A Dallas Federal Reserve working paper found that illegal immigration during recent years placed additional pressure on tight housing markets, with rent and home price effects varying sharply by metro area.
By yourNEWS Media Newsroom
A working paper released by two economists affiliated with the Federal Reserve Bank of Dallas found that illegal immigration contributed to rising housing costs in several major U.S. metropolitan areas, adding another factor to a nationwide affordability crisis already shaped by limited supply, inflation, regulatory barriers and elevated demand.
The paper, titled “The Impacts of Unauthorized Immigration on U.S. Labor and Housing Markets: New Evidence from Administrative Microdata,” examined how illegal immigration affected local labor and housing markets. According to the findings described in the paper, every 1% increase in unauthorized migrants as a share of a local area’s initial employment was associated with a 1.4% increase in rents and a 2.2% increase in housing prices.
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The research concluded that each 1% increase in illegal migrants relative to a local area’s initial employment was associated with a 1.4% increase in rents and a 2.2% increase in home prices.
The findings suggest that illegal migration contributed to as much as 20% of recent housing growth in some areas and up to a 30% increase in housing prices over the last five years in major American cities.
The housing effects were especially pronounced in metro areas such as Houston, Miami, New York and Minneapolis, where illegal migrant inflows were higher than the national average. Those cities already faced substantial housing pressures as construction failed to keep pace with demand.
The United States has struggled for years with a chronic housing shortage, with the problem most severe in large metropolitan regions where new homebuilding has lagged population growth. During the Biden administration, at least 15 million illegal migrants entered the country, intensifying demand in an already strained and inelastic housing market.
The added pressure has affected ordinary Americans seeking homes, particularly young people and first-time buyers. With more people competing for limited housing, many prospective homeowners have faced higher prices, longer delays and, in some cases, the inability to buy a home altogether.
Housing markets traditionally respond to rising demand through new construction, but that process has been slowed in recent years by multiple forces. Loose monetary policy and quantitative easing expanded the money supply and contributed to elevated asset prices. Inflation added further pressure, while supply chain disruptions after the COVID-19 pandemic made construction slower and more expensive.
Longstanding regulations, red tape and bureaucracy have also limited the ability of builders to increase supply quickly. In that environment, a large increase in population caused by illegal migration added demand faster than many local housing markets could absorb.
The strain extends beyond rents and home prices. Larger populations require additional roads, schools, utilities, public services and infrastructure. State and local governments facing those demands must often divert limited resources toward maintaining and expanding existing systems, leaving less time, money and manpower available to support new housing development.
That dynamic can worsen the shortage by increasing demand while slowing the infrastructure work needed to support additional supply.
The impact falls most heavily on Americans trying to begin their adult lives, buy their first homes, marry and start families. Delayed homeownership can also delay family formation, adding to broader concerns about declining birthrates and long-term demographic weakness.
Critics of Biden-era border policies argue that the housing crisis is one of several domestic consequences tied to illegal immigration, alongside concerns about election integrity, public resources, infrastructure and access to services. They contend that Americans who once competed primarily with other citizens for housing are now facing added pressure from people who entered the country illegally.
The issue has also renewed calls for tougher immigration enforcement, including faster mass deportations, as well as election reforms aimed at ensuring that only citizens vote. Supporters of the Save America Act argue that voting rights should be reserved strictly for U.S. citizens and that elected officials should prioritize the needs of Americans rather than foreign nationals or outside interests.
The Dallas Fed working paper adds an economic dimension to that debate by finding a direct link between unauthorized immigration and housing cost increases in local markets. For many Americans already struggling with affordability, the findings point to illegal migration as a significant driver of higher rents, higher home prices and reduced access to the American Dream.