The debate over illegal immigration has been going on for years. One question keeps coming up. Did the sharp increase in illegal immigration during the Biden administration make it harder for Americans to afford a home? A newly released Federal Reserve study offers more information that is likely to keep that discussion going.
A working paper from the Federal Reserve reports that the historic rise in illegal immigration during the Biden years was linked to increases in both home values and rental costs.
That conclusion lands squarely in the center of a major political disagreement. Republicans have consistently argued that President Joe Biden’s border policies placed extra strain on housing and government resources. Democrats have maintained that immigration helped businesses find workers and supported economic activity during a challenging time.
The research was prepared by economists at the Federal Reserve Bank of Dallas. To conduct the study, they matched immigration court records with federal administrative data. Their goal was to measure how the unusually large wave of illegal immigration from 2021 through 2024 influenced local job markets and housing conditions.
Before discussing the results, the researchers included an important disclaimer. They explained that the paper is an early draft that has been circulated for professional feedback. They also stated that the findings should not be viewed as the official position of either the Federal Reserve Bank of Dallas or the Federal Reserve System.
After examining the evidence, the researchers found that the arrival of unauthorized immigrants increased employment while having little measurable effect on average wages. They also determined that the added population created much stronger demand for housing.
VISIT OUR YOUTUBE CHANNELThe study found that when unauthorized workers increased by 1% relative to a local labor force, total employment also increased by about 1%. At the same time, the researchers found no indication that the additional workers pushed average wages lower.
The housing market produced a very different result.
The same 1% increase in unauthorized workers was linked to about a 2.2% increase in home prices and a 1.4% increase in rental prices. The researchers also found little evidence that builders added enough new housing to keep pace with the extra demand. Based on those findings, they concluded that the immigration surge acted as a housing demand shock in communities where available housing was already limited.
The economists estimate that unauthorized immigrant workers accounted for about 30% of employment growth, close to 30% of the increase in home prices, and roughly 20% of rent growth across the average metropolitan area between March 2021 and March 2024.
The authors also made clear that these estimates have limits. Their conclusions apply to the average metropolitan area included in the research. They do not claim that immigration alone caused housing prices to rise across the entire country.
The report contains another notable description. It refers to the years between 2021 and 2024 as an “unprecedented boom” in illegal immigration.
Drawing on estimates from the Congressional Budget Office, the researchers said net unauthorized immigration increased the nation’s population by about 7 million people before that pace slowed significantly during the middle of 2024.
Will this paper bring an end to the immigration debate? That seems unlikely. Even so, it adds another set of data that lawmakers, economists, and voters will almost certainly examine as the nation continues discussing immigration policy, housing costs, and the broader effects of border enforcement.
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