A recent draft study by Federal Reserve economists links the surge in unauthorized immigration to rising housing prices, but the increase is more moderate than some political claims suggest. The research attributes roughly 30 percent of home price growth in certain markets between early 2021 and early 2024 to an influx of unauthorized workers, who accounted for a significant population increase without corresponding increases in local home building.
The study, co-authored by economists from the San Francisco and Dallas Federal Reserve branches, analyzes detailed immigration data combined with housing market trends. It estimates that when unauthorized workers make up 1 percent of a local labor force, home prices rise by about 2.2 percent and rents by 1.4 percent — effects driven by demand in areas where new housing construction failed to keep pace over three years.
Importantly, this does not mean housing prices increased 30 percent directly because of immigration, as some political figures have claimed. Instead, unauthorized immigration explained close to one-third of the total price growth in the affected metropolitan areas, where overall prices rose by more than 20 percent. Nationwide, the impact was smaller, reflecting that unauthorized arrivals concentrated mainly in a few large cities, leading to a roughly 13 percent contribution to house price increases and 9 percent to rent increases in the typical metro area.
This research marks a significant development as previous political assertions about immigrants driving housing costs often lacked empirical backing. For instance, Vice President JD Vance’s claim that home prices doubled due to illegal immigration and the assertion that millions of unauthorized immigrants displaced Americans have been challenged for exaggeration. The draft paper provides the first systematic, credentialed evidence linking immigration with housing price dynamics, though it carries the Federal Reserve’s standard disclaimer that it does not reflect the institution’s official position.
The study highlights a persistent mismatch between demand and supply. Over the observed period, despite rising population pressures, home building remained relatively flat, failing to absorb additional demand from new residents, including unauthorized immigrants. This supply constraint largely shaped the upward pressure on prices and rents rather than immigration status per se.
The findings have surfaced in political debates, with some Republican candidates referencing the draft paper to support claims about immigration’s role in housing affordability issues. However, the economists caution that these effects are local and nuanced, and that unauthorized immigration explains part, but not all, of recent housing price increases.