As Americans continue to struggle with rising rents and home prices, an uncomfortable question is gaining renewed attention: Has illegal immigration contributed to the nation’s housing affordability crisis?
A new working paper from Federal Reserve economists suggests the answer is yes, at least in part.
The study examined the unprecedented surge in illegal immigration between 2021 and 2024, using immigration court records and government administrative data to measure its impact on local labor and housing markets. The findings were striking. A 1% increase in unauthorized workers relative to a local labor force was associated with about a 2.2% increase in home prices and a 1.4% increase in rents. Researchers also estimated that these migration flows accounted for roughly 30% of employment growth, 30% of home-price growth, and about 20% of rent growth in the average metropolitan area during the period studied.
Interestingly, the economists found little evidence that the increase in unauthorized workers lowered wages. Instead, the primary effect was increased demand for housing. Because home construction failed to keep pace with population growth, the added demand pushed prices and rents higher in markets that were already facing limited housing supply.
It’s important to note that the researchers describe the paper as a preliminary draft that does not necessarily represent the official views of the Federal Reserve. They also emphasize that illegal immigration was not the only cause of higher housing costs. Rising interest rates, inflation, restrictive zoning, and years of underbuilding all played significant roles.
Still, the report adds an important piece to the housing affordability debate. Whether policymakers focus on border security, increasing housing construction, or both, the evidence suggests that population growth without adequate housing supply places additional pressure on renters and homebuyers alike. Ignoring either side of that equation makes solving America’s housing crisis far more difficult.
