Surge in Immigration and Its Impact on Home Prices
Under President Joe Biden’s administration, immigration has risen significantly, coinciding with a notable increase in home prices nationwide, according to a recent Federal Reserve report underscored by the White House. The analysis indicates that for every 1% increase in “illegal immigrant workers” within a local workforce, housing prices experience a 2.2% upsurge, while rental prices rise by 1.4%.
In metropolitan areas nationwide, illegal immigrants have been responsible for approximately 30% of all home price growth and 20% of rent increases during Biden’s tenure. This correlation has reignited discussions among policymakers, particularly among certain Republican leaders. For instance, Vice President J.D. Vance highlighted that reducing illegal immigration could potentially lower housing prices and improve affordability for young Americans seeking to establish families.
The working paper, released in March by the research division of the Dallas Federal Reserve, was presented as a preliminary draft aimed at collecting expert feedback. It suggests that immigration influences housing construction only minimally. The findings imply that the growing demand for housing has not been effectively met by an increase in supply, particularly from immigrant labor.
Immigration Boom’s Scale
An estimated 7 million immigrants joined the U.S. population between March 2021 and March 2024, according to the report citing the Congressional Budget Office. This marks the largest net immigration surge in U.S. history, with an average of 1.75 million illegal immigrants annually—compared to just 100,000 per year over the preceding two decades. In Utah, the undocumented immigrant population nearly doubled during this timeframe, growing from approximately 95,000 to around 180,000.
While lawmakers have sought to adapt to this demographic change, advocating for support in schools experiencing a rise in English learners, efforts to curtail state funding for immigrants have largely failed. Interestingly, the report also highlighted that illegal immigration may reduce government expenditures, noting that a 1% increase in undocumented workers correlates with a 4.5% decline in local welfare spending, due to its positive effects on employment levels.
Influence of Immigration on Housing Demand
Mike Carey, Chairman of the Salt Lake County Republican Party and a housing developer, has long criticized state policies that he believes attract illegal immigrants, thereby adversely affecting Utah residents. Carey raised concerns that programs intended to assist first-time homebuyers in Utah could inadvertently benefit unauthorized individuals seeking interest-free loans for homes.
According to the Migration Policy Institute, approximately 58,000 individuals from Utah’s undocumented population are expected to become homeowners by 2023. Those opposed to current immigration policies, like Carey, argue that such demographic changes exert pressure on housing availability and affordability, with international migration representing a significant share of Utah’s population growth in recent years.
Factors Behind Rising Home Prices in Utah
The University of Utah’s Gardner Policy Institute has ranked Utah as the ninth most expensive housing market in the United States. Dejan Eskik, a housing researcher at the institute, notes that long-term demand is influenced by demographics, while short-term shifts are largely shaped by monetary policy and zoning laws. Eskik finds it challenging to parse out immigration’s specific impact, considering that numerous factors contribute to rising prices.
Despite prevalent narratives attributing high home prices to immigration, industry experts suggest that the effects are relatively modest compared to other inflationary pressures. For instance, if immigration has contributed to housing prices, its effect pales in comparison to other dynamics prompting increases.
Housing Supply and Immigration’s Role
A November study conducted by Troup Howard, a professor at the University of Utah, suggests that the exclusion of immigrants could paradoxically escalate home prices in several areas. The report warns that initiatives to deport undocumented immigrants may yield a short-term reduction in housing demand, but also result in a substantial negative shock to housing supply.
Indeed, many sectors related to housing, particularly construction, rely heavily on immigrant labor. The study estimates that immigration enforcement could lead to a loss of nearly 300,000 construction workers, significantly impacting the industry. In communities facing increased immigration enforcement, new home construction has decreased notably, resulting in higher prices for both new and resale properties, thus exacerbating an already precarious housing landscape.
