall US workforce.
Speaker 1:Yeah. So basically what they're saying is that you know, if you take away that 13 percent, you're taking away more than double the amount of people that they represent in other industries.
Speaker 1:Exactly, that's a huge chunk of the workforce represent in other industries. Exactly, that's a huge chunk of the workforce and I think that you know this is where the argument from the construction industry comes in and they've been saying this for a long time is that you know a lot of Americans just don't want these jobs, right, and you know they don't have the skills or you know they might not be willing to work for the wages that are being offered.
Speaker 2:Yeah, and I think that's that's a really key point. You know, the video even mentioned some figures from Zip Recruiter I think about $25 an hour nationally and about $24 in Maryland.
Speaker 1:Okay, so you know, it sounds like decent money, right, yeah, $25 an hour.
Speaker 2:Yeah, on the surface it does, but-.
Speaker 1:But the thing that they bring up in the video that I think is so important is like okay, $25 an hour nationally, but then if you think about, like where are these big construction projects happening? They're happening in major metropolitan areas where the cost of living is so high that $25 an hour doesn't really go that far. You know, if you're trying to live in New York or San Francisco, or even you know DC, where we're talking about, you know $25 an hour then that might not even be enough to cover your rent.
Speaker 2:And that's if you're living by yourself.
Speaker 1:Yeah, exactly.
Speaker 2:Right.
Speaker 1:Right, it's like $25 an hour. Doesn't really get you that much in some of these places.
Speaker 2:No, and you know, and you know that brings up that that question like if, if a large portion of that workforce is no longer available due to, you know, potential mass deportations, you know what's that going to do to the cost of construction?
Speaker 1:It's like is anybody going to be able to afford to build anything or get anything renovated? I mean it's it's a really valid question and I think that you know the article that they bring up from Pew Research Org is really interesting too, because it's kind of like trying to get at the public perception of this issue and it's from October 21st and it's called Most US Voters Say Immigrants, no Matter their Legal Status, mostly Take Jobs Citizens Don't Want.
Speaker 2:Yeah.
Speaker 1:So it's like are they right? Are these construction industry folks right when they say, like Americans just don't want these jobs?
Speaker 2:And it seems like you know, the public perception, at least according to this article, is that they're, that they are.
Speaker 1:That they are. Yeah, so it's like if we take away this workforce, who's going to fill that gap?
Speaker 2:Right.
Speaker 1:And I think that the data that they bring in from the Census Bureau is really interesting too, because it's like OK, so let's just look at the numbers. You know what percentage of immigrant workers are in these different industries.
Speaker 2:Yeah, and they pull this analysis from 2022. And you know, the one that stood out to me was agriculture, forestry, fishing and hunting.
Speaker 1:Oh, wow.
Speaker 2:At 27 percent.
Speaker 1:That's huge.
Speaker 2:With construction right behind it, at 26% 26, that's a quarter of the workforce. So we're not talking about you know small numbers here.
Speaker 1:Yeah, these are big numbers and it kind of like I don't know. For me it just like reinforces that point that they're making in the video, which is that this is a pretty integral part of the workforce, and then they even break it down further into specific occupations. They're looking at the unauthorized immigrant workers in 2022.
Speaker 2:Right and some of these jobs drywall and ceiling tile installers, roofers, painters.
Speaker 1:Yeah, agricultural workers.
Speaker 2:It's like you know, the people that are literally building the houses.
Speaker 1:Right.
Speaker 2:The ground level work.
Speaker 1:Construction laborers, maids and housekeeping cleaners.
Speaker 2:So it's like it's not just construction, it's like other industries, too, that are, you know, reliant on on this workforce.
Speaker 1:Right.
Speaker 2:And the percentages are, you know, they range from like a quarter to a third of those workforce.
Speaker 1:That's a huge percent it is. It's a big number and it kind of like makes me wonder, you know, like OK, so if we take all these people away, are we really prepared, as consumers, to pay a lot more for these services?
Speaker 2:Yeah, I mean, that's the question right. Like are we going to see, you know, a surge in DIY projects if hiring a contractor becomes, like crazy expensive?
Speaker 1:That's a good point.
Speaker 2:Right.
Speaker 1:Or are we going to see, you know, like I don't know, maybe like a bigger push to encourage, you know, younger generations to go into these trades?
Speaker 2:Right, and then maybe we see, you know, wages go up significantly in these fields, which could make them more attractive.
Speaker 1:Right, it's like it could actually be a good thing for the people who are doing the work. Potentially, yeah, but but then is it going to make housing, you know, astronomically expensive.
Speaker 2:Right, exactly so. There's these tradeoffs that you know we have to consider.
Speaker 1:Yeah, there's definitely tradeoffs, and I think you know what the video does really well is. It kind of lays out both sides of the argument and then it's like, ok, now it's up to you to decide, like what do you think is going to happen and what are you going to do about it? Right, but then they shift gears a little bit and they start talking about materials.
Speaker 2:Right.
Speaker 1:Which I think is the other really big piece of this puzzle. You know like OK, so if labor is potentially going to get more expensive, what about all the stuff that you need to actually build a house?
Speaker 2:Yeah, because I mean labor is one thing, but if the cost of lumber goes through the roof, Literally. Literally, literally, right, then you know you're talking about a significant increase in the overall cost of housing.
Speaker 1:Absolutely. This is where the whole like tariff conversation comes in, because they bring up President-elect Trump's stated potential tariffs, which are 25 percent on goods from Canada and Mexico Wow and 10 percent on goods from China.
Speaker 2:That's huge.
Speaker 1:That's a lot, and these are, like, our major trading partners, you know, for building materials. Like this is where we get a lot of our stuff. Yeah, and they bring up a Wall Street Journal article from November 27th and it's called Lumber Prices Unmoved by Trump's Canada Tariff Threat. But it's like, ok, so even though there was this kind of initial like, oh, maybe it's not going to be a big deal, the article also acknowledges that, like, if these tariffs actually go into effect, it's very likely that prices are going to go up for US buyers. Yeah, and this is on top of you know, the fact that we're already dealing with affordability issues, so it's like another layer of potential. You know cost increases.
Speaker 2:Absolutely, and you know. To kind of emphasize that point, they bring in an article from February from Constructioncom and it's titled Buy America Provisions can improve construction lead times for a price.
Speaker 1:Oh, interesting.
Speaker 2:So you know they're already acknowledging there that if you want to buy American in you're going to have to pay a premium.
Speaker 1:Right. So it's like OK, so buy American, but be prepared to pay more.
Speaker 2:Exactly.
Speaker 1:And what's really interesting is that the article estimates that about a third of the materials used in US construction projects are actually made overseas.
Speaker 2:A third.
Speaker 1:A third. It's not like a little bit, it's a lot. And then they go on to list some of these key materials that we get from, you know, other countries Cement, lumber, steel, insulation, electrical equipment.
Speaker 2:Yeah, it's like the essential ingredients for a house.
Speaker 1:Yeah, it's like you can't really build a house without these things. And then they kind of go on this really interesting argument about, like, bringing manufacturing back to the US.
Speaker 2:Yeah, it's a whole reshoring argument.
Speaker 1:Yeah, and they're kind of like, you know, looking back at this time when the US was this huge manufacturing powerhouse, especially like before the 1980s, and it's like that were this pride associated with, you know, made in the USA right, look, it meant something, it meant something, yeah, and, and you know they connect this to, like, the millions of manufacturing jobs that have been lost since the 1970s.
Speaker 2:Right, all those jobs that went overseas.
Speaker 1:Yeah, and they're saying that that's a big part of the reason why we've seen, like you know, stagnant wage growth and and why so many Americans are struggling financially.
Speaker 2:And they cite some statistics from Rehornoorg. They estimate that somewhere between three and five million manufacturing jobs have been lost to offshoring since 1979.
Speaker 1:That's a lot of jobs.
Speaker 2:That's a huge number.
Speaker 1:Yeah.
Speaker 2:And they say that potentially a similar number of jobs could be created through reshoring efforts. Yeah, and then you know. To kind of back that up, they bring in data from the Bureau of Labor and Statistics which confirms that manufacturing employment has seen a pretty steep decline over the past 40 years or so.
Speaker 1:Yeah, because we've kind of shifted to more of a service-based economy, right, it's like we're not really making things as much anymore.
Speaker 2:And they point to a specific data point from the BLS. They say that manufacturing employment peaked at 19.6 million in June of 1979.
Speaker 1:1979.
Speaker 2:Yeah, but then by June of 2019, it had fallen to 12.8 million.
Speaker 1:So that's a loss of what like almost 7 million jobs.
Speaker 2:Yes, 6.7 million jobs, which is about a 35 percent decrease.
Speaker 1:So it's like, basically, what they're saying is that we've lost more than a third of our manufacturing jobs.
Speaker 2:In that time period, yeah.
Speaker 1:That's a huge shift.
Speaker 2:It's a huge shift. It's a massive shift and you know, the speaker in the video really emphasizes the connection between that decline in domestic manufacturing and the kind of overall economic well-being of the middle class and the lower class.
Speaker 1:Yeah, it's like if you don't have those good paying manufacturing jobs, then what happens to everybody? Else Right manufacturing jobs than what happens to everybody else. And you know, one thing that they bring up that I thought was really interesting is that after each of the five recessions since 1979, manufacturing employment never fully recovered to its pre-recession levels.
Speaker 2:So it's like a downward trend, it's like a downward trend.
Speaker 1:It's not like it goes down and then comes back up. It's like it goes down and then kind of stays down. And I think that the main point that they're trying to make here is that, you know, understanding this historical context is really important for understanding. You know where we are today and what the potential, you know solutions might be.
Speaker 2:Yeah, because you know you can't just ignore the past.
Speaker 1:Yeah, you can't just ignore the past and then they kind of bring it back to their own personal experience. You know, as a real estate broker 35 experience.
Speaker 2:You know as a real estate broker 35 years in the industry 35 years Wow, you know they've seen a lot of changes. Yeah, and they're talking about. You know all the challenges that they see on a daily basis, like high housing costs, increasing insurance and property taxes, and you know those rising building imperial prices that we've been talking about.
Speaker 1:Right.
Speaker 2:And they even tell this really interesting story about seeing this. You know, outdated, overpriced, $500,000 home.
Speaker 1:Yeah.
Speaker 2:And it's like you know, you're paying $500,000 for this house. That's not even that great, and it's like you know this is. This is the reality that we're living in right now.
Speaker 2:Yeah, it's tough, it is tough and it kind of makes me think about, like all the people who are trying to buy their first home or even just trying to make ends meet, and it's like how are we supposed to make this work? Yeah, that's a really good question. And speaking of the financial aspects of housing, we want to take a moment to thank our sponsor, flowers Associates Property Rentals yes, specializing in special needs housing.
Speaker 1:Absolutely.
Speaker 2:Robert Flowers, the founder of Flowers Associates, is also a well-respected author in the field of real estate. Investing With books like From Setback to Comeback. Finding your Resiliency in Tough Times, available now on Amazon.
Speaker 1:Finding your Resiliency in Tough Times available now on Amazon. So you know, if you're looking for property rentals that really understand diverse needs or if you're just interested in you know Robert Flowers' insights on real estate investing, you can reach Flowers Associates at 901-445-8148 or visit flowersandassociatesbookingcom. Yeah, so you know we've talked about these two major potential cost increases. You know the labor side of things and then the materials, and it's clear from the Saks Realty video that you know these are these of coming together at the same time it's a perfect store.
Speaker 1:It's kind of like a perfect storm, and it's like you know how, how are we gonna weather this storm right? And and you know, just to be clear, like all the information that we've talked about today comes directly from you know the source material that you guys sent in right, we're just trying to distill it down yeah, we're just trying to distill it down and make sense of it and, you know, hopefully give you guys, guys, some food for thought.
Speaker 2:Right.
Speaker 1:But, you know, as we wrap up this deep dive, I think the question that I'm left with is like OK, so, given all of these potential pressures on the housing market you know, rising labor costs, rising material costs, like what are the solutions?
Speaker 2:What are the innovative solutions or policy changes that could help to ensure that you know affordable and quality housing remains accessible for everybody?
Speaker 1:It's a big question, it is a huge question and there's no easy answers. There's no easy answers, but I think it's a conversation that we need to be having.
Speaker 2:Absolutely.
Speaker 1:And you know, I'm really curious to hear what you guys think.
Speaker 2:Yeah, let us know your thoughts.
Speaker 1:Yeah, leave us a comment, let us know what you think and you know, let's keep this conversation going.
Speaker 2:And thanks for joining us for this deep dive.
Speaker 1:Thanks for listening everybody.
Speaker 2:See you next time. Bye.
