A recent working paper from the Federal Reserve Bank of Dallas found that the record increase in illegal immigration during the Biden administration contributed notably to rising housing costs, including a substantial jump in home prices and rents. The analysis coincides with a heated political debate over immigration’s impact on public resources and economic conditions.
The study merges immigration court data with government administrative records to assess how the influx of unauthorized immigrants between 2021 and 2024 affected local labor markets and housing supply. Researchers observed that a 1% rise in unauthorized workers relative to a local labor force correlated with about a 1% increase in total employment, without measurable downward pressure on wages.
However, this labor growth came with significant housing market consequences. The same 1% increase in unauthorized workers was associated with an approximate 2.2% rise in home prices and a 1.4% increase in rents. The paper identifies this trend as a housing demand shock, particularly acute in markets already facing supply constraints. It concluded that homebuilding did not expand sufficiently to accommodate the additional demand driven by immigration.
Economists estimate that unauthorized immigrant workers accounted for around 30% of employment growth and approximately 30% of home price increases in the average metropolitan area studied from March 2021 through March 2024. Rent growth linked to unauthorized workers represented about 20% of the total rise during the same period. The authors caution that these figures reflect average metropolitan trends and do not claim illegal immigration was the sole factor behind nationwide housing cost escalations.
The paper frames the period from 2021 to 2024 as an “unprecedented boom” in illegal immigration, with net unauthorized immigration adding an estimated seven million people to the U.S. population before tapering in mid-2024, referencing Congressional Budget Office data. While the labor market absorbed much of this growth without significant wage effects, the housing market bore the brunt, facing elevated demand without proportional increases in supply.