Biden-era illegal immigration drove up housing costs, Fed economists find

• A 1% increase in unauthorized workers relative to the local labor force corresponded with a 2.2% rise in home prices and a 1.4% increase in rents, with little evidence of sufficient homebuilding to meet the added demand
• The influx added approximately 7 million people to the U.S. population between 2021 and 2024, representing an 'unprecedented boom' in illegal immigration according to Congressional Budget Office estimates
• Employment grew by roughly 1% for every 1% increase in unauthorized workers with no measurable negative effect on average wages, accounting for about 30% of employment growth in the average metro area studied

Summary: Federal Reserve Study Links Biden-Era Immigration to Housing Cost Increases

A working paper from the Federal Reserve Bank of Dallas found that the surge in illegal immigration during the Biden administration (2021-2024) contributed significantly to rising housing costs across U.S. metropolitan areas.

Key Findings

Researchers analyzed immigration court records and government data to assess impacts on labor and housing markets. They determined that a 1% increase in unauthorized workers relative to the local labor force correlated with:

• 1% increase in overall employment
• 2.2% rise in home prices
• 1.4% increase in rents
• No measurable negative effect on average wages

The study estimates unauthorized immigrant worker flows accounted for approximately:

• 30% of employment growth
• 30% of home price growth
• 20% of rent growth

in the average metropolitan area between March 2021 and March 2024.

Market Context

According to Congressional Budget Office estimates, net unauthorized immigration added roughly 7 million people to the U.S. population during this period before slowing in mid-2024. The influx functioned primarily as a housing demand shock in markets with constrained supply, as homebuilding did not expand sufficiently to meet increased demand.

Important Caveats

The authors emphasize this is a preliminary draft and does not represent official Federal Reserve views. The estimates apply to average metro areas studied and do not suggest immigration was the sole driver of nationwide housing cost increases.

Sector Impact

The findings have implications for real estate, homebuilding, and construction sectors, highlighting supply-demand imbalances in housing markets during the period studied.