A recent working paper from the Federal Reserve Bank of Dallas indicates that a surge in unauthorized immigration during the Biden administration contributed to rising home prices and rents. The study, which combines immigration court records with government administrative data, analyzed the impact of the influx on local labor and housing markets between 2021 and 2024.
The paper's authors caution that it is a preliminary draft circulated for professional comment and does not necessarily represent the official views of the Federal Reserve Bank of Dallas or the Federal Reserve System.
Researchers found that while the increase in unauthorized workers correlated with a rise in employment, it had a limited measurable effect on wages. However, the study noted a significant increase in housing demand. The paper estimates that a 1% increase in unauthorized workers relative to a local labor force corresponded with approximately a 2.2% rise in home prices and a 1.4% increase in rents. The authors observed little evidence that home construction adequately increased to meet this added demand, suggesting the influx acted as a demand shock in markets already facing supply constraints.
Economists involved in the study estimate that the flow of unauthorized immigrant workers accounted for about 30% of employment growth, approximately 30% of home-price growth, and about 20% of rent growth in the average metropolitan area studied between March 2021 and March 2024. The authors emphasized that these figures apply to the average metropolitan area and do not imply that immigration was the sole cause of nationwide housing cost increases.
The paper characterizes the period from 2021 through 2024 as an "unprecedented boom" in unauthorized immigration. Citing estimates from the Congressional Budget Office, the authors stated that net unauthorized immigration added roughly 7 million people to the U.S. population before a notable slowdown occurred in mid-2024.