A new Federal Reserve working paper found the record surge in illegal immigration during the Biden administration triggered higher home prices and rents.
The findings arrive as immigration remains a polarizing political issue. Republicans argue former President Joe Biden’s border policies strained housing and public resources, while Democrats say immigration helped ease labor shortages and supported economic growth.
The paper, published by the Federal Reserve Bank of Dallas, combines immigration court records with government administrative data to measure how the unprecedented wave of illegal immigration between 2021 and 2024 affected local labor and housing markets.
The authors caution the study is a preliminary draft circulated for professional comment and does not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System.
Researchers found the influx of illegal immigrants boosted employment with little measurable effect on wages but significantly increased housing demand.
A 1% increase in unauthorized workers relative to a local labor force corresponded with roughly a 1% increase in overall employment, with no evidence the immigration surge reduced average wages. The same 1% increase, however, was associated with a roughly 2.2% rise in home prices and a 1.4% increase in rents. Researchers found little evidence that homebuilding expanded enough to meet the added demand, concluding the influx acted as a housing demand shock in markets where supply was already constrained.
The economists estimate unauthorized immigrant worker flows accounted for about 30% of employment growth, roughly 30% of home-price growth, and about 20% of rent growth in the average metropolitan area between March 2021 and March 2024.
They stress these estimates apply to the average metro area studied and do not suggest immigration was the sole driver of rising housing costs nationwide.
The paper describes 2021 through 2024 as an “unprecedented boom” in illegal immigration.
Citing Congressional Budget Office estimates, the authors said net unauthorized immigration added roughly 7 million people to the U.S. population before slowing sharply in mid-2024.
