Dallas Fed paper shows immigration lifted home prices 6.6%

A Dallas Federal Reserve working paper finds unauthorized immigration during the Biden administration raised home prices 6.6% and rents 4.3% in the average metro — far less than the 30% figure President Trump cited.

A Dallas Federal Reserve working paper circulating in Washington shows the surge in unauthorized immigration from 2021 to 2024 raised home prices 6.6% and rents 4.3% in the average U.S. metro, though the findings have been mischaracterized by the Trump administration.

"The paper suggests that unauthorized immigration accounted for roughly 30% of total home-price growth and 20% of rent growth — not that immigration alone caused a 30% price increase," said Jake Krimmel, senior economist at Realtor.com.

The 65-page draft by economists Daniel J. Wilson and Xiaoqing Zhou estimates that an inflow of unauthorized workers equal to 1% of a local area's workforce pushed home prices up 2.2% and rents up 1.4%. With total house prices rising 22.4% and rents 22.6% over the period, the inflow of roughly 7 million undocumented immigrants explains about 30% of the price increase and 20% of the rent increase, according to the paper.

The debate matters because housing affordability remains a top voter concern, and the Trump administration has seized on the paper to justify its aggressive immigration enforcement. But the study also found that unauthorized immigration boosted local employment roughly one-for-one without depressing wages, and that government transfer payments fell more in areas with higher illegal immigration — findings that complicate the narrative that immigrants drain public resources.

What the paper actually found

President Trump posted on Truth Social that the working paper "suggests Biden illegal immigrant wave drove up home prices 30%." Vice President JD Vance said the study shows that "stopping the flood of illegal migrants into this country will bring down home prices." The WSJ Editorial Board pushed back, noting the paper's actual estimate is 6.6% for home prices and 4.3% for rents — a roughly fivefold exaggeration by the administration.

The paper also raises economic puzzles that its authors acknowledge. Undocumented immigrants are overwhelmingly renters — few qualify for mortgages given low incomes, small savings and thin credit records. Yet the study found a larger impact on home prices than on rents. "This is a bit puzzling because it implies that it's not as simple as immigrants bidding up home prices directly," Krimmel said. "To me, this in part implies that immigration grows labor markets and pushes up local rents, which in turn increases demand for owned homes."

Caveats and context

The WSJ Editorial Board highlighted that the paper does not directly control for pandemic-era domestic migration. Masses of Californians and Northeasterners also flooded into Sun Belt metros during the same period as migrants moved, and domestic migration may have been a bigger driver of local home prices.

The paper's timeline — early 2021 to early 2024 — was also too short for housing supply to respond to higher demand. "Over a longer period of time, the undocumented immigrants' impact on prices could dissipate if more homes are built," Krimmel said. Other studies have found that increased immigration helps keep down housing prices over time by boosting the supply of construction labor, the WSJ Editorial Board noted.

Housing and Urban Development Secretary Scott Turner offered a different interpretation, writing that "for years hardworking Americans had to compete with millions of illegal aliens for housing. Of course that raised prices." Former acting ICE Director Jonathan Fahey told Fox Business that illegal immigration "cost the American people money" because "you bring in over ten million people, they didn't bring any homes with them, prices are going to rise."

The primary drivers of today's high housing prices, the WSJ Editorial Board argued, are inflation, the Federal Reserve's historically low interest rates during the pandemic, and the Biden administration's easing of mortgage underwriting standards. Higher interest rates have since created a lock-in effect for homeowners, constraining supply further. Prices have begun to fall in areas where new construction is catching up.

The working paper carries a standard disclaimer that it is a preliminary draft and that the views contained in it are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System.

This article is for informational purposes only and does not constitute investment advice.