The Twin Cities housing market is experiencing significant disruptions as home builders report major construction delays. A shortage of skilled labor in trades like roofing and drywall, linked to increased federal immigration enforcement, is pushing back project timelines by up to four months and creating a ripple effect across the real estate sector.
Homeowners planning to move are now stuck, unable to list their current properties because their new homes are not ready. This is further tightening an already strained housing supply, while rental property owners report substantial financial losses from unfinished renovation projects.
Key Takeaways
- New home construction in the Twin Cities is delayed by two weeks to four months due to a labor shortage.
- The worker shortage is attributed to increased federal immigration enforcement actions at construction sites.
- Pending home sales in the metro area fell 19.2% in January, compared to a 1.6% national decline.
- The delays are preventing existing homeowners from listing their properties, worsening the housing inventory shortage.
- Rental property owners are also facing financial losses as renovations and maintenance work stall.
Construction Sites Face Unprecedented Delays
Home builders across the Minneapolis-St. Paul metropolitan area are falling behind schedule, forcing them to notify customers of significant delays. The core of the problem is a sudden, severe shortage of specialized trade workers, particularly in roofing and drywall installation.
In January, several construction companies sent letters to clients explaining the situation. Keith Horkey, vice president of Key Land Homes, directly cited the impact of increased immigration enforcement on the workforce. “The decrease in skilled laborers may impact the build time for your home,” Horkey wrote, asking for patience from buyers.
Robert Thomas Homes President Paul Grabow described a specific incident where federal agents arrived at a Lakeville job site. In a letter, he stated that officers remained for hours, disrupting work and creating an atmosphere of fear that led to false rumors and threats against workers on social media.
By the Numbers: Market Impact
The slowdown is reflected in recent market data. According to real estate brokerage Redfin, pending home sales in the Twin Cities metro plunged 19.2% in January. This is a stark contrast to the national figure, which saw a decline of just 1.6% during the same period.
A Climate of Fear Disrupts the Workforce
Labor rights advocates and union representatives report that a recent intensification of federal enforcement has created widespread fear among immigrant workers, many of whom have stopped coming to job sites or have left the state entirely.
The Minneapolis-based labor group Centro De Trabajadores Unidos En La Lucha (CTUL) noted that while federal agents have been present at construction sites since last summer, activity escalated significantly with an initiative dubbed "Operation Metro Surge" that began in December. During its peak in January, as many as 3,000 agents were reportedly active in Minnesota.
“The indiscriminate nature of these actions has caused fear,” said Lucho Gomez, CTUL's director of campaign strategies. He added that the fear has made many workers afraid to even leave their homes.
Gomez confirmed that federal agents have been seen at housing developments in several suburbs, including Shakopee, Lakeville, and Plymouth. He stated that both undocumented workers and U.S. citizens who are members of the labor group have been detained.
The impact is being felt across various trades. Jeff Heimerl, business manager for the International Brotherhood of Electrical Workers Local 292, said that Latino and Asian electricians and apprentices have been afraid to attend work or training classes. “This ICE activity is definitely impacting all of us in the construction industry, but it is hitting the roofers hardest because they have a heavier Latino population,” Heimerl explained.
The Ripple Effect on Homeowners and Landlords
The construction delays are not just an issue for builders; they are creating a bottleneck in the entire residential real estate market. The inability of builders to complete new homes on time has a direct impact on the availability of existing homes for sale.
“People are not listing their existing homes as planned because their new-build homes are not ready,” said Redfin real estate agent Emily Olson. This chain reaction means fewer options for all buyers and adds pressure to an already competitive market.
Redfin Premier agent Bridgette Prew shared a recent example of this disruption. Her clients had to cancel plans to sell their home in Prior Lake after their builder, Key Land Homes, informed them their new, larger home would be delayed by two months. The reason given was an inability to secure roofers and drywall installers.
Beyond New Construction
The labor shortage is also hitting the rental market. Property developers and landlords are struggling to complete renovations and maintenance, leading to direct financial consequences. Small-scale developers are particularly vulnerable to these unexpected work stoppages.
Minneapolis property developer P.J. Hill is currently renovating two apartment buildings and has experienced the effects firsthand. He reported that two of his contractors, both U.S.-born Latinos, were pulled over and detained by federal agents on their way to his job site. Though they were legal residents and eventually released, the disruption has been costly.
“I got my crew back,” Hill said, “but I lost well over $10,000” in rental income and event space fees because the projects were not completed on schedule. Furthermore, he estimates he could lose an additional $40,000 after several tenants were either deported or abandoned their apartments out of fear, leaving him with vacant units and turnover costs.
