The Fire Hose of Chaos: Housing Problems

Peter Zeihan 6 min

The housing sector is the American industry most damaged by mid- and long-term trends combining labor shortages, tariffs, financing cuts, and insurance collapse. The housing sector is looking to be the sector that is potentially most damaged by the mid- and long-term trends that are coming together.

  • Donald Trump

Chapters

  1. 0:00

    Labor Shortages

    Immigrant labor constitutes 25% to 50% of housing construction costs, and deporting 5 million workers will eliminate the workforce needed to build homes.

  2. 2:01

    Material Costs

    Tariffs on wood from Canada, steel and aluminum, copper, and tile increase the physical cost of building a house significantly.

  3. 2:26

    Add-on Expenses

    Homeowners spend an additional dollar or two for every three to four dollars spent on the primary purchase of housing. Retiring baby boomers and increased federal deficits shrink private sector financing availability while mortgage rates approach 20-year highs.

  4. 4:38

    Insurance Collapse

    Rising reconstruction costs combined with populist restrictions on premium hikes will force insurance companies to stop offering coverage.

Key points

  • 0:00

    Somewhere between 25% and 35% of that labor is immigrant labor, with that number going to 40 to 50% if you're in California or Texas.

  • 2:01

    Now there is a 145% tariff, which basically means we stopped shipping stuff from China for this product category about a month ago.

  • 2:26

    As a rule in the United States, for every three to four dollars we spend on the primary purchase of housing, we spend another dollar or two on add-on costs.

  • 2:26

    Between the baby boomers retiring and liquidating their savings and the Trump administration planning to increase the federal budget deficit by a trillion dollars a year, the availability of financing for the private sector has shrunk precipitously.

  • 4:38

    The only way that insurance companies can deal with that is by stopping to offer coverage.

Who and where

People · 1

  • Drawing of Donald Trump

    Donald Trump 3

    President of the United States (2017–2021; since 2025)

    Photo 1

1. Photo: Daniel Torok, Public domain, via Wikimedia Commons · Wikidata · redrawn in our house style (Donald Trump)

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