A Federal Reserve working paper found that the unprecedented surge in illegal immigration during the Biden administration contributed significantly to rising home prices and rents across American cities, accounting for roughly 30 percent of home price growth in the average metropolitan area between 2021 and 2024.
The Numbers Behind the Housing Impact
Researchers at the Federal Reserve Bank of Dallas analyzed immigration court records alongside government administrative data to measure how unauthorized immigration affected local markets. Their findings showed that a 1 percent increase in unauthorized workers relative to a local labor force corresponded with approximately a 2.2 percent rise in home prices and a 1.4 percent increase in rents. The same increase in unauthorized workers generated about a 1 percent boost in overall employment.
The paper estimates that unauthorized immigrant worker flows accounted for roughly 30 percent of employment growth, 30 percent of home price growth, and 20 percent of rent growth in the average metropolitan area during the three-year period examined. Researchers emphasized these figures represent averages and do not suggest immigration was the sole factor driving housing costs nationwide.
Supply Failed to Meet Demand
The study found little evidence that homebuilding expanded sufficiently to meet the additional housing demand created by the population influx. This supply constraint transformed the immigration surge into a housing demand shock in markets already facing limited inventory. The research showed the influx boosted employment without measurably affecting average wages, but the housing sector could not absorb the increased demand.
The authors characterized 2021 through 2024 as an unprecedented boom in illegal immigration, citing Congressional Budget Office estimates that net unauthorized immigration added approximately 7 million people to the United States population before declining sharply in mid-2024.
Political Implications and Disclaimers
Immigration remains a contentious political issue, with Republicans arguing that former President Biden’s border policies strained housing availability and public resources. Democrats counter that immigration helped address labor shortages and supported economic expansion. The authors cautioned that their study is a preliminary draft circulated for professional comment and does not necessarily reflect official positions of the Federal Reserve Bank of Dallas or the Federal Reserve System.
The findings arrive as Americans continue grappling with housing affordability challenges. The research provides quantitative evidence for claims that population growth from unauthorized immigration placed upward pressure on housing costs during a period when construction failed to keep pace with demand, affecting families seeking to purchase homes or rent apartments across the country.
