A recent working paper from the Federal Reserve Bank of Dallas found that the surge in illegal immigration under former President Joe Biden contributed to higher home prices and rents across U.S. cities.
The 65-page draft paper, written by economists Daniel J. Wilson and Xiaoqing Zhou, maintains that between 2021 and 2024, an “unprecedented boom in unauthorized immigration” drove up home prices by 6.6% and rents by 4.3% in the average metro.
President Donald Trump, who has pursued aggressive policies targeting undocumented immigrants since starting his second term, quickly seized on the preliminary findings.
In a Truth Social message posted on Sunday, Trump wrote, “the working paper suggests Biden illegal immigrant wave drove up home prices 30%.”
However, Trump’s take misinterprets Wilson and Zhou’s actual findings, which instead indicated that unauthorized immigration accounted for 30% of the total increase in home prices.
According to the economists, an influx of unauthorized workers equal to 1% of a local area’s workforce
increased home prices by 2.2% and rents by 1.4%.
In the average metro market, undocumented immigrant workers drove up home prices by 6.6% and rents by 4.3% during the study period.
Because total overall house prices and rents increased 22.4% and 22.6%, respectively, from 2021 to 2024, illegal immigration explains approximately 30% and 20% of that total growth, according to the paper.
The authors write that the inflow of 7 million undocumented immigrants into the U.S. triggered a “housing demand shock in the face of short-run inelastic supply.”
The study suggests that, besides driving up housing costs, immigrants boosted local employment roughly 1-for-1 without causing significant declines in wages.
The working paper carries a standard disclaimer that it is a preliminary draft, and that the views contained in it are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Dallas.
Study raises questions
Realtor.com® senior economist Jake Krimmel argues that Wilson and Zhou’s findings, which have been widely touted by conservative politicians and media outlets, align with the basic laws of supply and demand during a period when the housing market in most major metros was particularly tight.
“An influx of immigrant workers increases demand for housing. Over the short run, like the few years the study focuses on, the supply of housing is pretty inelastic. That is, it takes a while for new-home construction to catch up to that demand shock,” explains Krimmel. “So in the short run, house prices will rise as demand outstrips supply.”
The economist also points out that because the timeline of the Dallas Fed study was so limited, housing supply did not have a chance to respond to the higher demand, suggesting that over a longer period of time, the undocumented immigrants’ impact on prices could dissipate if more homes are built.
The purported impact on rents also raises some perplexing economic questions.
The paper shows that rents increased less dramatically than home prices, even though undocumented newcomers are presumably much more likely to rent than buy.
“This is a bit puzzling because it implies that it’s not as simple as immigrants bidding up home prices directly,” he says. “To me, this in part implies that immigration grows labor markets and pushes up local rents, which in turn increases demand for owned homes.”
Ultimately, Krimmel highlights that while the paper suggests that illegal immigration caused a 6.6% bump in home prices, it also shows that other factors drove the lion’s share of overall home price growth.
“Short-run changes to immigration inflows, whether up or down, are only part of the story,” he says.
