Fed Study Links Illegal Immigration to 30% of Home Price Growth

A preliminary working paper from the Federal Reserve Bank of Dallas and the Federal Reserve Bank of San Francisco found that a record surge in unauthorized immigration between early 2021 and early 2024 significantly drove up U.S. housing costs. The study estimates that unauthorized immigrant worker flows accounted for approximately 30% of home-price growth and 20% of rent growth in the average metropolitan area. Specifically, researchers found that 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.

The researchers determined that the influx of roughly 7 million people created a housing demand shock in markets with constrained supply, as home construction did not accelerate enough to absorb the growth. While the surge contributed to roughly 30% of employment expansion, the study found no significant evidence that it reduced average weekly wages. This contradicts claims by former acting ICE Director Jonathan Fahey, who argued that the surge caused lower wages for American citizens.

The authors noted that the unprecedented boom in unauthorized immigration began to slow rapidly in mid-2024. They cautioned that the paper is a preliminary draft circulated for professional comment and does not necessarily reflect the official views of the Federal Reserve Bank of Dallas or the Federal Reserve System.