A newly released working paper from the Federal Reserve suggests that the sharp rise in illegal immigration during the Biden administration contributed to higher home prices and rents in local markets.
The research comes as immigration continues to be one of the country’s most divisive political issues. Republicans have argued that former President Joe Biden’s border policies placed added pressure on housing and public services, while Democrats have maintained that immigration helped fill worker shortages and strengthened the broader economy.
Published by the Federal Reserve Bank of Dallas, the paper uses immigration court records alongside government administrative data to examine how the historic increase in illegal immigration from 2021 through 2024 affected local labor markets and housing conditions.
The authors note that the study is an early draft being circulated for professional feedback and that its conclusions do not necessarily represent the views of the Federal Reserve Bank of Dallas or the Federal Reserve System.
According to the researchers, the arrival of unauthorized immigrants increased employment levels while having little detectable impact on wages. At the same time, it substantially raised demand for housing.
The paper found that a 1% increase in unauthorized workers as a share of a local labor force was linked to an approximately 1% rise in overall employment, with no evidence that the immigration surge lowered average wages. But that same 1% increase was associated with an estimated 2.2% increase in home prices and a 1.4% increase in rents. Researchers said they found limited evidence that new construction rose enough to absorb the additional demand, concluding that the influx functioned as a housing demand shock in areas where supply was already tight.
The economists estimate that flows of unauthorized immigrant workers accounted for roughly 30% of employment growth, about 30% of home-price growth and around 20% of rent growth in the average metropolitan area between March 2021 and March 2024.
They emphasize, however, that the figures reflect the average metro area included in the study and should not be interpreted to mean immigration was the only factor behind rising housing costs across the country.
The paper describes 2021 through 2024 as an “unprecedented boom” in illegal immigration.
Citing Congressional Budget Office estimates, the authors said net unauthorized immigration added roughly 7 million people to the U.S. population before slowing sharply in mid-2024.
