Illegal Migrants and Housing Affordability – What’s the Truth?

Whether buying or renting, US housing affordability has spiraled out of control over the last few years. Since the onset of the pandemic, home prices have spiked by 47%, and rents have surged 25%. Economists and politicians have alluded to various culprits behind the dramatic increase, from decades of underbuilding to the Federal Reserve-fueled, record-low mortgage rates. But what about illegal immigrants? A recent article in RealClearInvestigations has provided some answers. Still, it is an issue with plenty of complications. Vice President-elect JD Vance claimed during his debate with Gov. Tim Walz (D-MN) that undocumented migrants have led to soaring housing costs. The truth, however, is a bit more muddled.

Illegal Migrants and Housing Affordability

Economic observers have wrestled with whether it is accurate to blame migrants for pricing out millions of Americans from the real estate market. Bob Ivry of RealClearInvestigations studied the issue and "found no definitive answers." This is because of a paucity of reliable government data and, according to Ivry, very few "economists have studied" the subject "with much rigor.”

To be clear, research does highlight that immigration can bolster housing demand, exacerbate supply shortages, and raise prices, though there are variables within the reports. It is not exactly a controversial view; Federal Reserve officials have made comparable observations.

"Given the current low inventory of affordable housing, the inflow of new immigrants to some geographic areas could result in upward pressure on rents, as additional housing supply may take time to materialize,” Fed Gov. Michelle Bowman said in a speech. Minneapolis Fed President Neel Kashkari asserted that "their arrival in the U.S. has likely also increased demand for housing.”

Of course, there are nuances within the data. A recent Bipartisan Policy Center study concluded that immigrants can buoy housing demand in regions already enduring expanding populations. At the same time, regions with declining or stagnating populations can be better positioned to take on new arrivals without impacting the existing housing supply.

Now, the timing is interesting. Since 2021, millions of illegal immigrants have poured into the United States while demand for limited residential properties intensified. Over the last decade, the deep yawning chasm between single-family home builds and household formations spiked to 6.5 million. Put simply, just to remedy the current housing shortage, the US needs to construct millions of units.

A chief concern among economists, builders, and trade associations is that President-elect Donald Trump’s plan to deport illegals could impact efforts to improve supply. Estimates suggest that illegals represent a sizable share of the talent pool of construction workers. The industry is already facing a labor shortage, and wiping out a significant chunk could potentially weigh on the incoming administration’s efforts to revitalize the housing portfolio.

“Economically, if there’s an attempt to deport these workers and also, attendant with that, punish employers more aggressively for using undocumented workers, then these workers no longer become accessible to the building industry,” said Anirban Basu, the chief economist for Associated Builders and Contractors, a 23,000-member trade group that endorsed Trump in the 2024 election, in an interview with RCI. “That would massively shrink the construction workforce and would substantially increase the cost of housing, which already has an affordability problem.”

In addition, there are other factors at play. Illegal migrants are more likely to rent than own, meaning they will worsen the rental market than the homebuying arena. A Center for Immigration Studies (CIS) analysis found that 90% of households headed by undocumented immigrants over the last years were renters. Moody's economists wrote in October that "immigrants, particularly newcomers, make up a significant portion of renter households."

As Liberty Nation News has reported, some states, like California and Oregon, have made efforts to offer down payment assistance to these families.

The trend is troubling for renters because of the growing supply-demand imbalance. A National Low Income Housing Coalition study found that a little more than seven million rental units were available for the roughly 11 million extremely low-income households nationwide. Therefore, impoverished Americans are competing with individuals entering the country illegally, increasing competition for finite rentals.

In recent years, the chief topic of conversation has been illegal migrants causing higher prices. However, as RCI's Ivry reported, the opposite problem can transpire, like the situation unfolding in the Denver suburb of Aurora. The community has captured the national spotlight as Venezuelan gang members have taken over apartment buildings, terrorized innocent people, and committed crimes.

The October edition of Realtor.com revealed that Denver's rent fell more than that of any other US city. "Many landlords are dying to sell and get out of Colorado," one landlord told RCI. Danielle Jurinsky, an Aurora council member, confirmed to RCI that many landlords have reached out to her "because they have a hard time renting their properties."

Interestingly enough, Leesa Donner, executive editor at Liberty Nation News, has noticed a trend in the DC Metropolitan area anecdotally showing legal Hispanics fleeing areas with an immense illegal immigrant population.

“A handyman recently mentioned that he bought a little house in a rural area to ‘get away from all the crime that’s going on’ due to the influx of illegals,” Donner said. “A Northern Virginia housekeeper from Chile moved her family out of Manassas, VA, and into the small, safe town of Warrenton because she ‘feared for the safety of her children.’ Yet another legal Latin woman from Honduras moved out to the countryside to ‘get her kids away from the schools’ that had heavy illegal populations because she ‘didn’t want her children around the negative influences of the illegal aliens.’ If these people are moving to safer, higher ground – that really tells you something.”

For housing markets that require construction workers, the legal ones could be frightened off by the illegal ones.

Solutions Ahead?

It will take years for the supply-demand fundamentals in the US housing market to return to balance. In 2021, housing construction had recovered to 2006 levels. Put simply, it is a matter of catching up. However, the challenge will continue to be the influx of illegal migrants. In October, CIS Research Director Steven Camarota testified at a House Oversight Committee that 2.4 million immigrant-headed households have formed since January 2021. Within this number, it is estimated that nearly two-thirds were "due to illegal immigration."

Are illegals the primary culprit for rocketing housing costs? No. Are they having a sizable impact on the US real estate market? Yes. Ivry might have best summarized the situation in his article's title: "It's complicated."