Immigration bursts into election housing price debate

The role that mass immigration plays in driving up housing costs has come under renewed scrutiny as soaring housing prices and rents have become a topic of debate in the presidential campaign .

Both campaigns have called for boosting the construction of homes to lower prices — that is, by focusing on the supply side. But the Republican ticket has also focused on stemming immigration to reduce demand for housing and blamed high housing costs on the immigration policies of President Joe Biden and Vice President Kamala Harris, the Democratic presidential nominee.

In a speech on his economic policies earlier this month at the Economic Club of New York, former President Donald Trump outlined his plans for reducing prices by cutting back regulations to allow for more construction. But he said that “we also cannot ignore the impact that the flood of 21 million illegal aliens has had on driving up housing costs.”

His running mate, Sen. J.D. Vance (R-OH), has focused even more intently on immigration as a factor in elevating housing prices, referencing it often on the campaign trail.

Vance, in a recent X response to Harris’s housing proposals, laid out the argument that immigration to a given area raises its housing prices and rents.

“It's common sense, we can't fix our housing crisis until we address the crisis at the border,” he concluded.

The Trump-Vance campaign’s efforts to blame immigration for high housing prices is a new development in the ascent of high housing costs as a top political concern.

Recent years have seen the rise of a movement in favor of allowing greater housing construction. The movement has labeled itself “Yes In My Back Yard,” or YIMBY, a contrast with “Not In My Back Yard,” or NIMBY, a label applied to local homeowner groups that oppose new buildings. The YIMBY movement has succeeded in passing measures to limit policies that restrict housing in cities such as Minneapolis and states such as Massachusetts.

But while the YIMBY movement has focused on the supply side of the housing market, the Trump-Vance campaign is now also looking at the demand side.

Evidence from housing markets suggests that immigrants do put upward pressure on prices in the housing markets they enter, even if experts are divided on the prescriptions that follow.

“It’s basic 101 economics,” HousingWire lead analyst Logan Mohtashami said. “You’re not ready for an influx, and guess what happens — housing inflation takes off.”

Econometric studies have indeed found that immigration to an area raises housing prices and rent. A 2017 paper published in the Journal of Housing Economics, for example, concluded that immigration equivalent to 1% of a metro area’s population results in an 0.8% increase in rents. More recently, the Congressional Budget Office published an analysis of the economic effects of the surge in immigration under Biden, and concluded it pushed up prices mainly by increasing demand for housing.

Mohtashami said, though, that high immigration was not the main culprit in the steep rise in housing prices nationally in recent years — since Biden came into office, house prices are up more than 40%, according to the Federal Housing Finance Agency's housing price index, and overall shelter costs are up 22%, according to the Consumer Price Index. Rather, he said, population and economic growth, coupled with housing supply constraints, were to blame for rising prices, and the effects of immigration on the housing market were mostly limited to regions seeing large arrivals of migrants, and especially markets that already had low vacancy rates.

Roughly 1.7 million additional immigrants have entered the United States under the Biden administration. A similarly sized “organic” increase in the population would have driven up housing prices significantly more, said Eric Finnigan, the vice president of demographics research at John Burns Research and Consulting.

That’s because migrants who have crossed the border illegally generally don’t compete for the same houses and apartments that others are trying to rent or buy.

In some cases, at least thus far, migrants who entered the country in recent months are still in the shelter system and are not yet in the housing market, Finnigan said.

More broadly, though, migrants live in larger households, meaning that more family members or multiple families will live in a single unit. That means there’s less competition in the market for each individual unit.

Also, migrants who are coming from poor nations typically don’t have the financial means to compete in the market for single-family homes and new apartments. Usually, they’re working in low-income jobs and lacking significant savings.

“You’ll see some differences if you go South, in Texas, let’s say in El Paso or San Antonio, where there's a much higher foreign-born population — there’s definitely housing market effects there,” Finnigan told the Washington Examiner. “But we’re just not dealing with a population that’s earning incomes high enough to boost house prices.”

Still, he said, it is difficult to trace the effects of migration on housing markets because of a lack of good data about where they go after they are released at the border.

Finnigan’s group has estimated that the market as a whole is undersupplied by 1.5 million units, including both units for sale and for rent. Other analyses have placed the shortfall as high as 20 million, depending on how the problem is defined.

Trump and Vance have said there are as many as 18 million to 21 million immigrants in the U.S. without authorization, although outside estimates put the number lower. The Center for Immigration Studies, for example, a think tank that favors restrictions on immigration, has estimated that there were 14 million illegal immigrants in the country as of this year. Trump and Vance have pledged to carry out mass deportations of migrants, and Vance has said that they would start by deporting 1 million.

Such mass deportations would be logistically complicated. Whether and how they would affect housing prices and rents are difficult questions to answer.

Kevin Erdmann, a housing expert at the libertarian Mercatus Center, said that it is technically true that high immigration rates have raised housing prices, by increasing demand.

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He said that the larger problem, though, is the lack of supply, noting that per-capita housing construction is still at levels it was during the financial crisis.

The lack of supply pits migrants against natives and all other groups, he said, like “hyenas around a kill during a drought.”