Los Angeles is facing a reconstruction crisis—and it has nothing to do with materials or money. After wildfires destroyed more than 16,000 structures earlier this year, tens of thousands of residents were displaced. The city needed a massive, coordinated effort to rebuild. What it got instead? A sweeping series of ICE raids that are driving construction labor underground and paralyzing recovery efforts.

The result: stalled timelines, abandoned job sites, and an unraveling labor force at the exact moment LA needs it most.

A One-Two Punch: Fires, Then Fear

First came the flames. In January, the Eaton and Palisades fires scorched neighborhoods across Southern California, pushing an already-tight housing market into full-blown crisis. The city needed 70,000 additional construction workers to meet demand, according to projections from UCLA, USC, and ULI.

Then came the raids.

In June, the Department of Homeland Security arrested nearly 2,800 people in a series of high-profile immigration sweeps across greater Los Angeles. Overnight, job sites emptied. Crews disappeared. And developers were left scrambling to hold projects together.

“People are really going into hiding,” says Brock Harris, a local agent working directly with rebuild teams. “There’s a noticeable sense of fear that ‘I could literally get snatched off my job site.’”

Developers Are Now Hiding Their Job Sites

Fear has reshaped the way LA is building. Contractors are disguising sites, taking down fencing, hiding porta-potties, and moving dumpsters off the street—all in hopes of avoiding scrutiny.

But it’s not just optics. It’s operations. Delayed inspections, incomplete crews, disrupted deliveries—it all adds up to blown budgets and shattered timelines.

“There was already a housing shortage. There was already a labor shortage before the fires,” Harris explains. “The fires made everything worse. These raids feel like the final insult.”

This Is Not a Day Laborer Crisis—This Is a Skilled Workforce Exodus

Immigrants make up 23% of the U.S. construction workforce, including an estimated 700,000 to 900,000 undocumented workers—many in roles like roofing, framing, and finish carpentry. The Hispanic Construction Council’s 2025 Building the Future of America report makes it clear: these are not fly-by-night laborers. These are deeply skilled professionals.

“These are family teams,” says Harris. “You lose one person, you might lose the whole crew.”

It’s not just fear of detention. It’s fear of disruption. In Tallahassee, ICE detained 100 workers on a jobsite. The next day, only 20 out of 180 showed up. That kind of loss isn’t easily replaced.

“You might think the equivalent worker just costs more,” says Pia Orrenius of the Dallas Fed. “But if you can’t find someone with the same skill level, you’re hiring someone less qualified—and that slows everything.”

Permit Delays Add Another Layer of Pain

Six months after the fires, only 90 of 1,207 rebuild permits have been issued in unincorporated LA County. In the Palisades, just 70 of 360 have been approved. Even developers ready to push forward are stuck waiting—and increasingly, many are choosing to wait it out or walk away.

“I’ve heard my own clients say they’re just going to build on what they already have and see what happens,” Harris adds.

For contractors, the math no longer pencils. Tight labor, slow permits, longer timelines—every factor erodes margin. And when you’re operating in a state where housing is already a high-risk, low-margin business, the tipping point isn’t far.

“A project that takes 14 months instead of 12 can be the difference between making money and losing money,” Harris says.

What We’re Seeing Beyond LA

This isn’t just LA anymore.

In Florida and Texas, we’re seeing similar patterns: raids, workforce fear, delayed inspections, abandoned projects. Labor is the linchpin of any housing recovery—and it’s vanishing at a moment when America can least afford it.

“Contractors are now being punished … because they’re experiencing the consequences of the last four years of federal workforce policy,” says Brian Turmail of the AGC. “It’s like, ‘We’re going to starve you, and then prosecute you for being starved.’”

The Bottom Line

If we want to rebuild LA—or any of the fire, hurricane, and climate-impacted cities around the country—we need a rational, workforce-driven policy approach. We need permits to move faster. We need labor supply to stabilize. And we need to stop criminalizing the very people rebuilding our communities.

Because as of now, the rebuild math doesn’t work—not because demand is gone, but because the labor is.

And this time, we may not get a second chance.

For more real estate insights, workforce analysis, and development commentary, subscribe to the blog or connect with me directly at www.danielkaufmanrealestate.com.