How Would Donald Trump’s Wall Impact U.S. Real Estate?

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The third and final presidential debate between Hillary Clinton and Donald Trump did not disappoint—it was packed with Whoa, did I hear that right? moments. One of which—Trump’s comment that “We have some bad hombres here, and we’re gonna get them out”—again framed his early pledge to build a 1,000-foot wall on the U.S.-Mexico border to stem the tide of illegal immigrants.

The feasibility and effectiveness of that wall has been debated to death over the course of the Republican’s campaign. We’ll let others argue over whether it would solve our immigration woes. But we’re pondering a slightly different question: What impact would Trump’s wall, if built, have on the surrounding real estate?

Lucky for us, a recent article in Barron’s made some predictions on this front, both for the short term and long haul.

Short-term effects: Good

Initially, the wall would be a real estate boon, particularly to towns along the border. After all, the area would see an influx of an estimated 40,000 people to work in construction and support services for at least four years—and they have to live somewhere, right?

“It would be a mini gold rush,” agrees John McNellis, a California-based commercial real estate developer. “I liken it to what happened in the Dakotas during the fracking revolution. Employment and the housing market in that area were at an all-time high in 2014.”

The effects of this massive venture wouldn’t just be felt along the border, either. Since an estimated 8 million cubic yards of concrete and 5 billion pounds of steel rebar would be needed to complete the wall, this demand would cause the cost of these materials to skyrocket. This, in turn, would drive up construction costs throughout the Southwest—and likely slow down new development projects in those areas. Still, if anyone finds the housing supply slim in their area, the solution would be obvious: Head to the border, amigo!

Long-term effects: Not so good

But what will happen once the wall is complete? At that point, according to Barron’s, the workers would move away, leading to a glut of ghost towns along the border. Retail in that area would suffer, too. According to the Simon Property Group, approximately 21 million people cross the U.S.-Mexico border every year to shop in towns like San Ysidro, CA, and McAllen, TX. A wall would stop that commerce in its tracks.

As for the additional campaign pledge of deporting 11.3 Mexican immigrants to the south side of the wall, this would have other effects on the housing market, Barron’s reports. It would reverse five years of population growth—and reduce housing demand in its wake—with the impact being strongest in Texas and Arizona, due to their reliance on low-cost immigrant labor.

Meanwhile, reduced trade with Mexico could have a ripple effect on the U.S. economy and housing market nationwide. Currently, Mexico trades up to $1 billion worth of goods with the United States every day, which supports roughly 6 million U.S. jobs. If those jobs were eliminated due to lack of trade, that could cause housing prices to dip—for better or for worse, depending on whether you’re buying or selling a home.

Bottom line? Trump’s wall, if built, would be a mixed bag for real estate … and affect a whole lot more than just those “bad hombres.”

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